Exhibit
10.14


 


REGISTRATION RIGHTS AGREEMENT


 


This Registration Rights Agreement (this “Agreement”)
is made and entered into as of September 9, 2003, between Aerogen, Inc., a
Delaware corporation (the “Borrower”), and the lender identified on
the signature page hereto (the “Lender”).


 


This Agreement is made pursuant to the Loan and
Securities Purchase Agreement, dated as of the date hereof among the Borrower
and the Lender (the “Loan Agreement”).


 


The Borrower and the Lender hereby agree as follows:


 


1.                   Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Loan Agreement shall have the meanings
given such terms in the Loan Agreement. 
As used in this Agreement, the following terms shall have the respective
meanings set forth in this Section 1:


 


“Additional Closing”
shall have the meaning set forth in the Loan Agreement.


 


“Additional Closing
Date” shall have the meaning set forth in the Loan Agreement.


 


“Additional
Registrable Securities” means the Underlying Shares issuable upon
conversion or exercise (as applicable) of the Securities issued on the
Additional Closing Date, together with any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event, or any conversion price or exercise price adjustment with respect
thereto.


 


“Effectiveness Date”
means: (a) with respect to the initial Registration Statement required to be
filed to cover the resale by the Holders of the Initial Registrable Securities
(and if the Additional Closing Date occurs prior to the 40th day following the
Closing Date, the Additional Registrable Securities), the earlier of: (i) the
120th day following the Closing Date and (ii) the fifth Trading Day following
the date on which the Borrower is notified by the Commission that the initial
Registration Statement will not be reviewed or is no longer subject to further
review and comments, and (b) unless previously filed pursuant to the
immediately preceding subsection, with respect to a Registration Statement
required to be filed to cover the resale by the Holders of the Additional
Registrable Securities, the earlier of: (i) the 120th day following the
Additional Closing Date, (ii) the fifth Trading Day following the date on which
the Borrower is notified by the Commission that such Registration Statement
will not be reviewed or is no longer subject to further review and comments and
(c) with respect to any additional Registration Statements that may be required
pursuant to Section 2(c) hereof, the earlier of: (i) the 120th day following
the date on which the Borrower first knows, or reasonably should have known,
that such additional Registration Statement is required under such Section and
(ii) the fifth Trading Day following the date on which the Borrower is notified
by the Commission that 


 

















 


such additional Registration Statement will not be reviewed or is no
longer subject to further review and comments.


 


“Effectiveness Period”
shall have the meaning set forth in Section 2(a).


 


“Filing Date”
means: (a) with respect to the initial Registration Statement required to be
filed to cover the resale by the Holders of the Initial Registrable Securities
(and if the Additional Closing Date occurs prior to the 40th day following the
Closing Date, the Additional Registrable Securities), the 45th day following
the Closing Date, (b) unless previously filed pursuant to the immediately
preceding subsection, with respect to a Registration Statement required to be
filed to cover the resale by the Holders of the Additional Registrable
Securities, the 45th day following the Additional Closing Date, and (c) with
respect to any additional Registration Statements that may be required pursuant
to Section 2(c) hereof, the 45th day following the date on which the Borrower
first knows, or reasonably should have known, that such additional Registration
Statement is required under such Section.


 


“Holder” or “Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.


 


“Indemnified Party”
shall have the meaning set forth in Section 5(c).


 


“Indemnifying Party”
shall have the meaning set forth in Section 5(c).


 


“Initial Registrable
Securities” means the Underlying Shares issuable upon conversion or
exercise (as applicable) of the Securities issued on the Closing Date, together
with any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event, or any conversion price or
exercise price adjustment with respect thereto.


 


“Losses” shall have
the meaning set forth in Section 5(a).


 


“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.


 


“Prospectus” means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.


 


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“Registrable
Securities” means, collectively, the Initial Registrable Securities and the
Additional Registrable Securities.


 


“Registration
Statement” means each of the following: 
(i) an initial registration statement which is required to register the
resale of the Initial Registrable Securities, (ii) if an Additional Closing
shall have occurred, an initial registration statement, which is required to
register the resale of the Additional Registrable Securities, (iii) each
additional registration statement, if any, contemplated by Section 2(c), and
(iv) including, in each case, the Prospectus, amendments and supplements to
each such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.


 


“Rule 144” means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


“Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


“Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


“Securities” shall
have the meaning set forth in the Loan Agreement.


 


“Special Counsel”
means Bryan Cave LLP.


 


“Underlying Shares”
shall have the meaning set forth in the Loan Agreement.


 


2.                   Registration.


 


(a)                       On or prior
to each Filing Date, the Borrower shall prepare and file with the Commission a
Registration Statement covering the resale of all Registrable Securities
required to be included in such Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415. 
Each Registration Statement shall be on Form S-3 (except if the Borrower
is not then eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another appropriate form in
accordance herewith) and shall contain (except if otherwise required by the
Commission or directed by the Holders of at least a majority of the Registrable
Securities) the “Plan of Distribution” attached hereto as Annex A.  The Borrower shall use its best efforts to
cause each Registration Statement to be declared effective under the Securities
Act as promptly as possible, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until the date which
is two years after


 


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the date that such Registration Statement is declared effective by the
Commission or such earlier date when all Registrable Securities covered by a
Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the
Borrower pursuant to a written opinion letter to such effect, addressed and
acceptable to the Borrower’s transfer agent and the affected Holders (the “Effectiveness
Period”).  Notwithstanding anything
herein to the contrary, if the Additional Closing Date shall occur on or prior
to the 45th day following the Closing Date, then the Borrower shall
include all of the Registrable Securities on the initial Registration
Statement.


 


(b)                      If: (a) a
Registration Statement is not filed on or prior to its Filing Date (if the
Borrower files a Registration Statement without affording the Holder the
opportunity to review and comment on the same as required by Section 3(a), the
Borrower shall not be deemed to have satisfied clause (a)), or (b)
notwithstanding anything herein to the contrary, after a Registration Statement
is first declared effective by the Commission, it ceases for any reason to
remain continuously effective as to all Registrable Securities for which it is
required to be effective, or the Holders are not permitted to utilize the
Prospectus therein to resell such Registrable Securities, for in any such cases
an aggregate of twenty Trading Days (which need not be consecutive Trading
Days) (any such failure or breach being referred to as an “Event,” and
for purposes of clause (a) the day after the Filing Date, or for purposes of
clause (b) the date on which such twenty Trading Day period is exceeded being
referred to as “Event Date”), then, in addition to any other rights the
Holders may have hereunder or applicable law: (x) the Borrower shall pay to
each Holder an amount in cash, as liquidated damages and not as a penalty,
equal to 1% of the aggregate purchase price paid by such Holder pursuant to the
Loan Agreement for the first 30 day period beginning on the Event Date during
which the applicable Event is not cured (or a pro rata portion of any such
partial period); and (y) if the applicable Event shall not have been cured by
the last day of such 30 day period, until the applicable Event is cured, the
Borrower shall pay to each Holder an amount in cash, as liquidated damages and
not as a penalty, equal to 2% of the aggregate purchase price paid by such
Holder pursuant to the Loan Agreement for each month anniversary thereafter (or
a pro rata portion of any such partial month). 
The period of time in which the Borrower is required to file the
Registration Statement hereunder shall be tolled to the extent of any delays
caused solely by any Holder.


 


(c)                       File one or
more additional Registration Statements if the number of Registrable Securities
issuable upon conversion or exercise (as applicable) of the Securities relating
to such Registration Statement would require the issuance of in excess of 85%
of the number of shares of Common Stock then registered in such Registration
Statement.  Such additional Registration
Statement shall cover the resale by the Holders of not less than 110% of the
number of shares required in order that all Registrable Securities issuable
upon conversion or exercise (as applicable) of the Securities relating to such
Registration Statement would then be registered.


 


3.                   Registration
Procedures


 


In connection with the Borrower’s registration
obligations hereunder:


 


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(a)                       Not less
than two Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Borrower shall
furnish to the Holders and the Special Counsel copies of all such documents
proposed to be filed which documents will be subject to the review of such
Holders and the Special Counsel. The Borrower shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities or the Special
Counsel shall reasonably object in good faith.


 


(b)                      The Borrower
shall (i)  prepare and file with the
Commission such amendments, including post-effective amendments, to each
Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously effective as to
the applicable Registrable Securities for its Effectiveness Period and prepare
and file with the Commission such additional Registration Statements in order
to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
to any comments received from the Commission with respect to each Registration
Statement or any amendment thereto and, as promptly as reasonably possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to such Registration Statement that would not result in
the disclosure to the Holders of material and non-public information concerning
the Borrower; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the Registration Statements
and the disposition of all Registrable Securities covered by each Registration
Statement.


 


(c)                       The
Borrower shall notify the Holders and the Special Counsel as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than three Trading
Days prior to such filing) and (if requested by any such Person) confirm such
notice no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the
Borrower whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement (the
Borrower shall provide true and complete copies thereof and all written
responses thereto to each of the Holders and the Special Counsel that pertain
to the Holders as a Selling Stockholder or to the Plan of Distribution, but not
information which the Borrower believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Borrower of any notification with respect
to the suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such


 


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purpose; and (v) of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.


 


(d)                      The Borrower
shall use its best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.


 


(e)                       The
Borrower shall furnish to each Holder, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.


 


(f)                         The
Borrower shall promptly deliver to each Holder, without charge, as many copies
of each Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request.  The Borrower hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.


 


(g)                      Prior to any
public offering of Registrable Securities, the Borrower shall use its best
efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of all jurisdictions within the
United States, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided, that the Borrower shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or subject the Borrower to any material tax in any such jurisdiction where it
is not then so subject.


 


(h)                      The Borrower
shall cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to the Registration Statements, which certificates shall
be free, to the extent permitted by the Loan Agreement, of all restrictive
legends, and to enable such Registrable


 


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Securities to be in such denominations and registered in such names as
any such Holders may request.


 


(i)                          Upon the
occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, the Borrower shall prepare a supplement or amendment,
including a post-effective amendment, to the affected Registration Statements
or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, no Registration Statement nor any
Prospectus will contain 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, in light of the circumstances under which they were made,
not misleading.


 


(j)                          The
Borrower may require each selling Holder to furnish to the Borrower a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if requested by the Commission, the controlling person thereof.


 


(k)                       The
Borrower has read and understands the conversion and exercise limitations
contained in the Debentures and Warrants and will not take a position in any
Registration Statement or other filing with the Commission that a Holder is the
beneficial owner of more than the percentage of Common Stock permitted to be
beneficially owned by such Holder absent an affirmative written statement by
such Holder to such effect.


 


(l)                          At any
time, upon written notice to the participating Holders and for a period not to
exceed twenty (20) Trading Days
thereafter (the “Suspension Period”), the Borrower may suspend the use
or effectiveness of any Registration Statement (and the Holders hereby agree
not to offer or sell any Registrable Securities pursuant to such Registration
Statement during the Suspension Period) if the Borrower reasonably believes
that the Borrower may, in the absence of such delay or suspension hereunder, be
required under state or federal securities laws to disclose any corporate
development the disclosure of which could reasonably be expected to have a
material adverse effect upon the Borrower, its stockholders, a potentially
significant transaction or event involving the Borrower, or any negotiations,
discussions, or proposals directly relating thereto.  In the event that the Borrower shall exercise its right to  suspend the effectiveness of a registration
hereunder, the applicable time period during which the Registration Statement
is to remain effective shall be extended by a period of time equal to the
duration of the Suspension Period.  The
Borrower may extend the Suspension Period for an additional twenty (20) Trading Days in accordance
with the provisions of this Section 3(l) with the consent of the Holders of a
majority of the Registrable Securities registered under the applicable
Registration Statement. If so directed by the Borrower, all Holders registering
shares under such Registration Statement shall use their commercially
reasonable efforts to deliver to the Borrower (at the Borrower’s expense) all
copies, other than permanent file copies then in such Holders’ possession, of
the Prospectus relating to such Registrable Securities current at the time of
receipt of such notice.


 


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4.                   Registration
Expenses.  All fees and expenses
incident to the performance of or compliance with this Agreement by the
Borrower shall be borne by the Borrower whether or not any Registrable
Securities are sold pursuant to a Registration Statement.  The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with any Trading Market on which the Common
Stock is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested
by the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Borrower and up to $5,000 of the fees
and disbursements of Special Counsel for each Registration Statement, (v)
Securities Act liability insurance, if the Borrower so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Borrower in
connection with the consummation of the transactions contemplated by this
Agreement.  In addition, the Borrower
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder.


 


5.                   Indemnification.


 


(a)                       Indemnification
by the Borrower.  The Borrower
shall, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, investment advisors and
employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Borrower by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto (it being understood that the Holder has approved Annex A
hereto for this purpose) or (2) in the case of an occurrence of an event of the
type specified in


 


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Section 3(c)(ii)-(v), the use by such Holder of an outdated or
defective Prospectus after the Borrower has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of an Advice or an amended or supplemented Prospectus, but only if and
to the extent that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected.  The Borrower
shall notify the Holders promptly of the institution, threat or assertion of
any Proceeding of which the Borrower is aware in connection with the
transactions contemplated by this Agreement.


 


(b)                      Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and
hold harmless the Borrower, its directors, officers, agents and employees, each
Person who controls the Borrower (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
arising solely out of or based solely upon: (x) such Holder’s failure to comply
with the prospectus delivery requirements of the Securities Act or (y) any
untrue statement of a material fact contained in any Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent that, (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Borrower by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (2) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Borrower has notified such
Holder in writing that the Prospectus is outdated or  defective and prior to the receipt by such Holder of an Advice or
an amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been
corrected.  In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.


 


(c)                       Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only)


 


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to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.


 


An Indemnified Party shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: 
(1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.


 


All fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).


 


(d)                      Contribution.  If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge,


 


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access to information and opportunity to correct or prevent such
action, statement or omission.  The
amount paid or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.


 


The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the
provisions of this Section 5(d), no Holder shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable Securities
subject to the Proceeding exceeds the amount of any damages that such Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.


 


The indemnity and contribution agreements contained in
this Section are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.


 


6.                   Miscellaneous


 


(a)                       Remedies.  In the event of a breach by the Borrower or
by a Holder, of any of their obligations under this Agreement, each Holder or
the Borrower, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement.  The Borrower and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.


 


(b)                      No
Piggyback on Registrations.  Other
than (i) securities to be issued to the Borrower’s landlord in connection the
restructuring of its lease, and (ii) pursuant to the exercise of existing
registration rights by certain stockholders of the Borrower as specified in Schedule
3.1(g) of the Loan Agreement, neither the Borrower nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Borrower in a Registration Statement other than the
Registrable Securities, and the Borrower shall not after the date hereof enter
into any agreement providing any such right to any of its security
holders.  Except as and to the extent
specified in Schedule 3.1(g) of the Loan Agreement, the Borrower has not
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person which have not been fully
satisfied.


 


11

















 


(c)                       Compliance.  Each Holder covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.


 


(d)                      Discontinued
Disposition.  Each Holder agrees by
its acquisition of such Registrable Securities that, upon receipt of a notice
from the Borrower of the occurrence of any event of the kind described in
Section 3(c), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder’s
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement or until it is advised in writing (the “Advice”)
by the Borrower that the use of the applicable Prospectus may be resumed, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. 
The Borrower may provide appropriate stop orders to enforce the
provisions of this paragraph.


 


(e)                       Piggy-Back
Registrations.  If at any time
during the Effectiveness Period  there
is not an effective Registration Statement covering all of the Registrable
Securities and the Borrower shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Borrower shall send to each Holder written notice of
such determination and, if within fifteen days after receipt of such notice,
any such Holder shall so request in writing, the Borrower shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.


 


(f)                         Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Borrower and the Holders of all of
the then outstanding Registrable Securities. 
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates, provided,
that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.


 


(g)                      Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder 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 telephone number specified in this Section prior to 6:30


 


12

















 


p.m. (New York
City time) on a Trading Day, (ii) the Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 6:30 p.m.
(New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (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 address for such notices and communications
shall be as follows:


 


If to the Borrower:                                              Aerogen,
Inc.

2071 Stierlin Court

Mountain View, CA 94043

Facsimile No.: (650) 864-7433

Attn: Chief Financial Officer


 


With a copy to:                                                            Cooley
Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 94306 

Attn: Robert J. Brigham, Esq.

Facsimile No.:  (650) 849-7400


 


If to the Lender:                                                          To
the address set forth under the Lender’s name on the signature pages hereto.


 


If to Special Counsel:                              Bryan Cave LLP

1290 Avenue of the Americas

New York, NY 10101

Attn.: Eric L. Cohen, Esq.

Fax No.: (212) 541-1432


 


If to any other Person who is then the registered
Holder:


 


To the address of such
Holder as it appears in the stock transfer books of the Borrower


 


or such other address as may be designated in writing
hereafter, in the same manner, by such Person.


 


(h)                      Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties and shall inure to the benefit of each
Holder.  The Borrower may not assign its
rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Loan Agreement.


 


13

















 


(i)                          Execution
and Counterparts.  This Agreement
may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken together shall
constitute one and the same Agreement. 
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature were the original thereof.


 


(j)                          Governing
Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement 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
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (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 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 Agreement 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 Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.  If
either party shall commence a Proceeding to enforce any provisions of this
Agreement, 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.


 


(k)                       Cumulative
Remedies.  The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.


 


(l)                          Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction.  It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.


 


14

















 


(m)                    Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]


 


15

















 


IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.


 


	
   

  	
  AEROGEN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jane E. Shaw

  	
   

  
	
   

  	
  Name: Jane E. Shaw

  
	
   

  	
  Title: Chief Executive Officer

  



 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE OF LENDER TO FOLLOW]


 


16

















 


IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.


 


 


	
   

  	
  SF CAPITAL PARTNERS, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian H. Davidson

  
	
   

  	
   

  	
  Name:

  	
  Brian H. Davidson

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
  c/o Staro Asset
  Management, LLC

  
	
   

  	
  3600 South Lake Drive

  
	
   

  	
  St. Francis, Wisconsin
  53235

  
	
   

  	
  Facsimile No.:  (414) 294-7700

  
	
   

  	
  Attn.:  Brian H. Davidson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
  Bryan Cave LLP

  
	
   

  	
  1290 Avenue of the
  Americas

  
	
   

  	
  New York, NY  10104

  
	
   

  	
  Facsimile No.: (212)
  541-4630 and (212) 541-1432

  
	
   

  	
  Attn:  Eric L. Cohen, Esq.

  



 


17

















 


Annex A


 


Plan of Distribution


 


The Selling Stockholders and any of their pledgees,
donees, assignees and successors-in-interest may, from time to time, sell any
or all of their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions.  These sales may be at fixed or negotiated
prices.  The Selling Stockholders will
act independently of us in making decisions regarding the timing, manner and
size of each sale. The Selling Stockholders may use any one or more of the
following methods when selling shares:


 


•                  ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;


 


•                  block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;


 


•                  purchases by a broker-dealer as
principal and resale by the broker-dealer for its account;


 


•                  an exchange distribution in
accordance with the rules of the applicable exchange;


 


•                  privately negotiated transactions;


 


•                  short sales;


 


•                  broker-dealers may agree with the
Selling Stockholders to sell a specified number of such shares at a stipulated
price per share;


 


•                  a combination of any such methods of
sale; and


 


•                  any other method permitted pursuant
to applicable law.


 


The Selling Stockholders may also sell shares under
Rule 144 under the Securities Act, if available, rather than under this
prospectus.


 


Broker-dealers engaged by the Selling Stockholders may
arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated.  The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.


 


The Selling Stockholders may from time to time pledge
or grant a security interest in some or all of the Shares or Warrant Shares
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell shares of
Common Stock from time to time under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933


 


18

















 


amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.


 


Upon the Borrower being notified in writing by a
Selling Stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of Common Stock through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, a supplement to this prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of
each such Selling Stockholder and of the participating broker-dealer(s), (ii)
the number of shares involved, (iii) the price at which such the shares of
Common Stock were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information
set out or incorporated by reference in this prospectus, and (vi) other facts
material to the transaction.  In
addition, upon the Borrower being notified in writing by a Selling Stockholder
that a donee or pledge intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.


 


The Selling Stockholders also may transfer the shares
of common stock in other circumstances, in which case the transferees, pledgees
or other successors in interest will be the selling beneficial owners for
purposes of this prospectus.


 


The Selling Stockholders and any broker-dealers or
agents that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such
sales.  In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.  Because the
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, the Selling Stockholders will be subject to the prospectus
delivery requirements of the Securities Act. Each Selling Stockholders has
represented and warranted to the Borrower that it does not have any agreement
or understanding, directly or indirectly, with any person to distribute the
Common Stock.


 


The Borrower is required to pay all fees and expenses
incident to the registration of the shares. 
The Borrower has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the Securities Act.


 


19