Document:

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                                                                    EXHIBIT 10.6

                                  AEROGEN, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

                ADOPTED BY BOARD OF DIRECTORS [AUGUST 24, 2000]
                  APPROVED BY STOCKHOLDERS [___________, 2000]
                     TERMINATION DATE: [___________, 2020]

1.       PURPOSE.

         (a)      The purpose of the Plan is to provide a means by which
Employees of the Company and certain designated Affiliates may be given an
opportunity to purchase Shares of the Company.

         (b)      The Company, by means of the Plan, seeks to retain the
services of such Employees, to secure and retain the services of new Employees
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.

         (c)      The Company intends that the Rights to purchase Shares granted
under the Plan be considered options issued under an "employee stock purchase
plan," as that term is defined in Section 423(b) of the Code.

2.       DEFINITIONS.

         (a)      "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

         (b)      "BOARD" means the Board of Directors of the Company.

         (c)      "CODE" means the United States Internal Revenue Code of 1986,
                  as amended.

         (d)      "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

         (e)      "COMMON STOCK" means the common stock of the Company.

         (f)      "COMPANY" means AeroGen, Inc., a Delaware corporation.

         (g)      "DIRECTOR" means a member of the Board.

         (h)      "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in the Offering for eligibility to participate in the
Offering.

                                      -1-
<PAGE>

         (i)      "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate of the Company. Neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
"employment" by the Company or the Affiliate.

         (j)      "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights
intended to be options issued under an "employee stock purchase plan," as that
term is defined in Section 423(b) of the Code.

         (k)      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (l)      "FAIR MARKET VALUE" means the value of a security, as
determined in good faith by the Board. If the security is listed on any
established stock exchange or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, then, except as otherwise provided in the Offering, the Fair
Market Value of the security shall be the closing sales price (rounded up where
necessary to the nearest whole cent) for such security (or the closing bid, if
no sales were reported) as quoted on such exchange or market (or the exchange or
market with the greatest volume of trading in the relevant security of the
Company) on the trading day prior to the relevant determination date, as
reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable.

         (m)      "OFFERING" means the grant of Rights to purchase Shares under
the Plan to Eligible Employees.

         (n)      "OFFERING DATE" means a date selected by the Board for an
Offering to commence.

         (o)      "PARTICIPANT" means an Eligible Employee who holds an
outstanding Right granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Right granted under the Plan.

         (p)      "PLAN" means this AeroGen, Inc. 2000 Employee Stock Purchase
Plan.

         (q)      "PURCHASE DATE" means one or more dates established by the
Board during an Offering on which Rights granted under the Plan shall be
exercised and purchases of Shares carried out in accordance with such Offering.

         (r)      "RIGHT" means an option to purchase Shares granted pursuant to
the Plan.

         (s)      "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect with respect to the Company at the time
discretion is being exercised regarding the Plan.

         (t)      "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (u)      "SHARE" means a share of the Common Stock of the Company.

                                      -2-
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3.       ADMINISTRATION.

         (a)      The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c). Whether
or not the Board has delegated administration, the Board shall have the final
power to determine all questions of policy and expediency that may arise in the
administration of the Plan.

         (b)      The Board (or the Committee) shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:

                  (i)      To determine when and how Rights to purchase Shares
shall be granted and the provisions of each Offering of such Rights (which need
not be identical).

                  (ii)     To designate from time to time which Affiliates of
the Company shall be eligible to participate in the Plan.

                  (iii)    To construe and interpret the Plan and Rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

                  (iv)     To amend the Plan as provided in Section 14.

                  (v)      Generally, to exercise such powers and to perform
such acts as it deems necessary or expedient to promote the best interests of
the Company and its Affiliates and to carry out the intent that the Plan be
treated as an Employee Stock Purchase Plan.

                  (vi)     All determinations, interpretations and constructions
made by the Board in good faith shall not be subject to review by any person and
shall be final, binding and conclusive on all persons.

         (c)      The Board may delegate administration of the Plan to a
Committee of the Board composed of two (2) or more Directors.

4.       SHARES SUBJECT TO THE PLAN.

         (a)      Subject to the provisions of Section 13 relating to
adjustments upon changes in securities, the Shares that may be sold pursuant
to Rights granted under the Plan shall not exceed in the aggregate seven
hundred fifty thousand (750,000) Shares. If any Right granted under the Plan
shall for any reason terminate without having been exercised, the Shares not
purchased under such Right shall again become available for the Plan.

         (b)      The aggregate number of Shares that may be sold pursuant to
Rights granted under the Plan as specified in Section 4(a) hereof automatically
shall be increased as follows:

                  (i)      Subject to the provisions of Section 13 relating to
adjustments upon changes in securities, on the day of each annual meeting of
stockholders of the Company (the

                                      -3-
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"Calculation Date") for a period of twenty (20) years, commencing with the
annual meeting of stockholders in 2001, the aggregate number of shares of
Common Stock that is available for issuance under the Plan shall
automatically be increased by that number of shares equal to the least of (1)
one percent (1%) of the Diluted Shares Outstanding; (2) two hundred fifty
thousand (250,000) number of shares of Common Stock; or (3) such lesser
number of shares as determined by the Board.

                  (ii)     "Diluted Shares Outstanding" shall mean, as of any
date, (1) the number of outstanding shares of Common Stock of the Company on
such Calculation Date, plus (2) the number of shares of Common Stock issuable
upon such Calculation Date assuming the conversion of all outstanding Preferred
Stock and convertible notes, plus (3) the additional number of dilutive Common
Stock equivalent shares outstanding as the result of any options or warrants
outstanding during the fiscal year, calculated using the treasury stock method.

         (c)      The Shares subject to the Plan may be unissued Shares or
Shares that have been bought on the open market at prevailing market prices or
otherwise.

5.       GRANT OF RIGHTS; OFFERING.

         (a)      The Board may from time to time grant or provide for the grant
of Rights to purchase Shares of the Company under the Plan to Eligible Employees
in an Offering on an Offering Date or Dates selected by the Board. Each Offering
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all Employees granted Rights to purchase Shares under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in Sections 6 through 9, inclusive.

         (b)      If a Participant has more than one Right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (i) each agreement or notice delivered by that Participant will be
deemed to apply to all of his or her Rights under the Plan, and (ii) an
earlier-granted Right (or a Right with a lower exercise price, if two Rights
have identical grant dates) will be exercised to the fullest possible extent
before a later-granted Right (or a Right with a higher exercise price if two
Rights have identical grant dates) will be exercised.

6.       ELIGIBILITY.

         (a)      Rights may be granted only to Employees of the Company or, as
the Board may designated as provided in subsection 3(b), to Employees of an
Affiliate. Except as provided in subsection 6(b), an Employee shall not be
eligible to be granted Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Affiliate, as the

                                      -4-
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case may be, for such continuous period preceding such grant as the Board may
require, but in no event shall the required period of continuous employment be
equal to or greater than two (2) years.

         (b)      The Board may provide that each person who, during the course
of an Offering, first becomes an Eligible Employee will, on a date or dates
specified in the Offering which coincides with the day on which such person
becomes an Eligible Employee or which occurs thereafter, receive a Right under
that Offering, which Right shall thereafter be deemed to be a part of that
Offering. Such Right shall have the same characteristics as any Rights
originally granted under that Offering, as described herein, except that:

                  (i)      the date on which such Right is granted shall be the
"Offering Date" of such Right for all purposes, including determination of the
exercise price of such Right;

                  (ii)     the period of the Offering with respect to such Right
shall begin on its Offering Date and end coincident with the end of such
Offering; and

                  (iii)    the Board may provide that if such person first
becomes an Eligible Employee within a specified period of time before the end of
the Offering, he or she will not receive any Right under that Offering.

         (c)      No Employee shall be eligible for the grant of any Rights
under the Plan if, immediately after any such Rights are granted, such Employee
owns stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of any Affiliate. For
purposes of this subsection 6(c), the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of any Employee, and stock which such
Employee may purchase under all outstanding rights and options shall be treated
as stock owned by such Employee.

         (d)      An Eligible Employee may be granted Rights under the Plan only
if such Rights, together with any other Rights granted under all Employee Stock
Purchase Plans of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such Eligible Employee's rights to purchase
Shares of the Company or any Affiliate to accrue at a rate which exceeds twenty
five thousand dollars ($25,000) of the fair market value of such Shares
(determined at the time such Rights are granted) for each calendar year in which
such Rights are outstanding at any time.

         (e)      The Board may provide in an Offering that Employees who are
highly compensated Employees within the meaning of Section 423(b)(4)(D) of the
Code shall not be eligible to participate.

         (f)      The Board may provide in an Offering that Employees whose
customary employment is twenty (20) hours or less per week shall not be eligible
to participate.

                                      -5-
<PAGE>

         (g)      The Board may provide in an Offering that Employees whose
customary employment is for not more than five (5) months in any calendar year
shall not be eligible to participate.

7.       RIGHTS; PURCHASE PRICE.

         (a)      On each Offering Date, each Eligible Employee, pursuant to an
Offering made under the Plan, shall be granted the Right to purchase up to the
number of Shares purchasable either:

                  (i)      with a percentage designated by the Board not
exceeding fifteen percent (15%) of such Employee's Earnings (as defined by the
Board in each Offering) during the period which begins on the Offering Date (or
such later date as the Board determines for a particular Offering) and ends on
the date stated in the Offering, which date shall be no later than the end of
the Offering; or

                  (ii)     with a maximum dollar amount designated by the Board
that, as the Board determines for a particular Offering, (1) shall be withheld,
in whole or in part, from such Employee's Earnings (as defined by the Board in
each Offering) during the period which begins on the Offering Date (or such
later date as the Board determines for a particular Offering) and ends on the
date stated in the Offering, which date shall be no later than the end of the
Offering and/or (2) shall be contributed, in whole or in part, by such Employee
during such period.

         (b)      The Board shall establish one or more Purchase Dates during an
Offering on which Rights granted under the Plan shall be exercised and purchases
of Shares carried out in accordance with such Offering.

         (c)      In connection with each Offering made under the Plan, the
Board may specify a maximum amount of Shares that may be purchased by any
Participant as well as a maximum aggregate amount of Shares that may be
purchased by all Participants pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board may specify a maximum aggregate amount of Shares which may be purchased by
all Participants on any given Purchase Date under the Offering. If the aggregate
purchase of Shares upon exercise of Rights granted under the Offering would
exceed any such maximum aggregate amount, the Board shall make a pro rata
allocation of the Shares available in as nearly a uniform manner as shall be
practicable and as it shall deem to be equitable.

         (d)      The purchase price of Shares acquired pursuant to Rights
granted under the Plan shall be not less than the lesser of:

                  (i)      an amount equal to eighty-five percent (85%) of the
fair market value of the Shares on the Offering Date; or

                  (ii)     an amount equal to eighty-five percent (85%) of the
fair market value of the Shares on the Purchase Date.

                                      -6-
<PAGE>

8.       PARTICIPATION; WITHDRAWAL; TERMINATION.

         (a)      An Eligible Employee may become a Participant in the Plan
pursuant to an Offering by delivering a participation agreement to the Company
within the time specified in the Offering, in such form as the Company provides.
Each such agreement shall authorize payroll deductions of up to the maximum
percentage specified by the Board of such Employee's Earnings during the
Offering (as defined in each Offering). The payroll deductions made for each
Participant shall be credited to a bookkeeping account for such Participant
under the Plan and deposited with the general funds of the Company. To the
extent provided in the Offering, a Participant may reduce (including to zero) or
increase such payroll deductions. To the extent provided in the Offering, a
Participant may begin such payroll deductions after the beginning of the
Offering. A Participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the Participant
has not already had the maximum permitted amount withheld during the Offering.

         (b)      At any time during an Offering, a Participant may terminate
his or her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board in the Offering. Upon such withdrawal
from the Offering by a Participant, the Company shall distribute to such
Participant all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire Shares for the
Participant) under the Offering, without interest unless otherwise specified in
the Offering, and such Participant's interest in that Offering shall be
automatically terminated. A Participant's withdrawal from an Offering will have
no effect upon such Participant's eligibility to participate in any other
Offerings under the Plan but such Participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under
the Plan.

         (c)      Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating Employee's employment
with the Company or a designated Affiliate for any reason (subject to any
post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of his
or her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire Shares for the terminated Employee) under
the Offering, without interest unless otherwise specified in the Offering. The
distribution shall be made from the general funds of the Company, without
interest.

         (d)      Rights granted under the Plan shall not be transferable by a
Participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in Section 15 and, otherwise during his
or her lifetime, shall be exercisable only by the person to whom such Rights are
granted.

9.       EXERCISE.

         (a)      On each Purchase Date specified therefor in the relevant
Offering, each Participant's accumulated payroll deductions and other additional
payments specifically

                                      -7-
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provided for in the Offering (without any increase for interest) will be applied
to the purchase of Shares up to the maximum amount of Shares permitted pursuant
to the terms of the Plan and the applicable Offering, at the purchase price
specified in the Offering. No fractional Shares shall be issued upon the
exercise of Rights granted under the Plan unless specifically provided for in
the Offering.

         (b)      Unless otherwise specifically provided in the Offering, the
amount, if any, of accumulated payroll deductions remaining in any Participant's
account after the purchase of Shares that is equal to the amount required to
purchase one or more whole Shares on the final Purchase Date of the Offering
shall be distributed in full to the Participant at the end of the Offering,
without interest. The distribution shall be made from the general funds of the
Company, without interest.

         (c)      No Rights granted under the Plan may be exercised to any
extent unless the Shares to be issued upon such exercise under the Plan
(including Rights granted thereunder) are covered by an effective registration
statement pursuant to the Securities Act and the Plan is in material compliance
with all applicable state, foreign and other securities and other laws
applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan
is not so registered or in such compliance, no Rights granted under the Plan or
any Offering shall be exercised on such Purchase Date, and the Purchase Date
shall be delayed until the Plan is subject to such an effective registration
statement and such compliance, except that the Purchase Date shall not be
delayed more than twelve (12) months and the Purchase Date shall in no event be
more than twenty-seven (27) months from the Offering Date. If, on the Purchase
Date of any Offering hereunder, as delayed to the maximum extent permissible,
the Plan is not registered and in such compliance, no Rights granted under the
Plan or any Offering shall be exercised and all payroll deductions accumulated
during the Offering (reduced to the extent, if any, such deductions have been
used to acquire Shares) shall be distributed to the Participants, without
interest unless otherwise specified in the Offering. The distribution shall be
made from the general funds of the Company, without interest.

10.      COVENANTS OF THE COMPANY.

         (a)      During the terms of the Rights granted under the Plan, the
Company shall ensure that the amount of Shares required to satisfy such Rights
are available.

         (b)      The Company shall seek to obtain from each federal, state,
foreign or other regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to issue and sell Shares upon exercise of
the Rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Shares under the Plan, the Company shall be relieved from any liability for
failure to issue and sell Shares upon exercise of such Rights unless and until
such authority is obtained.

                                      -8-
<PAGE>

11.      USE OF PROCEEDS FROM SHARES.

         Proceeds from the sale of Shares pursuant to Rights granted under the
Plan shall constitute general funds of the Company.

12.      RIGHTS AS A STOCKHOLDER.

         A Participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, Shares subject to Rights granted
under the Plan unless and until the Participant's Shares acquired upon exercise
of Rights under the Plan are recorded in the books of the Company.

13.      ADJUSTMENTS UPON CHANGES IN SECURITIES.

         (a)      If any change is made in the Shares subject to the Plan, or
subject to any Right, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
nature, class(es) and maximum number of Shares subject to the Plan pursuant to
Section 4, and the outstanding Rights will be appropriately adjusted in the
nature, class(es), number of Shares and purchase limits of such outstanding
Rights. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a transaction that does not involve the
receipt of consideration by the Company.)

         (b)      In the event of: (i) a dissolution, liquidation, or sale,
lease or other disposition of all or substantially all of the assets of the
Company; (ii) a merger or consolidation in which the Company is not the
surviving corporation; or (iii) a reverse merger in which the Company is the
surviving corporation but the Shares outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, then: (1) any surviving or acquiring
corporation shall assume or continue Rights outstanding under the Plan or shall
substitute similar rights (including a right to acquire the same consideration
paid to stockholders in the transaction described in this subsection 13(b)) for
those outstanding under the Plan, or (2) in the event any surviving or acquiring
corporation refuses to assume or continue such Rights or to substitute similar
rights for those outstanding under the Plan, then, as determined by the Board in
its sole discretion such Rights may continue in full force and effect or the
Participants' accumulated payroll deductions (exclusive of any accumulated
interest which cannot be applied toward the purchase of Shares under the terms
of the Offering) may be used to purchase Shares immediately prior to the
transaction described in clause (i)-(iii) above under the ongoing Offering and
the Participants' Rights under the ongoing Offering thereafter shall be
terminated.

                                      -9-
<PAGE>

14.      AMENDMENT OF THE PLAN.

         (a)      The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 13 relating to adjustments upon
changes in securities and except as to minor amendments to benefit the
administration of the Plan, to take account of a change in legislation or to
obtain or maintain favorable tax, exchange control or regulatory treatment for
Participants or the Company or any Affiliate, no amendment shall be effective
unless approved by the stockholders of the Company to the extent stockholder
approval is necessary for the Plan to satisfy the requirements of Section 423 of
the Code, Rule 16b-3 under the Exchange Act and any Nasdaq or other securities
exchange listing requirements. Currently under the Code, stockholder approval
within twelve (12) months before or after the adoption of the amendment is
required where the amendment will:

                  (i)      Increase the amount of Shares reserved for Rights
under the Plan;

                  (ii)     Modify the provisions as to eligibility for
participation in the Plan to the extent such modification requires stockholder
approval in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of Rule 16b-3;
or

                  (iii)    Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.

         (b)      It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide Employees with
the maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Employee Stock Purchase
Plans and/or to bring the Plan and/or Rights granted under it into compliance
therewith.

         (c)      Rights and obligations under any Rights granted before
amendment of the Plan shall not be impaired by any amendment of the Plan, except
with the consent of the person to whom such Rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or Rights granted under the Plan comply
with the requirements of Section 423 of the Code.

15.      DESIGNATION OF BENEFICIARY.

         (a)      A Participant may file a written designation of a beneficiary
who is to receive any Shares and/or cash, if any, from the Participant's account
under the Plan in the event of such Participant's death subsequent to the end of
an Offering but prior to delivery to the Participant of such Shares and cash. In
addition, a Participant may file a written designation of a beneficiary who is
to receive any cash from the Participant's account under the Plan in the event
of such Participant's death during an Offering.

                                      -10-
<PAGE>

         (b)      The Participant may change such designation of beneficiary at
any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant's death, the Company shall deliver such Shares
and/or cash to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such Shares
and/or cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

16.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a)      The Board in its discretion may suspend or terminate the Plan
at any time. Unless sooner terminated, the Plan shall terminate on the twentieth
anniversary of the effective date or at the time that all of the Shares subject
to the Plan's reserve, as increased and/or adjusted from time to time, have been
issued under the terms of the Plan whichever is earlier. No Rights may be
granted under the Plan while the Plan is suspended or after it is terminated.

         (b)      Rights and obligations under any Rights granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except as expressly provided in the Plan or with the consent of the person to
whom such Rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
Rights granted under the Plan comply with the requirements of Section 423 of the
Code.

17.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective upon the effective date of the initial
public offering the Company's Common Stock, but no Rights granted under the Plan
shall be exercised unless and until the Plan has been approved by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted by the Board, which date may be prior to the effective date
set by the Board.

                                      -11-
<PAGE>

                                  AEROGEN, INC.

                      EMPLOYEE STOCK PURCHASE PLAN ("ESPP")
                             ENROLLMENT/CHANGE FORM

<TABLE>
<CAPTION>

                       Action                                        Complete Sections:
                       ------                                        ------------------
<S>                    <C>                                           <C>
-------------------
SECTION 1:             / / New Enrollment                            2, 3, 6, 7
-------------------
                       / / Payroll Deduction Change                  2, 4, 7

ACTIONS                / / Withdrawal                                2, 5, 7

                       / / Beneficiary Designation                   2, 6, 7

================================================================================================================================
-------------------
SECTION 2:
-------------------
                         Name ________________________________________________________________________________________
                                  Last                          First                                MI
EMPLOYEE                 Home Address ________________________________________________________________________________
DATA                                                         Street
                         _____________________________________________________________________________________________
                                  City                       State                     Zip Code
                         Social Security #: / / / / / /- / / / / -/ / / /
================================================================================================================================
-------------------
SECTION 3:
-------------------
                       Effective:                           Payroll Deduction Amount:  _____% of Earnings (whole percentage,
NEW                    / / _______________, 200__            maximum 15%)
ENROLLMENT
                       / / Initial Offering
================================================================================================================================
-------------------
SECTION 4:
-------------------
                       Effective  _____________________,  200__,  I  authorize  the  following  new  level  of  payroll
                       deduction:   (circle one)

PAYROLL                           0%     1%      2%     3%      4%      5%        6%        7%        8%     9%      10%
DEDUCTION
CHANGE                           11%     12%     13%    14%     15%.
</TABLE>

                       I understand that I may increase or reduce my payroll
                       deductions only as of the start of the next Purchase
                       Period, PROVIDED, HOWEVER, that I may reduce my payroll
                       deduction level ONCE, AND ONLY ONCE, during a six month
                       Purchase Period, effective as soon as administratively
                       practicable (except during the ten (10)-day period
                       immediately preceding a Purchase Date). I further
                       understand that, notwithstanding the foregoing, I may
                       reduce my participation level to zero at any time during
                       the six month period ending on a Purchase Date (except
                       during the ten (10)-day period immediately preceding a
                       Purchase Date).

                       NOTE:    If you reduce your payroll deductions to zero,
                                you are still considered a participant in the
                                ESPP and your previously-collected payroll
                                deductions will be applied toward the purchase
                                of shares on the next Purchase Date. To stop
                                your payroll deductions during an Offering and
                                receive a refund of your payroll deductions,
                                complete Section 5.

================================================================================
-------------------
SECTION 5:
-------------------
                       Effective with the pay period beginning
                       _____________________, I withdraw from the ESPP. I
                       understand that my withdrawal will be effective during
                       the specified pay period if
WITHDRAWAL             administratively practicable, and may actually occur in
                       the following pay period. I also understand that I may
                       not withdraw during the ten (10)-day period immediately
                       preceding a Purchase Date.

                       Your election to withdraw from the Offering cannot be
                       changed, and you may not resume participation in the ESPP
                       prior to the commencement of the next Offering. In
                       connection with your withdrawal, your payroll deductions
                       will be refunded to you as soon as practicable, without
                       interest.

                       NOTE: If your employment terminates for any reason you
                       will immediately cease to participate in the ESPP, and
                       any payroll deductions collected and not previously used
                       to purchase stock will automatically be refunded to you
                       as soon as practicable, without interest.

================================================================================

<PAGE>

-------------------
SECTION 6:             Beneficiary            Relationship of Beneficiary
-------------------    -----------            ---------------------------

BENEFICIARY
DESIGNATION            _____________________  __________________________________

================================================================================
-------------------
SECTION 7:
-------------------

AUTHORIZATION

I hereby authorize AeroGen, Inc. to enroll me in the ESPP, to make regular
deductions in the amount indicated above, and to purchase shares for me. If I
have elected to withdraw from the ESPP, I authorize AeroGen, Inc. to distribute
my accumulated deductions to me. Any authorization for payroll deductions will
continue until canceled or changed by me in accordance with the terms of the
ESPP. Deductions will cease upon the termination of my status as an eligible
employee or termination of the ESPP or if I have elected to withdraw from the
ESPP. I agree to be bound by the terms and provisions of the ESPP, as described
in the official text of the ESPP, and any applicable offering document.

Date:_________________     Signature: __________________________________________

                                       2<PAGE>

                                                                   EXHIBIT 10.7

                                    SUBLEASE

1.       PARTIES. This Sublease ("Sublease") is entered into as of the 3rd
day of April 1997, by and between Aerogen, Inc., ("Sublessee"), and Microbar,
Inc., ("Sublessor"), as a Sublease under the Lease dated December 17, 1996,
("Master Lease") entered into by The Realty Associates Fund III, L.P., as
Lessor ("Master Lessor"). A copy of the Master Lease is attached hereto,
marked Exhibit "A," and incorporated herein by reference. Pursuant to the
Master Lease, Sublessor leases from Master Lessor approximately 75,000 of
space (the "Original Premises") located in those certain buildings
("Buildings") at 1310 Orleans Drive and 1252 Orleans Drive, Sunnyvale,
California. Except as otherwise expressly provided herein, any capitalized
terms used herein and not defined, shall have the same meaning as they have
in the Master Lease.

2.       PROVISIONS CONSTITUTING SUBLEASE.

         A.  This Sublease is and at all time shall be subject and
subordinate to the Master Lease. Sublessee shall take no action which would
cause Sublessor to be in default of its obligations under the Master Lease,
and Sublessee shall assume and perform all of its obligations under this
Sublease, (including those obligations of Sublessor under Master Lease that
are incorporated herein and are the obligation of Sublessee) and Sublessee
shall indemnify and hold Sublessor harmless from and against all liability,
costs, damages, claims, demands and expenses, including reasonable attorneys'
fees and costs, arising out of Sublessee's failure to do so. Sublessor shall
fully perform all of its obligations under the Master Lease (except to the
extent any of the same are the obligation of Sublessee hereunder) and shall
indemnify and hold Sublessee harmless from and against all liability, costs,
damages, claims, demands and expenses, including reasonable attorneys' fees
and costs, arising out of Sublessor's failure to do so. Each party's
obligations under this Paragraph 2.A shall survive the expiration or earlier
termination of this Sublease. Upon any termination of the Master Lease, this
Sublease shall terminate concurrently therewith except as otherwise provided
in the Consent of Landlord to Sublease and without any liability of Sublessor
to Sublessee; provided, however, that a lease termination due to Sublessor's
default of its obligations under the Master Lease or this Sublease, shall be
subject to the indemnification set forth above. Sublessor shall not enter
into any amendment or modification of the Master Lease materially adversely
affecting Sublessee's use of or right to possession of the Premises (as
defined below) without the prior written consent of Sublessee which will not
be unreasonably withheld (and except as may be specifically permitted by this
Sublease). Notwithstanding the foregoing, Sublessor shall have the right, at
its sole election, to exercise any discretionary right to terminate the
Master Lease granted Sublessor in the Master Lease as of the date hereof.

         B.  All of the terms and conditions contained in the Master Lease
which are not in conflict with the provisions of this Sublease are
incorporated herein with respect to

                                      1 of 7
<PAGE>

the Premises, except for Article 1 paragraphs 5, 6, 7, 8, 9, 10, 11, 12, 15
and 18, Article III (but excepting Section 3.7 from this exclusion), Section
4.6, Section 12.1, Article XX, Section 21.1, Exhibits A and D, and paragraphs
1 through 5.7 through 10, 11(a), 11(g) and 11 (h) of the Addendum to Lease,
as terms and conditions of this Sublease (with each reference therein to
Lessor and Lessee to be deemed to refer to Sublessor and Sublessee and each
reference therein to Commencement Date shall mean the Commencement Date as
used in this Sublease), and along with all of the following paragraphs set up
in this Sublease shall be the complete terms and conditions of this Sublease.
With respect to obligations or services to be performed or provided by Master
Lessor under the Master Lease including without limitation those set forth in
Articles IX, X, XII and XIII, Sublessee agrees Sublessor's sole obligation
shall be to exercise reasonable efforts to require Master Lessor to comply
with such obligations as provided in Section 18 hereof.

3.       PREMISES. Sublessor leases to Sublessee, and Sublessee hires from said
Sublessor, subject to the terms and conditions contained herein, approximately
25,000 square foot of space, located at 1310 Orleans Drive, Sunnyvale, County of
Santa Clara, California, (the "Premises"), as more particularly shown on Exhibit
B attached hereto.

4.       TERM.

    4.1  TERM.  The term of this Sublease shall be for a period commencing on
that date which is forty-five (45) days after the full execution of this
Sublease, and the consent thereto of Master Lessor (the "Commencement Date"),
and ending on that date which is one day prior to the third anniversary of the
Commencement Date, provided that if such date does not fall on the last day of a
calendar month the term shall be extended to the last day of such month, or such
earlier date as the Master Lease may be terminated pursuant to the terms
thereof. The parties agree to execute a writing memorializing the Commencement
Date once it has been established. Sublessee shall be obligated to accept
possession of the Premises on the Commencement Date whether or not the Tenant
Improvements (as defined herein) have been substantially completed.

    4.2  DELAY IN COMMENCEMENT.  Notwithstanding said Commencement Date, if
for any reason Sublessor cannot delivery possession of the Premises to Sublessee
on such date, Sublessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Sublease or the obligations of
Sublessee hereunder or extend the term hereof, but in such case Sublessee shall
not be obligated to pay rent until possession of the Premises is delivered to
Sublessee; provided, however, that if Sublessor shall not have delivered
possession of the Premises within thirty (30) days from such Commencement Date,
Sublessee may, at Sublessee's option, by notice in writing to Sublessor, cancel
this Sublease by providing written notice thereof to Sublessor within ten (10)
days after the expiration of the aforesaid thirty (30) day period. Effective
immediately, if this Sublease is canceled as herein provided, Sublessor shall
return any monies previously deposited by Sublessee and the parties shall be
discharged from all obligations hereunder.

    4.3  EARLY POSSESSION.  Upon full execution of this Sublease and delivery
of the Letter of Credit in accordance with Section 8 B., Sublessor shall permit
Sublessee to

                                      2 of 7
<PAGE>

occupy the Premises for the purpose of constructing the Tenant Improvements
prior to the Commencement Date subject to all of the provisions of this
Sublease except the obligation to pay rent. Such early possession shall not
advance the termination date of this Sublease.

5.       RIGHT OF FIRST REFUSAL TO EXTEND: Sublessee will have a one-time
right of first offer to extend the Sublease, if Sublessor determines that it
will not utilize the subject premises for any length of time after the
expiration date of the Sublease term. Sublessor will notify Sublessee that
the space is available, and on what terms Sublessor would be willing to
sublease the space not later than September 30, 1999. Except as modified by
any terms specifically addressed in Sublessor's Notice, the terms of the
Sublease will apply to the space. Sublessee will have 10 business days to
notify Sublessor of Sublessee's election to extend the Sublease. If Sublessee
exercises its right to sublease the space, Sublessor and Sublessee will amend
the Sublease, modify the rent and other Sublease terms affected by the
extension of the Sublease. If, however, Sublessee elects not to lease the
space or Sublessee fails to notify Sublessor of Sublessee's election to lease
the space within a 10 business-day period, Sublessor will have the right to
sublease the space to a third party without further notice to Sublessee.

6.       TENANT IMPROVEMENTS: Subject to Sublessee's satisfaction of the
condition set forth in Section 8 B. and this Section 6, Sublessor agrees to
fund $100,000 (the "Allowance") of the cost of the Tenant Improvements
described and referred to in Exhibit C attached hereto. Notwithstanding the
foregoing or anything contained herein to the contrary, Sublessor's
obligation to fund the Allowance or any portion thereof shall be subject to
the condition precedent that Sublessor receives the Allowance from Master
Lessor in accordance with the Master Lease. Provided Sublessor has received
such funds from Master Lessor, Sublessor agrees to reimburse Sublessee for
costs incurred by Sublessee to construct the Tenant Improvements described on
Exhibit C attached hereto (collectively, the "Tenant Improvements") in an
amount not to exceed $100,000, provided further that (a) prior to commencing
construction of the Tenant Improvements, Sublessee has obtained Sublessor's
and Master Lessor's approval of the Tenant Improvements and the plans and
specifications therefor in writing; (b) if requested by Master Lessor,
Sublessee has furnished Master Lessor with a lien and completion bond in form
and amount reasonably satisfactory to Sublessor and Master Lessor (provided
Sublessor may not withhold its approval if Master Lessor approves); (c)
Sublessee has entered into a contract with McClarney Construction as general
contractor for the construction of the Tenant Improvements; (d) Sublessee's
architect shall have delivered a written certificate to Sublessor that the
Tenant Improvements identified in the Request for Payment have been
substantially completed in accordance with the approved plans and
specifications; (e) Sublessor has received fully executed unconditional lien
waivers as to work which was subject of prior Request for Payments and
conditional lien waivers as to current work in the form prescribed by law
from Sublessee's contractor, all subcontractors and suppliers furnishing
labor or materials with respect to the Tenant Improvements; (f) Sublessee has
constructed the Tenant Improvements in accordance with the requirements of
the Master Lease and this Sublease, and with all applicable laws, codes,
permits, and the Americans with Disabilities Act; (g) Sublessee has furnished
its Request for Payment no later than July 3, 1997; and (h) Sublessee has
complied with the

                                      3 of 7

<PAGE>

terms of the Master Lease respecting the Tenant Improvements. All work to be
performed by Sublessee pursuant hereto shall be performed in good and
workmanlike manner using new materials. Sublessee agrees to use reasonable
efforts to complete the Tenant Improvements prior to the Commencement Date or
within a reasonable time period following the Commencement Date.

7.       RENT. Rent shall commence on the Commencement Date (as defined
herein). The monthly rent shall be payable in advance on the first day of
each calendar month as follows:

         Base Rent:

         Months 01-12 $1.40 per square foot per month NNN ($35,000.00 per month)
         Months 13-24 $1.45 per square foot per month NNN ($36,250.00 per month)
         Months 25-36 $1.50 per square foot per month NNN ($37,500.00 per month)

         Sublessee shall pay Sublessor upon the execution hereof the sum of
Thirty-five Thousand Dollars ($35,000.00) as rent for the first month of the
Term. Rent for any period during the term hereof which is less than one month
shall be a pro-rata portion of the monthly installment. In addition to base
rent, Sublessee shall pay as additional rent ("Additional Rent") within three
(3) days after demand all other amounts payable by Sublessor under the Master
Lease (other than the Monthly Rent referred to in paragraph 1.9 of the Lease)
which are incurred at the request of Sublessee or which are applicable to the
Premises. It is the intent of the parties that Sublessee shall pay all costs
and expenses relating to the Premises which arise under the Master Lease,
whether or not such costs and expenses are specifically referred to herein.

         Rent shall be payable to Sublessor in lawful money of the United
States, without prior notice, demands, or offset.

         In the event of any casualty or condemnation affecting the Premises,
rent payable by Sublessee shall be abated hereunder, but only to the extent that
rent under the Master Lease is abated with respect to the Premises. Sublessee
waives any right to terminate the Sublease in connection with such casualty or
condemnation except that to the extent such right is granted Sublessor under the
Master Lease, Sublessee shall have the same right with respect to the
termination of this Sublease.

8.       SECURITY DEPOSIT PROVISIONS.

         A. Upon the execution of this Sublease, Sublessee shall deposit with
Sublessor a cash security deposit in the amount of thirty-seven thousand five
hundred dollars ($37,500.00) (the "Security Deposit"). Sublessor may apply all
or part of the Security deposit to any unpaid rent or other charges due from
Sublessee or to cure any other defaults of Sublessee. If Sublessor uses any part
of the Security Deposit, Sublessee shall restore the Security Deposit to its
full amount within thirty (30) days after Sublessor's written request. No
interest shall be paid on the Security Deposit. Sublessor shall not be required
to keep the Security Deposit separate from its other accounts and no trust
relationship is created with respect to the Security Deposit. Sublessor shall
refund

                                      4 of 7
<PAGE>

the unused portion of the Security Deposit to Sublessee within thirty (30)
days after the expiration or earlier termination of this Sublease.

         B. In addition to the Security Deposit, Sublessee shall deliver to
Sublessor, promptly after the date that Master Lessor consents to this Sublease,
an irrevocable unconditional standby letter of credit made payable to Sublessor
in the amount of ninety thousand dollars ($90,000) (the "Letter of Credit") as
additional security for the performance of Sublessee's obligations under this
Sublease. The Letter of Credit shall be issued by a bank selected by Sublessee,
and approved by Sublessor, and shall be in form acceptable to Sublessor, with an
expiration date no less than one (1) year after issuance, and shall permit
Sublessor to draw on the Letter of Credit by presentation of a sight draft in an
amount equal to the extent of costs to cure a breach or default of this Sublease
by Sublessee, provided Sublessor has given Sublessee any notice and grace period
required under this Sublease with respect thereto. The Letter of Credit also
shall provide that if it is not renewed or replaced with a substitute letter of
credit no later than twenty (20) business days before the expiration date of the
Letter of Credit, then Sublessor may draw down the Letter of Credit. Within
thirty (30) days after the expiration or earlier termination of this Sublease or
as soon thereafter as is practical, Sublessor shall return to Sublessee the
original or replacement Letter of Credit, or so much thereof as remains after
curing any defaults of Sublessee hereunder, including without limitation, any
failure to surrender the Premises in the condition required pursuant to Section
19 hereof.

         C. Sublessor's obligations under this paragraph 8 shall survive the
expiration or earlier termination of this Sublease.

9.       SIGNAGE: Sublessee has the right to monument signage in appropriate
locations (subject to city and Master Lessor approval).

10.      USE. The Premises shall be used and occupied only for research and
development purposes, sales of medical devices and other legal related uses.

11.      BROKERS. Sublessor and Sublessee each represent and warrant to the
other that it has dealt only with CPS as brokers ("Brokers") in connection
with this Sublease transaction. Each of the Sublessor and Sublessee shall
indemnify and hold harmless the other from and against any and all claims,
liabilities, losses, damages, costs and expenses (including, without
limitation, attorneys fees) arising out of or related to any breach of such
party's representation and warranty set forth in this Paragraph 11. The
commission due to Brokers pursuant to this lease transaction shall be paid
per separate agreement by Sublessor.

12.      CONDITION OF PREMISES. Sublessee hereby accepts the Premises in their
"as-is" condition existing as of the date hereof, subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations governing
and relating to the use of the Premises, and accepts this Sublease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto.

                                      5 of 7
<PAGE>

13.      PARKING. Sublessee shall be entitled to 25% of all on-site parking
spaces provided at the Project.

14.      REPRESENTATIONS AND WARRANTIES. Sublessor hereby represents and
warrants to Sublessee as follows: the copy of the Master Lease attached
hereto as Exhibit "A" is accurate and complete; the Master Lease constitutes
the entire agreement between Master Lessor and Sublessor with respect to the
Premises; there are no defaults under the Master Lease, and to the best of
Sublessor's knowledge, no event has occurred which, with the passage of time,
the giving of notice, or both, would constitute a default under the Master
Lease; and Sublessor has not assigned or sublet the Premises to any other
party, nor has Sublessor encumbered the Premises or its leasehold estate
pursuant to the Master Lease.

15.      COUNTERPARTS. This Sublease may be signed in multiple counterparts
which, when signed by all parties, shall constitute a binding agreement.

16.      ATTORNEYS' FEES. In any action between the parties arising out of
this Sublease, the prevailing party in the action shall be entitled, in
addition to damages, injunctive relief or other relief; to its reasonable
costs and expenses including, without limitation, costs and reasonable
attorneys' fees fixed by the court.

17.      OBTAINING MASTER LESSOR'S CONSENT. Sublessor shall use commercially
reasonable efforts to obtain Master Lessor's consent to this Sublease
pursuant to the Master Lease. If Sublessor fails to so obtain Master,
Lessor's consent substantially in the form of Exhibit F attached hereto on or
before May 9, 1997, then Sublessee, at its option, shall have the right to
terminate this Sublease by delivering to Sublessor at any time thereafter
written notice of Sublessee's election, In such event, Sublessor shall
immediately return to Sublessee all amounts previously paid by Sublessee to
Sublessor under this Sublease.

18.      SUBLESSOR'S OBLIGATIONS. To the extent that the provision of any
services or the performance of any maintenance or any other act (singly
and/or collectively, "Master Lessor Obligations") is the responsibility of
Master Lessor, Sublessor, upon Sublessee's request, shall make reasonable
efforts to cause Master Lessor to perform such Master Lessor Obligations;
provided, however, that in no event shall Sublessor be liable to Sublessee
for any liability, loss or damage whatsoever in the event that Master Lessor
shall fail to perform the same, nor shall Sublessee be entitled to withhold
rent or terminate this Sublease.

         Except as provided in this paragraph 18, Sublessee acknowledges that
Sublessor is not in a position to furnish the services set forth in the Master
Lease, obtain a nondisturbance agreement, or to perform certain other
obligations which are not within Sublessor's control, including without
limitation, maintenance, repairs and replacements, compliance with laws, and
restoration of the Premises or Buildings after casualty or condemnation.
Notwithstanding anything to the contrary contained therein, Sublessee agrees to
look solely to the Master Lessor to furnish and perform all services and
obligations of Master Lessor under the Master Lease.

                                      6 of 7
<PAGE>

19.      SURRENDER OF PREMISES. Notwithstanding anything in the Sublease or
Master Lease to the contrary, Sublessee agrees to surrender the Premises at
or upon the expiration or termination of this Sublease in shell condition
with all Tenant Improvements demolished and free of debris, as more
particularly described in Exhibit D attached hereto.

SUBLESSOR:  MICROBAR, INC.                       SUBLESSEE:  AEROGEN, INC.

By:  /S/ James D. Paradee                        By:  /S/ Andrew Heath
   ----------------------------                     ----------------------------
Title:  C.F.O                                    Title:  C.E.O
      -------------------------                        -------------------------
Date: 4/25/97                                    Date: 4/25/97
     --------------------------                       --------------------------

CONSENT BY MASTER LESSOR:  See attached Exhibit F.

Exhibit A -       Master Lease
Exhibit B -       Premises
Exhibit C -       Tenant Improvements
Exhibit D -       Sublessee's Surrender Obligations
Exhibit E -       Sublessee's Environmental Questionnaire
Exhibit F -       Consent of Master Lessor

                                     7 of 7
<PAGE>

                               AMENDMENT NO. 1 TO

                                    SUBLEASE

This Amendment No. 1 ("Amendment No. 1") dated for reference purposes only July
1, 1999 amends as set forth below that certain Sublease, dated as of April 3,
1997 (the "Sublease") by and between MICROBAR, INC. ("Sublessor") and AEROGEN,
INC. ("Sublessee"). Capitalized terms not defined herein shall have the same
meaning as defined in the Sublease unless the context requires otherwise.

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, Sublessor and Sublessee covenant and agree as follows:

                                    AGREEMENT

1)     Sublessor and Sublessee hereby agree to the following modifications to
       the Sublease.

       a)     SECTION 4.1. TERM is hereby amended so that the expiration date of
              the Sublease shall be December 31, 2001.

       b)     Section 5. Right Of First Offer To Extend is hereby amended to
              read as follows:

              "If Sublessor does not need of the Premises for its own business
              purposes, which need shall be determined in Sublessor's sole and
              absolute discretion (i.e. if the space becomes available to lease
              to any third party), then Sublessee will have a one-time right of
              first offer to extend the term of this Sublease for a period of
              one (1) year. If Sublessor will not need the Premises beyond the
              initial term hereof, Sublessor will notify Sublessee on or prior
              to May 30, 2001 that the space will become available, and on what
              terms Sublessor would be willing to sublease the space. Except as
              modified by any terms specifically addressed in Sublessor's
              Notice, the terms of the Sublease will apply to the space.
              Sublessee will have 30 business days to notify Sublessor of
              Sublessee's election to extend the Sublease. If Sublessee
              exercises its right to sublease the space, Sublessor and Sublessee
              will amend the Sublease, modify the rent and other Sublease terms
              affected by the extension of the Sublease. If, however, Sublessee
              elects not to lease the space or Sublessee fails to notify
              Sublessor of Sublessee's election to lease the space within a 30
              business-day period, Sublessor will have the right to sublease the
              space to a third party without further notice to Sublessee. In the
              event that Sublessor does not notify Sublessee on or prior to May
              30, 2001 that the space will become available, then Sublessee
              shall have no further rights hereunder."

       c)     SECTION 7. RENT is hereby amended to read as follows:

                                       1
<PAGE>

<TABLE>
<CAPTION>
<S>                                        <C>
             Months 01-12                  $1.40 per square foot per month NNN ($35,000.00 per month)
             Months 13-24                  $1.45 per square foot per month NNN ($36,250.00 per month)
             Months 25-36                  $1.50 per square foot per month NNN ($37,500.00 per month)
             Months 37-48                  $1.55 per square foot per month NNN ($38,750.00 per month)
             Months 49- expiration         $1.60 per square foot per month NNN ($40,000.00 per month)
</TABLE>

       d)     Section 8.B. is hereby amended to that if there has been no
              default under this Sublease, then upon the natural expiration of
              the Letter of Credit in effect at the time of this Amendment, the
              amount required for a replacement Letter of Credit shall be
              seventy thousand dollars ($70,000.00).

       e)     SECTION 19. SURRENDER OF PREMISES is hereby amended to read as
              follows:

              "Notwithstanding anything in the Sublease or Master Lease to the
              contrary, at or upon the expiration or earlier termination of this
              Sublease, Sublessee agrees to surrender (i) the lab/manufacturing
              area of the Premises (as shown in Exhibit A) in shell condition
              with all Tenant Improvements demolished and free of debris, if so
              requested by Sublessor and otherwise in its as-improved condition,
              less lab cabinets (ii) the office portion of the Premises in its
              as-improved condition."

       f)     SECTION 20. CROSS DEFAULT. is hereby added and shall read as
              follows:

              "Any default hereunder shall also be deemed to be a default under
              that certain sublease by and between Sublessor and Sublessee for
              those certain premises located at 1306 Orleans Drive, dated as of
              July 1, 1999."

2)     Except as set forth in this Amendment No. 1, the Sublease continues in
       full force and effect according to its terms.

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the
date set forth above.

SUBLESSOR:  MICROBAR, INC.                       SUBLESSEE:  AEROGEN, INC.

By:  /S/ Bruce M. Juhdlo                         By:  /S/ Jane E. Shaw
   ----------------------------                     ----------------------------
            (signature)                                       (signature)

By:  BRUCE M. JUHDLO                             By:  JANE E. SHAW
   ----------------------------                     ----------------------------
          (printed name)                                    (printed name)

Its:  C.E.O                                      Its:  C.E.O.
   ----------------------------                     ----------------------------

                                       2
<PAGE>

                            CONSENT OF MASTER LESSOR

THE REALTY ASSOCIATES FUND III, L.P., the Master Lessor under the Sublease
hereby consents to the foregoing Amendment No. 1 to the Sublease.

Master Lessor:

THE REALTY ASSOCIATES FUND III, L.P.

By:
   ------------------------------------------
                  (signature)

Name:
     ----------------------------------------
Title:
      ---------------------------------------
Date:
     ----------------------------------------

                                       3
<PAGE>

                         EXHIBIT A - AMENDMENT TO LEASE

                               1310 ORLEANS DRIVE

                                   [GRAPHIC]

                                        4

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