Exhibit 10.16

 

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.

 

AEROGEN, INC.

 

WARRANT

 

Warrant No. 1

 

Date of Original Issuance: September 9, 2003

 

Aerogen, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for value received, SF Capital Partners, Ltd. or its registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of 1,357,143
shares of common stock (in accordance with the Warrant Shares Exercise Log
referenced in Section 5(a) below), par value $0.001 per share, (the “Common
Stock”) of the Company (each such share, a “Warrant Share” and all such shares,
the “Warrant Shares”) at an exercise price equal to $.35 per share (as adjusted
from time to time as provided in Section 9, the “Exercise Price”), at any time
and from time to time from and after the date hereof and through and including
September 9, 2007 (the “Expiration Date”), and subject to the following terms
and conditions:

 

1.                                      Definitions.  In addition to the terms
defined elsewhere in this Warrant, capitalized terms that are not otherwise
defined herein shall have the meanings given to such terms in the Loan and
Securities Purchase Agreement of even date herewith to which the Company and the
original Holder are parties (the “Purchase Agreement”).

 

2.                                      Registration of Warrant.  The Company
shall register this Warrant, upon records to be maintained by the Company for
that purpose (the “Warrant Register”), in the name of the record Holder hereof
from time to time.  The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.

 

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

 

3.                                      Registration of Transfers.  The Company
shall register the transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached
hereto duly completed and signed, to the Company at its address specified
herein.  Upon any such registration or transfer, a new Warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new Warrant, a
“New Warrant”), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations of
a holder of a Warrant.

 

4.                                      Exercise and Duration of Warrants.  This
Warrant shall be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration Date.  At
6:30 p.m., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value,
provided, that if the closing sales price of the Common Stock on the Expiration
Date is greater than 102% of the Exercise Price on the Expiration Date, then
this Warrant shall be deemed to have been exercised in full (to the extent not
previously exercised) on a “cashless exercise” basis at 6:30 P.M. New York City
time on the Expiration Date. The Company may not call or redeem all or any
portion of this Warrant without the prior written consent of the Holder.

 

5.                                      Delivery of Warrant Shares.

 

(a)                                  To effect conversions hereunder, the Holder
shall not be required to physically surrender this Warrant unless the aggregate
Warrant Shares represented by this Warrant is being exercised.  Upon delivery of
the Exercise Notice to the Company (with the attached Warrant Shares Exercise
Log) at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, the Company shall promptly (but in no event later than five
Trading Days after the Date of Exercise (as defined herein)) issue and deliver
to the Holder, a certificate for the Warrant Shares issuable upon such
exercise.  The Company shall, upon request of the Holder and subsequent to the
date on which a registration statement covering the resale of the Warrant Shares
has been declared effective by the Securities and Exchange Commission, use its
best efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions,  if available, provided, that, the Company may,
but will not be required to change its transfer agent if its current transfer
agent cannot deliver Warrant Shares electronically through the Depository Trust
Corporation.  A “Date of Exercise” means, subject to Section 11 hereof, the date
on which the Holder shall have delivered to Company: (i) the Exercise Notice
(with the Warrant Exercise Log attached to it), appropriately completed and duly
signed and (ii) if such Holder is not utilizing the cashless exercise provisions
set forth in this Warrant, payment of the Exercise Price for the number of
Warrant Shares so indicated by the Holder to be purchased.

 

2

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

 

(b)                                  If by the fifth Trading Day after a Date of
Exercise the Company fails to deliver the required number of Warrant Shares in
the manner required pursuant to Section 5(a), then the Holder will have the
right to rescind such exercise

 

(c)                                  If by the fifth Trading Day after a Date of
Exercise the Company fails to deliver the required number of Warrant Shares in
the manner required pursuant to Section 5(a), and if after such fifth Trading
Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall
(1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue by (B) the closing bid price of the
Common Stock at the time of the obligation giving rise to such purchase
obligation and (2) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder.  The Holder shall provide the Company written
notice in a form reasonably satisfactory to the Company indicating the amounts
payable to the Holder in respect of the Buy-In.

 

(d)                                  The Company’s obligations to issue and
deliver Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant 
as required pursuant to the terms hereof.

 

6.                                      Charges, Taxes and Expenses.  Issuance
and delivery of certificates for shares of Common Stock upon exercise of this
Warrant shall be made without charge to the Holder for any issue or transfer
tax, withholding tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder.  The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this Warrant
or receiving Warrant Shares upon exercise hereof.

 

3

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

 

7.                                      Replacement of Warrant.  If this Warrant
is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in lieu
of and substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity (which shall not include a
surety bond), if requested.  Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.  If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company’s obligation to issue the New Warrant.

 

8.                                      Reservation of Warrant Shares.  The
Company covenants that it will at all times reserve and keep available out of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant, free
from preemptive rights or any other contingent purchase rights of persons other
than the Holder (taking into account the adjustments and restrictions of
Section 9). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable.

 

9.                                      Certain Adjustments.  The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 9.

 

(a)                                  Stock Dividends and Splits.  If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an Exercise Price
is calculated hereunder, then the calculation of such Exercise Price shall be
adjusted appropriately to reflect such event.

 

(b)                                  Fundamental Transactions.  Subject to the
provisions of this paragraph, if, at any time while this Warrant is outstanding,
(1) the Company effects any merger or consolidation of the Company with or into
another Person, (2) the Company effects any sale of

 

4

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

 

all or substantially all of its assets in one or a series of related
transactions, (3) any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (4) the Company effects any reclassification of the Common Stock or
any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (in any such
case, a “Fundamental Transaction”), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately prior
to such Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the “Alternate Consideration”). 
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction.  The successor to the Company or surviving entity in such
Fundamental Transaction shall, either (1) issue to the Holder a new warrant
substantially in the form of this Warrant and consistent with the foregoing
provisions and evidencing the Holder’s right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof, or (2)
purchase the Warrant from the Holder for a purchase price, payable in cash
within five Trading Days after the consummation of the Fundamental Transaction),
equal to the Black Scholes value of the remaining unexercised portion of this
Warrant on the date of such request. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this
paragraph (c) and insuring that the Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.

 

(c)                                  Subsequent Equity Sales. 

 

(i)                                    While any portion of this Warrant is
outstanding, if the Company issues any shares of Common Stock or the Company or
any subsidiary thereof issues any rights, warrants, options or other securities
or debt that is convertible into, exchangeable for (any such securities, “Common
Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a
price per share less than the Exercise Price (if the holder of the Common Stock
or Common Stock Equivalent so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights issued in
connection with such issuance, be entitled to receive shares of Common Stock at
a price less than the Exercise Price, such issuance shall be deemed to have
occurred for less than the Exercise Price), then, at the option of the Holder
for such exercises as it shall indicate, the Exercise Price shall be adjusted to
equal the conversion, exchange or purchase price for such Common Stock or Common
Stock Equivalents (including

 

5

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

 

any reset provisions thereof) at issue and which adjusted Exercise Price shall
continue for as long as this Warrant remains outstanding.  Such adjustment shall
be made whenever such Common Stock or Common Stock Equivalents are issued.  The
Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalent subject to
this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms.

 

(ii)                                If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents at a
price per share that floats or resets or otherwise varies or is subject to
adjustment based on market prices of the Common Stock (a “Floating Price
Security”), then for purposes of applying the preceding paragraph in connection
with any subsequent exercise, the Exercise Price will be determined separately
on each Exercise Date and will be deemed to equal the lowest price per share at
which any holder of such Floating Price Security is entitled to acquire shares
of Common Stock on such Exercise Date (regardless of whether any such holder
actually acquires any shares on such date).

 

(iii)                            Notwithstanding the foregoing, no adjustment
will be made under this Section 9(d) as a result of: (i) the issuance of
securities upon the exercise or conversion of any Common Stock Equivalents
issued by the Company prior to the date of this Agreement (but will apply to any
amendments, modifications and reissuances thereof), (ii) the grant of options or
warrants, or the issuance of additional securities, under any duly authorized
company stock option, restricted stock plan or stock purchase plan including any
amendments or other modifications thereto, (iii) the issuance of Common Stock in
connection with a restructuring of the Company’s lease for its principal
business office in Mountain View, CA, (iv) the issuance of Common Stock
Equivalents pursuant to a Strategic Transaction, or (v) the issuance of Common
Stock or Common Stock Equivalents in the Additional Closing or any other such
issuance to Holder or Holder’s Affiliates.

 

(d)                                  Number of Warrant Shares.  Simultaneously
with any adjustment to the Exercise Price pursuant to paragraph (a) of this
Section, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

 

(e)                                  Calculations.  All calculations under this
Section 9 shall be made to the nearest cent or the nearest share, as
applicable.  The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.

 

(f)                                    Notice of Adjustments.  Upon the
occurrence of each adjustment pursuant to this Section 9, the Company at its
expense will promptly compute such adjustment in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant

 

6

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

 

Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.  Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

 

(g)                                 Notice of Corporate Events.  If the Company
(i) declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation any
granting of rights or warrants to subscribe for or purchase any capital stock of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days for transactions described in subsections
(i) and (iii), above and at least 10 calendar days for transactions described in
subsection (ii) above, prior to the applicable record or effective date on which
a Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction, and the Company will take all steps reasonably
necessary in order to insure that the Holder is given the practical opportunity
to exercise this Warrant prior to such time so as to participate in or vote with
respect to such transaction; provided, however, that the failure to deliver such
notice or any defect therein shall not affect the validity of the corporate
action required to be described in such notice.

 

10.                               Payment of Exercise Price. The Holder may pay
the Exercise Price in one of the following manners:

 

(a)                                  Cash Exercise.  The Holder may deliver
immediately available funds; or

 

(b)                                  Cashless Exercise.  The Holder may notify
the Company in an Exercise Notice of its election to utilize cashless exercise,
in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:

 

X = Y [(A-B)/A]

 

where:

 

X = the number of Warrant Shares to be issued to the Holder.

 

Y = the number of Warrant Shares with respect to which this Warrant is being
exercised.

 

A = the average of the closing prices for the five Trading Days immediately
prior to (but not including) the Exercise Date.

 

B = the Exercise Price.

 

7

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

 

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.

 

11.                               Limitations on Exercise. 

 

(a)                                  Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise).  For such
purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  This provision shall not restrict the number of shares of Common
Stock which a Holder may receive or beneficially own in order to determine the
amount of securities or other consideration that such Holder may receive in the
event of a merger or other business combination or reclassification involving
the Company as contemplated in Section 9 of this Warrant. By written notice to
the Company, the Holder may waive the provisions of this Section but any such
waiver will not be effective until the 61st day after such notice is delivered
to the Company.

 

(b)                                  Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise).  For such
purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  This provision shall not restrict the number of shares of Common
Stock which a Holder may receive or beneficially own in order to determine the
amount of securities or other consideration that such Holder may receive in the
event of a merger or other business combination or reclassification involving
the Company as contemplated in Section 9 of this Warrant.  This restriction may
not be waived.

 

12.                               No Fractional Shares.  No fractional shares of
Warrant Shares will be issued in connection with any exercise of this Warrant. 
All issued shares shall be rounded to the nearest whole share.

 

8

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

 

13.                               Notices.  Any and all notices or other
communications or deliveries hereunder (including, without limitation, any
Exercise Notice) shall be in writing and shall be deemed given and effective on
the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior
to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.  The addresses for such
communications shall be:  (i) if to the Company, to Aerogen, Inc., 2071 Stierlin
Court, Mountain View, CA 94043, Attn: Chief Financial Officer, Facsimile No.
(650) 864-7433, or (ii) if to the Holder, to the address or facsimile number
appearing on the Warrant Register or such other address or facsimile number as
the Holder may provide to the Company in accordance with this Section.

 

14.                               Warrant Agent.  The Company shall serve as
warrant agent under this Warrant.  Upon 30 days’ notice to the Holder, the
Company may appoint a new warrant agent.  Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act.  Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder’s last address as shown on the Warrant Register.

 

15.                               Miscellaneous.

 

(a)                                  This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding sentence, nothing in this Warrant shall be
construed to give to any Person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Warrant.  This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.

 

(b)                                  All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.  Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of this Warrant and the transactions herein contemplated
(“Proceedings”) (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”).  Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any

 

9

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

 

claim that it is not personally subject to the jurisdiction of any New York
Court, or that such Proceeding has been commenced in an improper or inconvenient
forum. Each party hereto hereby irrevocably waives personal service of process
and consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. 
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby.  If either party shall commence a Proceeding to enforce any provisions
of this Warrant, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

 

(c)                                  The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.

 

(d)                                  In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]

 

10

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

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.

 

 

Aerogen, Inc.

 

 

 

 

 

 

 

By:

 

/s/ Jane E. Shaw

 

 

Name:

Jane E. Shaw

 

 

Title:

Chief Executive Officer

 

 

11

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

 

EXERCISE NOTICE

 

To Aerogen, Inc.:

 

The undersigned hereby irrevocably elects to purchase
                            shares of common stock, par value $0.001 per share,
of Aerogen, Inc. (“Common Stock”), pursuant to Warrant No. 1, originally issued
September 9, 2003 (the “Warrant”), and, if such Holder is not utilizing the
cashless exercise provisions set forth in the Warrant, encloses herewith
$              in cash, certified or official bank check or checks or other
immediately available funds, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Exercise Notice relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.

 

By its delivery of this Exercise Notice, the undersigned represents and warrants
to the Company that in giving effect to the exercise evidenced hereby the Holder
will not beneficially own in excess of the number of shares of Common Stock
(determined in accordance with Section 13(d) of the Securities Exchange Act of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.

 

The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

 

 

PLEASE INSERT SOCIAL SECURITY OR

 

TAX IDENTIFICATION NUMBER

 

 

(Please print name and address)

 

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

 

Warrant Shares Exercise Log

 

 

Date

 

Number of Warrant
Shares Available to be
Exercised

 

Number of Warrant Shares
Exercised

 

Number of
Warrant Shares
Remaining to
be Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                                                 the right
represented by the within Warrant to purchase                             
shares of Common Stock of Aerogen, Inc. to which the within Warrant relates and
appoints                                attorney to transfer said right on the
books of the Company with full power of substitution in the premises.

 

Dated:                    ,          

 

 

 

 

 

 

(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)

 

 

 

 

 

 

 

Address of Transferee

 

 

 

 

 

 

 

 

 

 

 

In the presence of:

 

 

 

 

 

 

 

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