Document:

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                                                                EXHIBIT 4(iii)

                                     Form of
                    COLLATERAL PLEDGE AND SECURITY AGREEMENT

         COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of November 15, 2000
between Alliance Pharmaceutical Corp. (the "Pledgor") and _____________, as
collateral agent, (the "Agent") for the holders ("Holders") of the Notes (as
defined herein) of the Pledgor.

         WHEREAS, the Pledgor is issuing from time to time its 6% Convertible
Notes due 2005 (the "Notes") pursuant to a Convertible Note Purchase Agreement
dated as of November 8, 2000 (the "Purchase Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in the Purchase Agreement; and

         WHEREAS, the Pledgor has agreed (i) to deliver to the Agent (a) in
immediately available funds, $1.5 million for every $7 million principal amount
of Notes issued and purchased under the Purchase Agreement, payable
simultaneously with the closing of each such purchase of Notes (the "Funds") or
(b) direct obligations of, or obligations guaranteed by, the United States of
America for the payment of which obligations or guarantee the full faith and
credit of the United States is pledged and which have an aggregate fair market
value (which may be conclusively determined by their purchase price in open
market transactions) of not less than $1.5 million for every $7 million
principal amount of Notes purchased under the Purchase Agreement and have a
remaining weighted average life to maturity of not more than 18 months from the
date of investment therein ("Government Securities" and, together with any
replacement or substitute securities, the "Pledged Securities"), to provide for
payment of scheduled interest payments due on the Notes and (ii) that the Agent
will, on behalf of the Pledgor, deposit the Funds into, or place the Pledged
Securities in, the Pledge Account (as defined below) held by the Agent for the
benefit of Holders of the Notes; and

         WHEREAS, the Pledgor is the legal and beneficial owner of the Pledged
Securities; and

         WHEREAS, to secure its obligations to pay principal of and interest on
the Notes (the "Obligations"), the Pledgor has agreed to (i) pledge to the Agent
for its benefit and the ratable benefit of the Holders of Notes, a security
interest in the Pledged Securities and the Pledge Account (as defined below) and
(ii) execute and deliver this Collateral Pledge and Security Agreement (this
"Pledge Agreement") in order to secure the payment and performance by the
Pledgor of all such Obligations; and

         WHEREAS, the terms "investment property", "financial asset",
"securities", "securities account", "securities intermediary" and "security
entitlement" shall have the respective meanings ascribed to them in the sections
of the Uniform Commercial Code as in effect at the date hereof in the State of
New York (the "UCC") referred to herein.

         NOW THEREFORE, the parties hereto agree as follows:

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1. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby pledges to the
Agent for its benefit and for the ratable benefit of the Holders of Notes, and
grants to the Agent for its benefit and for the ratable benefit of the Holders
of Notes, a continuing first priority security interest in and to (i) all of
Pledgor's right, title and interest in the Pledged Securities and the Pledge
Account (as defined below), (ii) the certificates or other evidence of ownership
representing the Pledged Securities and the Pledge Account, and (iii) all
products and proceeds of any of the Pledged Securities, including, without
limitation, all dividends, interest, principal payments, cash and other property
or proceeds from time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of the Pledged
Securities (collectively, the "Collateral").

2. SECURITY FOR OBLIGATIONS. This Pledge Agreement and the Collateral
secure the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of all Obligations.

3. DELIVERY OF COLLATERAL; PLEDGE ACCOUNT; INTEREST; SUBSTITUTION OF COLLATERAL.

         (a) Concurrently with the execution and delivery hereof, or as soon as
practicable thereafter, all certificates or instruments representing or
evidencing the Collateral shall be delivered to and held by or on behalf of the
Agent pursuant thereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed and undated instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent.

         (b) Concurrently with the execution and delivery hereof, or as soon as
practicable thereafter, _____________, acting as securities intermediary, shall
establish in the name of the Agent a securities account entitled the "ALLIANCE
PHARMACEUTICAL CORP. PLEDGE ACCOUNT" for the deposit of the Funds or the Pledged
Securities, as the case may be (the "Pledge Account"), at its office at
_____________. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property accepted by the Agent pursuant to this
Pledge Agreement shall be held in the Pledge Account for the benefit of the
Agent and the ratable benefit of the Holders of Notes. The Agent hereby agrees
with the Pledgor for the benefit of the Holders of the Notes that each item of
property (whether investment property, security, instrument or cash, including
but not limited to the Funds) credited to the Pledge Account shall be treated as
a "financial asset" within the meaning of Section 8-102(a)(9) of the UCC.

         (c) All interest earned on any Collateral shall be retained in the
Pledge Account, pending disbursement pursuant to the terms hereof.

         (d) At any time while this Pledge Agreement is in force the Pledgor may
substitute for the Collateral in whole or in part hereunder: (i) Government
Securities; (ii) any time deposit account, money market deposit and certificate
of deposit maturing not more than 365 days after the date of acquisition issued
by, or time deposit of, an Eligible Institution (as hereinafter defined),
provided that any such deposit account, money market deposit or certificate of
deposit is eligible to be held through the Depository Trust Company ("DTC"); or

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(iii) commercial paper maturing not more than 365 days after the date of
acquisition issued by a corporation (other than an affiliate of the Pledgor)
with a rating, at the time as of which any investment therein is made, of "P-1"
or higher according to Moody's Investors Service, Inc., "A-1" or higher
according to Standard & Poor's Ratings Group or "A-1" or higher according to
Duff & Phelps Credit Rating Co. (or such similar equivalent rating by at least
one "nationally recognized statistical rating organization" (as defined in Rule
436 under the Securities Act)), provided that any such commercial paper is
eligible to be held through DTC; (together, the "Marketable Securities";
PROVIDED, HOWEVER that the Marketable Securities so substituted must have a
value (measured at the date of substitution), in the opinion of the Agent, at
least equal to 125% of the principal amount of the replaced Government
Securities or, if other Marketable Securities are being replaced, at least equal
to the value of the replaced Marketable Securities, as of the date such
Marketable Securities are proposed to be substituted as security for the
Pledgor's obligations hereunder; PROVIDED FURTHER that any such Marketable
Securities be reasonably acceptable to the Agent, taking into account its
operational capabilities. Concurrently with such substitution, the Pledgor will
deliver to the Agent a certificate signed by an executive officer of the Pledgor
reaffirming the representations and warranties set forth in Section 5(a) through
(e) hereof.

         For the purposes of this Pledge Agreement, "money market accounts" and
cash will be treated in the same manner as Government Securities, and the term
"Eligible Institution" shall mean a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A-3" or higher, "A" or higher or "A" or
higher according to Moody's Investors Service, Inc., Standard & Poor's Ratings
Group or Duff & Phelps Credit Rating Co. (or such similar equivalent rating by
at least one "nationally recognized statistical rating organization" (as defined
in Rule 436 under the Securities Act)) respectively, at the time as of which any
investment therein is made.

         (e) The Agent hereby confirms that: (i) the Pledge Account is a
"securities account" as such term is defined in Section 8-501(a) of the UCC,
(ii) the Agent shall, subject to the terms of this Pledge Agreement, treat the
Holders of the Notes as entitled to exercise the rights that comprise any
financial asset or other investment property credited to the Pledge Account and
(iii) all securities, security entitlements or other financial assets delivered
to the Agent pursuant to this Pledge Agreement will be promptly credited to the
Pledge Account.

4. DISBURSEMENTS.

         (a) Not less than five (5) business days prior to (i) the date of any
of the scheduled interest payments due on the Notes, or (ii) any redemption date
of the Notes, the Pledgor may, in writing, direct the Agent to transfer from the
Pledge Account to the Holders funds in an amount equal to the next scheduled
interest payment on the Notes, or the Make Whole Amount payable in respect of
the Notes on such redemption date, as applicable; PROVIDED that the Agent will
not be obligated to make any such transfer if there is not sufficient cash in
the Pledge Account on the relevant payment date including, in respect of the
Make Whole Amount, the proceeds of the sale of any Pledged Securities. Upon
receipt of such written request, the Agent will take any action necessary to
provide for the payment of such interest payment on the

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Notes, or Make Whole Amount, as the case may be, directly to the Holders of
Notes from proceeds of the Pledged Securities in the Pledge Account.

         (b) If at any time the "maintenance amount" of Pledged Securities
exceeds the amount sufficient, in the reasonable opinion of the Agent, to
provide for payment in full of the scheduled interest payments due on the Notes
then outstanding (or, in the event an interest payment or payments have been
made, an amount sufficient to provide for payment in full of any interest
payments then remaining on the Notes then outstanding), the Pledgor may direct
the Agent in writing to release any such overfunding to it. Upon receipt of a
request from the Pledgor and any other documentation reasonably satisfactory to
the Agent to substantiate such excess, the Agent will pay over to the Pledgor
any such overfunded amount. The "maintenance amount" shall mean the sum of 100%
of the amount of Government Securities included in the Pledged Securities and
80% of the amount of Marketable Securities included in the Pledged Securities.

         (c) Upon payment in full of the scheduled interest payments on the
Notes, the security interest in the Collateral evidenced by this Pledge
Agreement will terminate and be of no further force and effect. Furthermore,
upon the release of any Collateral from the Pledge Account in accordance with
the terms of this Pledge Agreement, whether upon release of Collateral to
Holders as payment of interest or Make Whole Amount, to the Company or
otherwise, the security interest evidenced by this Pledge Agreement in the
Collateral so released will terminate and be of no further force and effect.

5. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and warrants
that:

         (a) The execution, delivery and performance by the Pledgor of this
Pledge Agreement do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of incorporation of the
Pledgor or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Pledgor or result in or require the creation or
imposition of any lien on any assets of the Pledgor, except for the security
interests granted under this Pledge Agreement.

         (b) No financing statement covering the Pledged Securities is on file
in any public office (other than the financing statements filed pursuant to this
Pledge Agreement) and such Pledged Securities are directly owned, legally and
beneficially, by the Pledgor, free and clear of all liens other than the lien on
the Pledged Securities granted to the Agent pursuant to this Pledge Agreement.

         (c) Upon the delivery to the Agent of the certificates, if any,
representing the Pledged Securities, any filing of financial statements required
by the UCC and the notations on the records of the Agent that it holds the
Pledged Securities as pledgee, the pledge of the Collateral pursuant to this
Pledge Agreement creates a valid and perfected first priority security interest
in and to the Collateral, securing the payment of the Obligations for the
benefit of the Agent and the ratable benefit of the Holders of Notes,
enforceable as such against all creditors of the Pledgor and any persons
purporting to purchase any of the Collateral from the Pledgor.

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         (d) No consent of any other person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by the
Pledgor of the Collateral pursuant to this Pledge Agreement or for the
execution, delivery or performance of this Pledge Agreement by the Pledgor
(except for any filings and notations necessary to perfect liens on the
Collateral) or (ii) for the exercise by the Agent of the rights provided for in
this Pledge Agreement or the remedies in respect of the Collateral pursuant to
this Pledge Agreement.

         (e) The pledge of the Collateral pursuant to this Pledge Agreement is
not prohibited by any applicable law or government regulation, release
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations T,
U and X of the Board of Governors of the Federal Reserve System).

6. FURTHER ASSURANCES. The Pledgor agrees, at its own expense, to promptly take
such actions and to execute and deliver or cause to be executed and delivered
such stock or bond powers, proxies, assignments, instruments and such other or
different writings as the Agent may request, all in form and substance
reasonably satisfactory to the Agent, deliver any instruments to the Agent and
take any other actions that are necessary or, in the reasonable opinion of the
Agent, desirable, to perfect, continue the perfection of, confirm and assure the
first priority of the Agent's security interest in the Collateral, to protect
the Collateral against the rights, claims or interests of third persons, to
enable the Agent to exercise and enforce all of its rights and remedies under
this Pledge Agreement or to otherwise effect the purposes of this Pledge
Agreement.

7. COVENANTS. The Pledgor covenants and agrees with the Agent and the Holders of
Notes from and after the date of this Pledge Agreement until the earlier of
payment in full in cash of (A) each of the scheduled interest payments due on
the Notes under the terms of the Notes or (B) all Obligations due and owing
under the Notes in the event such Obligations become due and payable prior to
the Maturity Date of the Notes:

         (a) The Pledgor agrees that it will not (i) sell or otherwise dispose
of, or grant any option or warrant with respect to, any of the Collateral or
(ii) create or permit to exist any lien upon or with respect to any of the
Collateral (except for the lien created pursuant to this Pledge Agreement) and
at all times will be the sole beneficial owner of the Collateral.

         (b) The Pledgor agrees that it will not (i) enter into any agreement or
understanding that purports to or may restrict or inhibit the Agent's rights or
remedies hereunder, including, without limitation, the Agent's right to sell or
otherwise dispose of the Collateral or (ii) fail to pay or discharge any tax,
assessment or levy of any nature not later than five days prior to the date of
any proposed sale under any judgement, writ or warrant of attachment with regard
to the Collateral.

8. POWER OF ATTORNEY. The Pledgor hereby irrevocably appoints and constitutes
the Agent as the Pledgor's true and lawful attorney-in-fact with full power of
substitution (with the Agent to remain responsible for all acts and omissions of
any substitute) to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (i) collection of proceeds of any
Collateral;

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(ii) conveyance of any item of Collateral to any purchaser thereof; (iii)
giving of any notices or recording of any liens under Section 6 hereof; (iv)
making of any payments or taking any acts under Section 9 hereof and (v)
paying or discharging taxes or liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the
same to be determined by the Agent in its sole discretion, and such payments
made by the Agent to become the Obligations of the Pledgor to the Agent, due
and payable immediately upon demand. The Agent's authority hereunder shall
include, without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Collateral in the name of the
Pledgor, execute and give receipt for any certificate of ownership or any
document constituting Collateral, transfer title to any item of Collateral,
sign the Pledgor's name on all financing statements (to the extent permitted
by applicable law) or any other documents deemed necessary or appropriate by
the Agent to preserve, process or perfect the security interest in the
Collateral and to file the same, prepare, file and sign the Pledgor's name on
any notice of lien, and to take any other actions arising from or incident to
the powers granted to the Agent in this Pledge Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Pledgor.

9. AGENT MAY PERFORM. If the Pledgor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such agreement,
and the reasonable expenses of the Agent incurred in connection therewith shall
be payable by the Pledgor under Section 13 hereof.

10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and powers granted to
the Agent hereunder are being granted in order to preserve and protect the
Agent's and the Holders' of Notes security interest in and to the Collateral
granted hereby and shall not be interpreted to, and shall not, impose any duties
on the Agent in connection therewith other than those imposed under applicable
law.

11. INDEMNITY. The Pledgor agrees to pay and to indemnify, defend and hold
harmless the Agent and its directors, officers, agents and employees from and
against all claims, actions, obligations, losses, liabilities and expenses,
including costs, fees and disbursements of counsel (including, without
limitation, the reasonable cost to the Agent of legal counsel and the reasonable
costs incurred by the Agent in connection with its appointment as
attorney-in-fact), the costs of investigations, and claims for damages, arising
from the Agent's performance under this Pledge Agreement, except insofar as the
same may have been caused by the bad faith, gross negligence or willful
misconduct of such indemnified person.

12. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have occurred:

         (a) The Agent shall have and may exercise with reference to the
Collateral any or all of the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of New York, and as otherwise
granted herein or under any other applicable law or under any other agreement
now or hereafter in effect executed by Pledgor, including, without limitation,
the right and power to sell, at public or private sale or sales, or otherwise
dispose of, or otherwise utilize the Collateral and any part or parts thereof in
any manner authorized or permitted under said Uniform Commercial Code after
default by a debtor, and to apply the proceeds thereof toward payment of any
costs and expenses and attorneys' fees and expenses

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thereby incurred by the Agent and toward payment of the Obligations in such
order or manner as the Agent may elect. Specifically and without limiting the
foregoing, the Agent shall have the right to take possession of all or any
part of the Collateral or any security therefor and of all books, records,
papers and documents of Pledgor or in Pledgor's possession or control
relating to the Collateral which are not already in the Agent's possession,
and for such purpose may enter upon any premises upon which any of the
Collateral or any security therefor or any of said books, records, papers and
documents are situated and remove the same therefrom without any liability
for trespass or damages thereby occasioned. To the extent permitted by law,
Pledgor expressly waives any notice of sale or other disposition of the
Collateral and all other rights or remedies of Pledgor or formalities
prescribed by law relative to sale or disposition of the Collateral or
exercise of any other right or remedy of the Agent existing after default
hereunder; and to the extent any such notice is required and cannot be
waived, Pledgor agrees that if such notice is given in the manner provided in
Section 17 hereof at least four (4) days before the time of the sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy
any requirement for giving of said notice. The Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale. The Pledgor further
agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary.

         (b) All rights to marshaling of assets of Pledgor, including any such
right with respect to the Collateral, are hereby waived by Pledgor.

13. EXPENSES. The Pledgor will upon demand pay to the Agent the amount of any
and all reasonable expenses (including, without limitation, the reasonable fees,
expenses and disbursements of its counsel, experts and agents retained by the
Agent) that the Agent may incur in connection with (i) the exercise or
enforcement of any of the rights of the Agent and the Holders of Notes hereunder
or (ii) the failure by the Pledgor to perform or observe any of the provisions
hereof.

14. SECURITY INTEREST ABSOLUTE. All rights of the Agent and the Holders
of Notes and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:

         (a) any lack of validity or enforceability of the Notes or any other
agreement or instrument relating thereto;

         (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Notes;

         (c) any exchange, surrender, release or non-perfection of any liens on
any other collateral for all or any of the Obligations; or

         (d) to the extent permitted by applicable law, any other circumstance
which might otherwise constitute a defense available to, or a discharge of, the
Pledgor in respect of the Obligations or of this Pledge Agreement.

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15. CONTINUING SECURITY INTEREST; TERMINATION

         (a) This Pledge Agreement shall create a continuing security interest
in and to the Collateral and shall, unless otherwise provided in this Pledge
Agreement, remain in full force and effect until the earlier of payment in full
of (A) each of the scheduled interest payments due on the Notes under the terms
of the Notes or (B) all Obligations due and owing under the Notes in the event
such Obligations become payable prior to the Maturity Date of the Notes. This
Pledge Agreement shall be binding upon the Pledgor, its successors and assigns,
and shall inure, together with the rights and remedies of the Agent hereunder,
to the benefit of the Agent, the Holders of Notes and their respective
successors, transferees and assigns.

         (b) This Pledge Agreement shall terminate upon the earlier of payment
in full in cash of (A) each of the scheduled interest payments due on the Notes
under the terms of the Notes or (B) all Obligations due and owing under the
Notes in the event such Obligations become payable prior to the Maturity Date of
the Notes. At such time, the Agent shall, at the written request of the Pledgor,
reassign and redeliver to the Pledgor all of the Collateral hereunder that has
not been sold, disposed of, retained or applied by the Agent in accordance with
the terms of this Pledge Agreement. Such reassignment and redelivery shall be
without warranty (either express or implied) by or recourse to the Agent, except
as to the absence of any prior assignments by the Agent of its interest in the
Collateral, and shall be at the expense of the Pledgor.

16. AUTHORITY OF THE AGENT. The Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Agent by the terms hereof,
together with such powers as are reasonably incident thereto. The Agent may
perform any of its duties hereunder or in connection with the Collateral by or
through agents or employees and shall be entitled to retain counsel and to act
in reliance upon the advice of counsel concerning all such matters. Neither the
Agent, any director, officer, employee, attorney or agent of the Agent nor the
Holders of Notes shall be liable to the Pledgor for any action taken or omitted
to be taken by it or them hereunder, except for its or their own bad faith,
gross negligence or willful misconduct, nor shall the Agent be responsible for
the validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Agent and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.

17. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be deemed effectively given when made by telephone and
confirmed in writing by certified mail, facsimile, or overnight courier service
addressed to the Pledgor as set forth in the Purchase Agreement and to the Agent
at _____________, Telephone No. _____________, Facsimile No. _____________,
Attention: _____________.

18. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Agent of any right, remedy or power hereunder preclude any other or future
exercise of any other right, remedy or power. Each and every right, remedy and
power hereby granted to the Agent or allowed it by law or other agreement shall
be cumulative and not exclusive the one of any other, and may be exercised by
the Agent from time to time.

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19. BENEFITS OF THIS PLEDGE AGREEMENT. Nothing in this Pledge Agreement, express
or implied shall give to any person, other than the parties hereto and their
successors hereunder, and the Holders of the Notes, any benefit or any legal or
equitable right, remedy or claim under this Pledge Agreement.

20. APPLICABLE LAW; CONSENT TO JURISDICTION. This Pledge Agreement and the
rights and obligations of the parties hereunder shall be governed by, and
construed in accordance with, the internal laws of the State of New York.
Pledgor hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State or Federal court located in the State of New York in any action or
proceeding arising out of or relating to this Pledge Agreement. Regardless of
any provision in any other agreement, New York is agreed to be the "securities
intermediary's jurisdiction" and to the extent federal law does not apply, the
Pledge Account (as well as the security entitlements related thereto) shall be
governed by the laws of the State of New York.

21. REMOVAL OF AGENT. The Agent may be removed at any time through the issuance
of an instrument in writing addressed to the Agent and signed by or on behalf of
the Holders and specifying such removal and the date when it shall become
effective. Any resignation or removal of the Agent shall take effect upon the
appointment by the Holders of a successor Agent reasonably satisfactory to
Pledgor and the acceptance of such appointment by such successor Agent.

22. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

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         IN WITNESS WHEREOF, the parties have caused his Agreement to be duly
executed as of the date first above written.

                                     ALLIANCE PHARMACEUTICAL CORP.

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

                                           Title:

                                     ------------------------------------------

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

                                           Title:

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

                                           Title:

                                      10<PAGE>

                                                                 Exhibit 10(a)

                                 AMENDMENT NO. 2

                  AMENDMENT NO. 2 (THE "AMENDMENT") TO THE LICENSE AGREEMENT
DATED AS OF SEPTEMBER 23, 1997 BY AND BETWEEN ALLIANCE PHARMACEUTICAL CORP.
("ALLIANCE") AND SCHERING AKTIENGESELLSCHAFT ("SCHERING") AS AMENDED BY FIRST
AMENDMENT TO LICENSE AGREEMENT DATED AS OF DECEMBER 30, 1998 (COLLECTIVELY, THE
"LICENSE AGREEMENT").

                  WHEREAS Schering and Alliance entered into the License
Agreement with respect to the Product (as defined in the License Agreement) and
have agreed on certain provisions regarding either party's involvement with
Competitive Products (as defined in the License Agreement);

                  WHEREAS Schering and Alliance have, in Section 2.08 of the
License Agreement, agreed on certain contractual consequences of Alliance's
direct or indirect involvement with the manufacture, use or sale of Competitive
Products;

                  WHEREAS Schering and Alliance wish to amend the License
Agreement pursuant to Section 17.13 of the License Agreement and to make use of
a joint strategy regarding Competitive Products in certain cases.

                  NOW THEREFORE, Schering and Alliance agree to amend the
License Agreement as follows:

                  1.       DEFINITIONS. All capitalized terms used in this
Amendment shall have the meaning set forth herein or, if not explicitly set
forth in this Amendment, shall have the meaning used in the License Agreement.

                           1.1      "HI-Patent Basket" means all Alliance
Patents and Schering Patents in the field of the method of use of harmonic
imaging intended to be licensed to manufacturers and/or distributors of
Competitive Products, which Patents are now or in the future owned or Controlled
by Alliance or by Schering, including those as listed on Exhibit "A".

                           1.2      "Joint Agreements" means all agreements
listed in Exhibit B to this Amendment as amended from time to time, between
Alliance and Schering on the one side and a Third Party on the other side which
agreements provide for a license grant from Alliance and/or Schering to the
Third Party regarding either any Patents out of the HI Patent Basket or out of
the Alliance Patent Basket, as specified in each case in Exhibit B.

                           1.3      "Alliance Patent Basket" means all Alliance
Patents which cover the research, development, manufacture, use, importation,
sale or offer for sale of a Competitive Product licensed or to be licensed in
the field of composition of matter other than the HI Patents, which Patents are
now or in the future owned or Controlled by Alliance.

                           1.4      "Schering Patents" means all Patents listed
on Exhibit "A" to this Amendment.

                  2.       PROVISIONS FOR JOINT AGREEMENTS. For as long as the
License Agreement

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remains in effect, in the event that Alliance and Schering agree to conclude an
agreement with a Third Party as a Joint Agreement, whether such Joint Agreement
regards the licensing of any Patents out of the HI Patent Basket or out of the
Alliance Patent Basket, the following provisions shall apply:

                           (a)      Both Alliance and Schering shall be parties
to the Joint Agreement with the Third Party, and no Joint Agreement may be made
without both Alliance's and Schering's consent to its terms and conditions.

                           (b)      The Joint Agreement shall provide for
Schering to be the sole recipient of 100% of any and all payments (including,
but not limited to, royalties) payable by the Third Party pursuant to such Joint
Agreement, unless and until Schering and Alliance shall otherwise jointly notify
the Third Party in writing.

                           (c)      The Joint Agreement shall provide for (i)
Schering to be the recipient of all royalty reports and all other documentation
to be provided by the Third Party under the Joint Agreement; and (ii) Alliance
to be the recipient of copies of each such document to be provided by the Third
Party, unless and until Schering and Alliance shall otherwise jointly notify the
Third Party in writing.

                           (d)      The Joint Agreement shall provide for
Schering to be the party responsible for exercising all of Alliance's and
Schering's rights and obligations under the Joint Agreement towards the Third
Party, unless and until Schering shall otherwise notify the Third Party in
writing of a change in such responsibilities.

                           (e)      No Joint Agreement shall cover both Patents
out of the (i) HI Patent Basket and (ii) the Alliance Patent Basket.

                  3.       CONSEQUENCES OF JOINT AGREEMENTS.

                           (a)      Section 2.08 of the License Agreement shall,
limited to the scope of each Joint Agreement, not apply to Competitive Products
which are subject to such a Joint Agreement.

                           (b)      Schering shall, within thirty (30) days of
receipt of any payments by a Third Party pursuant to a Joint Agreement with a
Third Party, pay to Alliance an amount equal to 50% (fifty percent) of such
payment received by Schering from the Third Party.

                           (c)      Alliance and Schering agree to provide each
other with all of their respective information which, in the reasonable opinion
of each party, is necessary to enable it to perform its responsibilities
pursuant to Section 2.1(d) hereof. Each of Alliance and Schering (the
"Indemnifying Party") agrees to save, defend and hold the other party and its
agents and employees harmless from and against any and all Losses resulting from
the Indemnifying Party's unreasonable delay in performing its obligations under
any Joint Agreement or this Amendment. All claims for indemnification by either
Schering or Alliance arising under this Amendment in connection with this
Amendment or a Joint Agreement shall be governed by the provisions of Section
15.01 of the License Agreement.

                                       2
<PAGE>

                           (d)      In the event that Schering declares the
licenses granted to Schering under the License Agreement to be irrevocable
according to Section 14.02(e) of the License Agreement, the provisions of this
Amendment shall remain in force and unchanged.

                           (e)      In the event that Section 14.02(d) of the
License Agreement applies, then with respect to each terminated country the
following shall apply:

                                    (i)      Joint Agreements under which
licenses to any Patents out of the Patent Basket have been granted to a Third
Party in force prior to the termination of the License Agreement shall be
assigned by Schering to Alliance, and the parties shall each send notice of such
assignment to each Third Party. Schering shall no longer be entitled to any
Third Party license revenue from such licenses.

                                    (ii)     Joint Agreements under which
licenses to the Patents out of the HI Patent Basket have been granted to a Third
Party shall remain in full force and effect both between Schering and Alliance
as if the License Agreement has not been terminated for such country for as long
as the Schering Patents remain in effect in such country. Upon expiration of
such Schering Patents in such country, such Joint Agreements shall be assigned
by Schering to Alliance and the parties shall each send notice of assignment to
each Third Party. Thereafter, Schering shall no longer be entitled to any Third
Party license revenue from such license. Notwithstanding the foregoing, in the
event any Schering Patents remain in effect in any country after the expiration
of all Patents out of the HI Patent Basket in such country which are owned or
controlled by Alliance, such Joint Agreements shall be assigned by Alliance to
Schering and the parties shall each send notice of assignment to each Third
Party. Thereafter, Alliance shall no longer be entitled to any Third Party
license revenue from such license.

                                    (iii)    The parties may agree to conclude
Joint Agreements with Third Parties after the termination of the License
Agreement according to the terms and conditions set forth in this Amendment, but
neither party shall have any obligation to enter into any Joint Agreement after
the termination of the License Agreement.

                  4.       ALLIANCE ACQUISITION OF MOLECULAR BIOSYSTEMS, INC.
Schering hereby consents to the acquisition of Molecular Biosystems, Inc.
("MBI") by Alliance (the "MBI Acquisition"). The foregoing consent relate solely
to the MBI Acquisition and any other acquisition or transaction shall remain
subject to the terms of the License Agreement. In lieu of any other provisions
of the License Agreement as amended from time to time, the parties agree that
Alliance's sole obligations to Schering in connection with the MBI Acquisition
shall be as follows:

                           (a)      Upon the initiation of commercial sales of
MBI's ultrasound contrast agent ("FSO69") by Chugai Pharmaceutical Co., Ltd.
("Chugai"), Alliance shall pay Schering a royalty equal to 8% (i.e.
approximately 2.24% of Chugai net sales as of the date of this Amendment) of the
total royalty paid by Chugai to MBI, provided that, at such time as Schering
begins selling the Product in Japan, Taiwan, or South Korea, Alliance shall
increase the payment to Schering for such country to 16% (i.e. approximately
4.48% of Chugai net sales as of the date of this Amendment) of the total royalty
paid by Chugai to MBI for such country.

                                       3
<PAGE>

                           (b)      Alliance shall make royalty payments to
Schering within sixty (60) days after MBI receives royalties from Chugai. A
report summarizing the net sales of FSO69 shall be delivered to Schering within
sixty (60) days following receipt of such report from Chugai, subject to MBI's
obligations under the Cooperative Development Marketing Agreement dated as of
March 31, 1998 between MBI and Chugai, which obligations are attached hereto as
Exhibit C.

                           (c)      Sections 8.03, 8.04 and 8.05 of the License
Agreement are hereby incorporated into the terms of this Section 4.

                           (d)      Alliance's payments to Schering shall be in
the same currency or currencies as MBI receives from Chugai.

                           (e)      In the event of a termination of the License
Agreement, all obligations of Alliance pursuant to Section 4 of this Amendment
shall terminate.

                  5.       TERMS OF LICENSE AGREEMENT. All terms and conditions
provided for in the License Agreement, except insofar as they are not explicitly
amended for the purposes of this Amendment, shall remain unchanged and fully
applicable between the parties The termination or expiration of the License
Agreement shall not effect this Amendment, unless otherwise provided herein.

                  6.       FREEDOM TO CONTRACT. Each party shall be free to
conclude any agreement with any Third Party regarding its own Patents contained
in the HI Patent Basket and/or in the Alliance Patent Basket; PROVIDED that all
provisions of the License Agreement (including but not limited to, Section 2.08)
shall apply without any restriction if such agreement is not concluded as a
Joint Agreement

                  7.       EXECUTION AND COUNTERPARTS. This Amendment may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
instrument.

                                       4
<PAGE>

                  IN WITNESS WHEREOF, each party hereto has executed, or caused
its duly authorized officer to execute, this Amendment as of the date first
written below

ALLIANCE PHARMACEUTICAL CORP.                 SCHERING AKTIENGESSELSHAFT

Date:                                         Date:
      --------------------------------------       -----------------------------

By:                                           By:
      -------------------------------------      -------------------------------
      Theodore D. Roth                        Name:
      President and Chief Operating Officer        -----------------------------
                                              Title:
                                                    ----------------------------

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

                                       5
<PAGE>

                                                    Exhibit A to Amendment No. 2

                    SCHERING PATENTS AND PATENT APPLICATIONS

<TABLE>
<CAPTION>

               ===========================          ===========================
                        INT. NO.                             INT. NO.
               ===========================          ===========================
               <S>                                  <C>
                    50107AATM1EP00-P                     50107AUSC2WO00-P
               ===========================          ===========================
                    50107AAUM1WO00-P                     50107AUSC3WO00-P
               ===========================          ===========================
                    50107ABEM1EP00-P                     50107AUSC4WO00-P
               ===========================          ===========================
                    50107ACAM1XX00-P                     50107AZAM1XX00-P
               ===========================          ===========================
                    50107ACHM1EP00-P                     51172AAUM1WO00-P
               ===========================          ===========================
                    50107ADEM1EP00-P                     51172ACAM1WO00-P
               ===========================          ===========================
                    50107ADKM1WO00-P                     51172ACNM1WO00-P
               ===========================          ===========================
                    50107AESM1EP00-P
               ===========================          ===========================
                    50107AFRM1EP00-P                     51172AILM1XX00-P
               ===========================          ===========================
                    50107AGBM1EP00-P                     51172AJPM1WO00-P
               ===========================          ===========================
                    50107AGRM1EP00-P                     51172AKRM1W00-P
               ===========================          ===========================
                    50107AITM1EP00-P                     51172AMXM1WO00-P
               ===========================          ===========================
                    50107AJPM1WO00-P                     51172ANOM1WO00-P
               ===========================          ===========================
                    50107AKRM1WO00-P                     51172ANZM1WO00-P
               ===========================          ===========================
                    50107ALUM1EP00-P                     51172ATWM1XX00-P
               ===========================          ===========================
                    50107ANLM1EP00-P                     51172AUSM1XX00-P
               ===========================          ===========================
                    50107ANOM1WO00-P
               ===========================          ===========================
                    50107ASEM1EP00-P                     51172AZAM1XX00-P
               ===========================          ===========================
                    50107ATWM1XX00-P
               ===========================
                    50107AUSC1WO00-P
               ===========================

</TABLE>

<PAGE>

                                          Exhibit A to Amendment No. 2 CONTINUED

                    ALLIANCE PATENTS AND PATENT APPLICATIONS

                         =========================
                              PATENT NUMBER
                         =========================
                                5,540,909
                         =========================
                                5,733,527
                         =========================
                                6,019,960
                         =========================
                                6,056,943
                         =========================
                                6,036,644
                         =========================
                                09/523,872
                         =========================
                                  693608
                         =========================
                                 87135/98
                         =========================
                                2,176,206
                         =========================
                                95934531.5
                         =========================
                               295 22 119.4
                         =========================
                                98112155.9
                         =========================
                               511948/1996
                         =========================

<PAGE>

                                                    Exhibit B to Amendment No. 2

                                JOINT AGREEMENTS

None at time of signing

<PAGE>

                                                    Exhibit C to Amendment No. 2

                     MBI / CHUGAI CONFIDENTIALITY PROVISIONS

         9.1      NONDISCLOSURE OBLIGATIONS. During the Term, and for a period
of five (5) years after termination hereof, each party (the "receiving party")
will maintain all Confidential Information of the other party (the "disclosing
party") in trust and confidence and will not disclose any Confidential
Information of the disclosing party to any Third Party or use any Confidential
Information of the disclosing party for any purpose other than to the extent
required to satisfy its obligations under this Agreement. Confidential
Information of the disclosing party shall not be used for any purpose or in any
manner that would constitute a violation of any Applicable Laws. The receiving
party will not reproduce the Confidential Information of the disclosing party in
any form other than to the extent required to enable the receiving party to
satisfy its obligations under this Agreement. The receiving party will use at
least the same standard of care to protect Confidential Information of the
disclosing party as it uses to protect proprietary or confidential information
of its own. The receiving party will promptly notify the disclosing party upon
discovery of any unauthorized use or disclosure of the Confidential Information
of the disclosing party. All information that is to be held confidential shall
be given only to employees of the receiving party who are made aware of the
confidential nature of the information and who have an obligation to maintain
the confidentiality of the information under a signed confidentiality agreement
or employment agreement or who have a fiduciary responsibility to the receiving
party and who have a bona-fide need to know.

         9.2      Exceptions. Confidential Information shall not include any
information that the receiving party can document:

                  (a)      was in its possession or known by it prior to receipt
from the disclosing party;

                  (b)      is or (through no fault of the receiving party)
becomes generally available to the public;

                  (c)      is rightfully disclosed to the receiving party by a
Third Party having no obligations of confidentiality to the disclosing party)
provided the receiving party complies with any restrictions imposed by the Third
Party; or

                  (d)      was independently developed by employees or
consultants of the receiving party without access to any Confidential
Information of the disclosing party.

         9.3      AUTHORIZED DISCLOSURE. Notwithstanding any other provision of
this Agreement, each party may disclose Confidential Information if such
disclosure:

                  (a)      is required by law or regulation (including, without
limitation, in connection with filings with the United States Securities and
Exchange Commission), provided that the receiving party uses reasonable efforts
to restrict disclosure and, in the course of regulatory disclosures, to obtain
confidential treatment therefor in accordance with customary practices;

<PAGE>

                  (b)      is in response to a valid order of a court or other
governmental body of the United States or any country in the Territory or of any
political subdivision thereof; provided, however, that the receiving party shall
first have given notice to the disclosing party and shall have made a reasonable
effort to obtain a protective or other appropriate form of order requiring that
the Confidential Information so disclosed be used only for the purposes for
which the order was issued;

                  (c)      is otherwise required by Applicable Laws;

                  (d)      is otherwise necessary to file or prosecute patent
applications, prosecute or defend litigation or comply with Applicable Laws or
otherwise establish rights or enforce obligations under this Agreement, but only
to the extent that any such disclosure is necessary; or

                  (e)      is required by authorities, investigators or
Institutional Review Boards in conjunction with performing clinical development
programs, provided that the receiving party shall use reasonable efforts to
restrict disclosure and to cause such authorities, investigators or
Institutional Review Boards not to disclose the Confidential Information to any
Third Party.

         9.4      INJUNCTIVE RELIEF. Each party acknowledges and agrees that due
to the unique nature of the other's Confidential Information, there can be no
adequate remedy at law for any breach of its obligations under Article 9 of this
Agreement and, therefore, that upon any such breach or threat thereof, the other
party shall be entitled, notwithstanding anything to the contrary in Article 15,
to injunctive relief and other appropriate equitable relief in addition to
whatever remedies it may have at law from any court of competent jurisdiction in
any jurisdiction authorized to grant the relief necessary to prohibit the breach
or threatened breach.

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