Document:

Exhibit 10.26

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE
FOREGOING LAWS.

 

SUBJECT TO THE PROVISIONS OF SECTION 10
HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON
MARCH 22, 2009 (THE “EXPIRATION DATE”).

 

No.      

 

AEROGEN, INC

 

WARRANT
TO PURCHASE [insert number]
SHARES OF

COMMON STOCK, PAR VALUE $0.001 PER SHARE

 

FOR VALUE RECEIVED, [insert holder’s
name] (“Warrantholder”),
is entitled to purchase, subject to the provisions of this Warrant, from
AEROGEN, INC. a Delaware corporation (“Corporation”),
at any time not later than 5:00 P.M., Eastern time, on the Expiration Date (as
defined above), at an exercise price per share equal to $3.25 (the exercise
price in effect being herein called the “Warrant
Price”), [insert number]
shares (“Warrant Shares”)
of the Corporation’s Common Stock, par value $0.001  per share (“Common Stock”).  The number of Warrant Shares purchasable
upon exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time as described herein.  This Warrant has been issued pursuant to a certain Purchase
Agreement, dated as of March 11, 2004, by and among the Corporation, Xmark
Fund, L.P., Xmark Fund, Ltd., and the other Investors signatory thereto (the “Purchase Agreement”).  All capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

Section 1.                                            Registration.  The Corporation shall maintain books for the
transfer and registration of the Warrant. 
Upon the initial issuance of this Warrant, the Corporation shall issue
and register the Warrant in the name of the Warrantholder.

 

Section 2.                                            Transfers.  As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the
Securities Act of 1933, as amended (“Securities
Act”), or an exemption from such registration.  Subject to such restrictions, the
Corporation shall transfer this Warrant from time to time upon the books to be
maintained by the Corporation for that purpose, upon surrender thereof for
transfer properly endorsed or  accompanied
by appropriate instructions for transfer and such other documents as may be
reasonably required by the Corporation, including, if required by the
Corporation, an opinion of its counsel to the effect that such transfer is
exempt from the registration requirements of the Securities Act, to establish
that such transfer is being made in accordance with the terms hereof,

 

 

and a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be canceled by the Corporation.

 

Section 3.                                            Exercise
of Warrant.

 

(a)                                  Subject
to the provisions hereof, the Warrantholder may exercise this Warrant in whole
or in part at any time prior to its expiration upon surrender of the Warrant,
together with delivery of the duly executed Warrant exercise form attached
hereto as Appendix A (the “Exercise
Agreement”) and payment by cash, certified check or wire
transfer of funds for the aggregate Warrant Price for that number of Warrant
Shares then being purchased, to the Corporation during normal business hours on
any business day at the Corporation’s principal executive offices (or such
other office or agency of the Corporation as it may designate by notice to the
holder hereof).  The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder’s
designee, as the record owner of such shares, as of the close of business on
the date on which this Warrant shall have been surrendered (or evidence of
loss, theft or destruction thereof and security or indemnity satisfactory to
the Corporation), the Warrant Price shall have been paid and the completed
Exercise Agreement shall have been delivered. 
Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be delivered
to the holder hereof within a reasonable time, not exceeding three (3) business
days, after this Warrant shall have been so exercised.  The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder.  If this Warrant shall
have been exercised only in part, then, unless this Warrant has expired, the
Corporation shall, at its expense, at the time of delivery of such
certificates, deliver to the holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been
exercised.  As used in this Agreement,
“business day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

(b)                                 Notwithstanding
anything herein to the contrary, in no event shall the Warrantholder be
entitled to exercise any portion of this Warrant in excess of that portion of
this Warrant upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Warrantholder and its Affiliates (other
than shares of Common Stock which may be deemed beneficially owned through the
ownership of the unexercised portion of the Warrant or the unexercised or
unconverted portion of any other security of the Warrantholder subject to a
limitation on conversion analogous to the limitations contained herein) and (2)
the number of shares of Common Stock issuable upon the exercise of the portion
of this Warrant with respect to which the determination of this proviso is
being made, would result in beneficial ownership by the Warrantholder and its
Affiliates of more than 4.99% of the then outstanding shares of Common Stock.
As used herein, the term “Affiliate”
means any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act.   For purposes of
the proviso to the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise

 

 

provided in clause (1) of such proviso.  The Warrantholder may waive the limitations
set forth herein by sixty-one (61) days written notice to the Corporation.

 

(c)                                  Subject
to Section 3(b), if after March 11, 2005, the Market Price of the
Common Stock for each day during any ninety (90) consecutive trading day period
shall equal or exceed $7.00 per share, then, within ten (10) Business Days
after receipt of written notice to the Warrantholder by the Corporation, which
notice shall be delivered to the Warrantholder within five (5) Business Days of
the end of the relevant ninety (90) consecutive trading day period, the
Warrantholder shall exercise this Warrant to the fullest extent then permitted
in accordance with the terms hereof (including in accordance with
Section 19 below); provided, however, the Warrantholder
shall not be obligated to exercise this Warrant pursuant to this
Section 3(c) unless the Registration Statement covering the Warrant Shares
has been effective during the entirety of such entire 90-day period and
thereafter remains effective until all of the Warrant Shares issuable under
this Warrant have been sold by the Warrantholder.  For purposes of clarification, the Company shall not be permitted
to exercise its rights under this Section 3(c), and the Warrantholder
shall not be obligated to exercise this Warrant pursuant to this
Section 3(c), to the extent that this Warrant is not then exercisable by
virtue of the provisions of Section 3(b).

 

Section 4.                                            Compliance
with the Securities Act of 1933. The Corporation may cause the legend set
forth on the first page of this Warrant to be set forth on each Warrant or
similar legend on any security issued or issuable upon exercise of this
Warrant, unless counsel for the Corporation is of the opinion as to any such
security that such legend is unnecessary.

 

Section 5.                                            Payment
of Taxes.  The Corporation will pay
any documentary stamp taxes attributable to the initial issuance of Warrant
Shares issuable upon the exercise of the Warrant; provided, however,
that the Corporation shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of the registered
holder of this Warrant in respect of which such shares are issued, and in such
case, the Corporation shall not be required to issue or deliver any certificate
for Warrant Shares or any Warrant until the person requesting the same has paid
to the Corporation the amount of such tax or has established to the
Corporation’s reasonable satisfaction that such tax has been paid.  The holder shall be responsible for income
taxes due under federal, state or other law, if any such tax is due.

 

Section 6.                                            Mutilated
or Missing Warrants.  In case this
Warrant shall be mutilated, lost, stolen, or destroyed, the Corporation shall
issue in exchange and substitution of and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and for the purchase of a like number of
Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
the Corporation of such loss, theft or destruction of the Warrant, and with
respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond
with respect thereto, if requested by the Corporation.

 

Section 7.                                            Reservation
of Common Stock.  The Corporation
hereby represents and warrants that there have been reserved, and the Corporation
shall at all applicable times keep reserved until issued (if necessary) as
contemplated by this Section 7, out of the authorized and

 

 

unissued shares of Common Stock, sufficient
shares to provide for the exercise of the rights of purchase represented by
this Warrant.  The Corporation agrees
that all Warrant Shares issued upon due exercise of the Warrant shall be, at
the time of delivery of the certificates for such Warrant Shares, duly
authorized, validly issued, fully paid and non-assessable shares of Common
Stock of the Corporation.

 

Section 8.                                            Adjustments.  Subject and pursuant to the provisions of
this Section 8, the Warrant Price and number of Warrant Shares
subject to this Warrant shall be subject to adjustment from time to time as set
forth hereinafter.

 

(a)                                  If
the Corporation shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares of Common Stock into
a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Corporation so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been fully exercised immediately prior to such event upon
payment of a Warrant Price that has been adjusted to reflect a fair allocation
of the economics of such event to the Warrantholder.  Such adjustments shall be made successively whenever any event
listed above shall occur.

 

(b)                                 If
any capital reorganization, reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with another
corporation in which the Corporation is not the survivor, or sale, transfer or
other disposition of all or substantially all of the Corporation’s assets to
another corporation shall be effected, then, the Corporation shall use its best
efforts to ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without limitation,
provision for adjustment of the Warrant Price) shall thereafter be applicable,
as nearly equivalent as may be practicable in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise thereof.  The Corporation shall not effect any such
consolidation, merger, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor corporation (if
other than the Corporation) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such

 

 

assets or other appropriate corporation or
entity shall assume the obligation to deliver to the holder of the Warrant, at
the last address of such holder appearing on the books of the Corporation, such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase, and the other obligations
under this Warrant.  The provisions of
this Section 8(b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.

 

(c)                                  In
case the Corporation shall fix a payment date for the making of a distribution
to all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Corporation is the continuing
corporation) of evidences of indebtedness or assets (other than cash dividends
or cash distributions payable out of consolidated earnings or earned surplus or
dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior
to such payment date, less the fair market value (as determined by the Corporation’s
Board of Directors in good faith) of said assets or evidences of indebtedness
so distributed, or of such subscription rights or warrants, and the denominator
of which shall be the total number of shares of Common Stock outstanding
multiplied by such Market Price per share of Common Stock immediately prior to
such payment date.  “Market Price” as of a particular date
(the “Valuation Date”)
shall mean the following: (p) if the Common Stock is then listed on a national
stock exchange, the Market Price shall be the closing sale price of one share
of Common Stock on such exchange on the last trading day prior to the Valuation
Date, provided that if such stock has not traded in the prior ten (10) trading
sessions, the Market Price shall be the average closing price of one share of
Common Stock in the most recent ten (10) trading sessions during which the
Common Stock has traded; (q) if the Common Stock is then included in The Nasdaq
Stock Market, Inc. (“Nasdaq”), the Market Price shall be the closing
sale price of one share of Common Stock on Nasdaq on the last trading day prior
to the Valuation Date or, if no such closing sale price is available, the
average of the high bid and the low ask price quoted on Nasdaq as of the end of
the last trading day prior to the Valuation Date, provided that if such stock
has not traded in the prior ten (10) trading sessions, the Market Price shall
be the average closing price of one share of Common Stock in the most recent
ten (10) trading sessions during which the Common Stock has traded; (s) if the
Common Stock is then included in the Over-the-Counter Bulletin Board, the
Market Price shall be the closing sale price of one share of Common Stock on
the Over-the-Counter Bulletin Board on the last trading day prior to the Valuation
Date or, if no such closing sale price is available, the average of the high
bid and the low ask price quoted on the Over-the-Counter Bulletin Board as of
the end of the last trading day prior to the Valuation Date, provided that if
such stock has not traded in the prior ten (10) trading sessions, the Market
Price shall be the average closing price of one share of Common Stock in the
most recent ten (10) trading sessions during which the Common Stock has traded,
(t) if the Common Stock is then included in the “pink sheets,” the Market Price
shall be the closing sale price of one share of Common Stock on the “pink
sheets” on the last trading day prior to the Valuation Date or, if no such
closing sale price is available, the average of the high bid and the low ask
price quoted on the “pink sheets” as of the end of the last trading day prior
to the Valuation Date, provided that if such stock has not traded in the prior
ten (10) trading sessions, the Market Price shall be the average closing price
of one share of Common Stock in the most recent ten (10) trading sessions
during which the Common Stock has

 

 

traded. 
The Board of Directors of the Corporation shall respond promptly, in
writing, to an inquiry by the Warrantholder prior to the exercise hereunder as
to the Market Price of a share of Common Stock as determined by the Board of
Directors of the Corporation.

 

(d)                                 For
the term of this Warrant, in addition to the provisions contained above, the
Warrant Price shall be subject to adjustment as provided below. An adjustment
to the Warrant Price shall become effective immediately after the payment date
in the case of each dividend or distribution and immediately after the
effective date of each other event which requires an adjustment.

 

(e)                                  Except
as provided in Section 8(f) hereof, if and whenever the Corporation
shall issue or sell, or is, in accordance with any of Sections 8(e)(l)
through (e)(5) hereof, deemed to have issued or sold, any shares of Common
Stock for a consideration per share less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then and in each such case
(a “Trigger Issuance”),
effective as of the close of business on the effective date of the Trigger
Issuance the then-existing Warrant Price shall be reduced to the lowest price
per share at which any share of Common Stock was issued or sold or deemed to be
issued or sold in such Trigger Issuance.

 

For purposes of this
Section 8(e), “Additional Shares of Common Stock” shall mean all shares of
Common Stock issued by the Corporation or deemed to be issued pursuant to this Section 8(e),
other than those excluded issuances set forth in Section 8(f)
hereof.

 

For purposes of this Section 8(e),
the following subsections (e)(l) to (e)(5) shall also be applicable (subject,
in each such case, to the provisions of Section 8(f) hereof and to
each other subsection contained in this Section 8(e)):

 

(e)(1)  Issuance of Convertible Securities;
Issuance of Rights or Options.  In
case at any time after the date hereof the Corporation shall in any manner
grant, issue or sell any stock or security convertible into or exchangeable for
Common Stock (“Convertible Securities”)
or any warrants or other rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any Convertible Securities (such warrants,
rights or options being called “Options”),
whether or not the right to convert, exchange or exercise any such Convertible
Securities or such Options are immediately exercisable, and the price per share
for which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities or upon the exercise of such Options (determined by
dividing (i) the sum of (x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities or the granting of such Options, plus (y) the aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities or the exercise of
all such Options, plus (z), in the case of such Options to purchase Convertible
Securities, the aggregate amount of additional consideration, if any, payable
upon the conversion or exchange of such Convertible Securities, by (ii) the
maximum number of shares of Common

 

 

Stock issuable upon the
conversion or exchange of all such Convertible Securities, or upon the exercise
of such Options, or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Warrant Price in effect immediately prior to the time of the issue or sale of
such Convertible Securities or the granting of such Options, then the total
number of shares of Common Stock issuable upon the conversion or exchange of
such Convertible Securities, or the exercise of such Options, or upon the
conversion or exchange of the maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued
for such price per share as of the date of the issuance or sale of such
Convertible Securities or the granting of such Options (including Options to
purchase Convertible Securities) and thereafter shall be deemed to be
outstanding for purposes of adjusting the Warrant Price.  Except as otherwise provided in Section 8(e)(2),
no additional adjustment of the Warrant Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities or upon exercise of such Options.

 

(e)(2) Change
in Option Price or Conversion Rate. 
Upon the happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in Section 8(e)(l)
hereof, the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in Section 8(e)(l),
or the rate at which Convertible Securities referred to in Section 8(e)(l)
are convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Warrant Price in effect at the time
of such event shall forthwith be readjusted to the Warrant Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold, but only if as a result of such adjustment the Warrant
Price then in effect hereunder is thereby reduced.   On the termination of any Option for which an adjustment was
made pursuant to this Section 8(e) or any right to convert or
exchange Convertible Securities for which an adjustment was made pursuant to
this Section 8(e), the Warrant Price then in effect hereunder shall
forthwith be changed to the Warrant Price which would have been in effect at
the time of such termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such termination, never been issued.

 

(e)(3) Consideration
for Stock.  In case any shares of
Common Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the gross
amount received by the Corporation therefor, before deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith.  In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the

 

 

Corporation shall be deemed to
be the fair value of such consideration as determined in good faith by the
Board of Directors of the Corporation, before deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith.  In
case any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of the
Corporation.

 

(e)(4) Record
Date.  In case the Corporation shall
take a record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be. 
Notwithstanding the foregoing, no anti-dilution adjustment shall be
effected with respect to any transaction for which a record date is set by the
Corporation if the transaction is abandoned by the Corporation prior to the
time such transaction becomes effective.

 

(e)(5) Treasury
Shares.  The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation or any of its Subsidiaries (as
defined in the Purchase Agreement pursuant to which this Warrant was issued),
and the disposition of any such shares (other than the cancellation or
retirement thereof) shall be considered an issue or sale of Common Stock for
the purpose of this subsection (e).

 

(f)                                    Anything
herein to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment to the Warrant Price or the number of Warrant Shares
subject to this Warrant in the case of the following issuances of shares of
Common Stock from and after the date of this Warrant, for: (i) issuances upon
the exercise of any Options or Convertible Securities granted, issued and
outstanding on the date hereof; (ii) issuances upon the grant or exercise of
any stock or options which may hereafter be granted or exercised under any
employee benefit plan, stock option plan or restricted stock plan of the Corporation
in existence on the date hereof, so long as the issuance of such stock or
options is approved by a majority of the independent members of the Board or a
majority of the members of a committee of independent directors established for
such purpose; (iii) issuances of securities as consideration for a merger or
consolidation with, or purchase of assets from, a non-Affiliated third party or
in connection with any strategic partnership or joint venture with a
non-Affiliated third party with which the Corporation will enter into
technology agreements (the primary purpose of any such action is not to raise
equity capital); (iv) shares of Common Stock issuable upon conversion of Series
A-1 Preferred Stock or as payment-in-kind dividends on the Series A-1 Preferred
Stock in

 

 

accordance with the terms thereof; and (v)
shares of Common Stock issued or issuable as a result of any stock split,
combination, dividend, distribution, reclassification, exchange or substitution
for which an equitable adjustment is otherwise provided for in this Section 8.

 

(g)                                 In
the event that, as a result of an adjustment made pursuant to this Section 8,
the holder of this Warrant shall become entitled to receive any shares of
capital stock of the Corporation other than shares of Common Stock, the number
of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.

 

Section 9.                                            Fractional
Interest.  The Corporation shall not
be required to issue fractions of Warrant Shares upon the exercise of this
Warrant.  If any fractional share of
Common Stock would, except for the provisions of the first sentence of this Section 9,
be deliverable upon such exercise, the Corporation, in lieu of delivering such
fractional share, shall pay to the exercising holder of this Warrant an amount
in cash equal to the Market Price of such fractional share of Common Stock on
the date of exercise.

 

Section 10.                                      Extension
of Expiration Date.  If the
Corporation fails to cause any Registration Statement covering “Registrable
Securities” (as that term is defined in the Registration Rights Agreement) to
be declared effective prior to the applicable dates set forth therein, or if
any of the events specified in Section 2(c)(ii) of the Registration Rights
Agreement occurs, and the “Blackout Period” (as that term is defined in the
Registration Rights Agreement) (whether alone, or in combination with any other
Blackout Period) continues for more than 30 days in any 12 month period, or for
more than a total of 90 days, then the Expiration Date of this Warrant shall be
extended one day for each day beyond the 30-day or 90-day limits, as the case
may be, that the Blackout Period continues.

 

Section 11.                                      Benefits.  Nothing in this Warrant shall be construed
to give any person, firm or corporation (other than the Corporation and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the
Corporation and the Warrantholder.

 

Section 12.                                      Notices
to Warrantholder.  Upon the
happening of any event requiring an adjustment of the Warrant Price, the
Corporation shall promptly give written notice thereof to the Warrantholder at
the address appearing in the records of the Corporation, stating the adjusted
Warrant Price and the adjusted number of Warrant Shares resulting from such
event and setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. 
Failure to give such notice to the Warrantholder or any defect therein
shall not affect the legality or validity of the subject adjustment.

 

Section 13.                                      Identity
of Transfer Agent.  The Transfer
Agent for the Common Stock is Mellon Investor Services LLC.  Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Corporation’s
capital stock issuable upon the exercise of

 

 

the rights of purchase represented by the
Warrant, the Corporation will mail to the Warrantholder a statement setting
forth the name and address of such transfer agent.

 

Section 14.                                      Notices.  Unless otherwise provided, any notice
required or permitted under this Warrant shall be given in writing and shall be
deemed effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such delivery, (ii) if
given by telex or facsimile, then such notice shall be deemed given upon
receipt of confirmation of complete transmittal, (iii) if given by mail, then
such notice shall be deemed given upon the earlier of (A) receipt of such
notice by the recipient or (B) three days after such notice is deposited in
first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one
day after delivery to such carrier.  All
notices shall be addressed as follows: if to the Warrantholder, at its address
as set forth in the Corporation’s books and records and, if to the Corporation,
at the address as follows, or at such other address as the Warrantholder or the
Corporation may designate by ten days’ advance written notice to the other:

 

If to the Corporation:

 

Aerogen, Inc.

2071 Stierlin Court

Mountain View, CA 94043

Attention:  Jane Shaw, Chairman/CEO

Fax:  650-864-7435 and 650-864-7433

 

With a copy to:

 

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attn:  Robert J. Brigham, Esq.

Fax:  650-849-7400

 

Section 15.                                      Registration
Rights.  The initial holder of this
Warrant is entitled to the benefit of certain registration rights with respect
to the shares of Common Stock issuable upon the exercise of this Warrant as
provided in the Registration Rights Agreement, and any subsequent holder hereof
shall be entitled to such rights to the extent provided in the Registration
Rights Agreement.

 

Section 16.                                      Successors.  All the covenants and provisions hereof by
or for the benefit of the Warrantholder shall bind and inure to the benefit of
its respective successors and assigns hereunder.

 

 

Section 17.                                      Governing
Law.  This Warrant shall be governed
by, and construed in accordance with, the internal laws of the State of New
York, without reference to the choice of law provisions thereof.  The Corporation and, by accepting this
Warrant, the Warrantholder, each irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Warrant and the transactions contemplated hereby.  Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Warrant.  The Corporation and, by
accepting this Warrant, the Warrantholder, each irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court.  The
Corporation and, by accepting this Warrant, the Warrantholder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.  THE COMPANY
AND THE WARRANTHOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 18.                                      No
Rights as Shareholder.  Prior to the
exercise of this Warrant, the Warrantholder shall not have or exercise any
rights as a shareholder of the Corporation by virtue of its ownership of this
Warrant.

 

Section 19.                                      Cashless
Exercise.  In the event (and only in
the event) that (i) the Company sends a notice to the Warrantholder pursuant to
Section 3(c) above of its obligation to immediately exercise the Warrant
or (ii) at the time of exercise at least one (1) year after the date hereof,
there is no effective registration statement covering the Warrant Shares filed
under the Securities Act as a result of a breach of the Company’s obligations
under the Registration Right Agreement, the Warrantholder may elect to receive,
without the payment by the Warrantholder of the aggregate Warrant Price in
respect of the shares of Common Stock to be acquired upon exercise hereof,
shares of Common Stock equal to the value of this Warrant or any portion hereof
being exercised pursuant to this Section 19 by the surrender of
this Warrant (or such portion of this Warrant being so exercised) together with
the Net Issue Election Notice annexed hereto as Appendix B duly
executed, at the office of the Corporation. 
Thereupon, and in no event later than three Business Days after the
Corporation’s receipt of the Net Issue Election Notice, the Corporation shall
issue to the Warrantholder certificate(s) for such number of fully paid,
validly issued and nonassessable shares of Common Stock as is computed using
the formula immediately below.  The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder.  If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Corporation shall, at its expense, at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.

 

X = Y (A - B)

A

 

 

where

 

X =                             the
number of shares of Common Stock to be issued to the Warrantholder upon
exercise of this Warrant pursuant to this Section 19;

 

Y =                              the
total number of shares of Common Stock covered by this Warrant which the
Warrantholder has surrendered at such time for cashless exercise (including
both shares to be issued to the Warrantholder and shares to be canceled as
payment therefor);

 

A =                            the
Market Price of one share of Common Stock as at the time the net issue election
is made; and

 

B =                              the
Warrant Price in effect under this Warrant at the time the net issue election
is made.

 

The Warrant Shares issued
pursuant to this Section 19 shall be deemed to be issued to the
exercising holder or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which the Net Issue Election
Notice shall have been surrendered (or evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Corporation) to the
Corporation.

 

Section 20.                                      Amendments.  This Warrant shall not be amended without
the prior written consent of the Corporation and the Requisite Holders; provided,
that (x) any such amendment or waiver must apply to all Warrants; and (y) the
number of Warrant Shares subject to this Warrant, the Warrant Price and the
Expiration Date may not be amended, and the right to exercise this Warrant may
not be altered or waived, without the prior written consent of the
Warrantholder.

 

Section 21.                                      Section Headings.  The section headings in this Warrant
are for the convenience of the Corporation and the Warrantholder and in no way
alter, modify, amend, limit or restrict the provisions hereof.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the
Corporation has caused this Warrant to be duly executed, as of the
       day of March, 2004.

 

	
   

  	
  AEROGEN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

APPENDIX A

AEROGEN, INC.

WARRANT EXERCISE FORM

 

To: AEROGEN, INC.

 

The undersigned hereby
irrevocably elects to exercise the right of purchase represented by the within
Warrant (“Warrant”) for, and to purchase thereunder by the payment of the
Warrant Price and surrender of the Warrant,
                           
shares of Common Stock (“Warrant Shares”) provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:

 

 

Name

 

Address

 

Federal Tax ID or Social
Security No.

 

and delivered by

 

o            certified
mail to the above address, or

o            electronically
(provide DWAC Instructions:
                                        ),

or

o            other
(specify:
                                                                                       ).

 

and, if the number of Warrant Shares shall
not be all the Warrant Shares purchasable upon exercise of the Warrant, that a
new Warrant for the balance of the Warrant Shares purchasable upon exercise of
this Warrant be registered in the name of the undersigned Warrantholder or the
undersigned’s Assignee as below indicated and delivered to the address stated
below.

 

	
  Dated: 

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Note: 
  The signature must correspond with the name of

  	
   

  	
   

  
	
  the registered holder as written on the
  first page of the 

  	
   

  	
  Signature:

  	
   

  	
   

  
	
  Warrant in every particular, without
  alteration or 

  	
   

  	
   

  	
   

  
	
  enlargement or any change whatever, unless
  the 

  	
   

  	
  Name (please print)

  
	
  Warrant has been assigned.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Federal Identification or

  	
   

  

 

 

	
   

  	
   

  	
  Social Security No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Assignee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

APPENDIX
B
AEROGEN, INC.

NET ISSUE ELECTION NOTICE

 

To: AEROGEN, INC.

 

Date:                                                  

 

The undersigned hereby elects
under Section 19 of this Warrant to surrender the right to purchase
                        
shares of Common Stock pursuant to this Warrant and hereby requests the
issuance of
                          
shares of Common Stock.  The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name for Registration

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mailing AddressExhibit
10.27

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 22nd
day of March, 2004 by and among Aerogen, Inc.,a Delaware corporation (the “Company”),
and the “Investors” named in that certain Purchase Agreement, dated
March 11, 2004, by and among the Company and the Investors (the “Purchase Agreement”).  Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

The parties hereby agree as follows:

 

1.             Certain Definitions.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Affiliate” shall mean, with respect to any person, any other
person which directly or indirectly Controls, is Controlled by, or is under
common Control with, such person.

 

“Business Day” shall mean a day, other than a Saturday or
Sunday, on which banks in New York City are open for the general transaction of
business.

 

“Common Stock” shall mean the Company’s common stock, par value
$0.001 per share, and any securities into which such shares may hereinafter be
reclassified.

 

“Control” means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.

 

“Holders” shall mean the Investors, the Lead Investor and any Affiliate or permitted transferee
thereof who is a subsequent holder of any Shares, Warrants or Registrable
Securities.

 

“Investors” shall mean the Investors identified in the Purchase
Agreement.

 

“Lead Investor” shall mean Xmark Fund, L.P. and Xmark Fund, Ltd.
so long as they continue to own any Shares, and thereafter, any action or
consent required of the Lead Investor shall be satisfied by a majority of the
Holders.

 

“NASD” shall mean the National Association of Securities
Dealers, Inc.

 

“Prospectus” shall mean the prospectus included in any
Registration Statement, 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 such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.

 

“Register,” “registered” and “registration” refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.

 

“Registrable Securities” shall mean the shares of Common Stock
issuable (i) upon conversion of the Preferred Stock issued pursuant to the
Purchase Agreement, (ii) issuable as payment-in-kind dividends on the Preferred
Stock in accordance with the terms thereof, (iii) upon the exercise of the
Warrants, and (iv) with respect to or in exchange for Registrable

 

 

Securities; provided, that,
a security shall cease to be a Registrable Security upon sale pursuant to a
Registration Statement.

 

“Registration Statement” shall mean any registration statement
of the Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
Registration Statement.

 

“SEC” shall mean the U.S. Securities and Exchange Commission.

 

“1933 Act” shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

 

“1934 Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

2.             Registration.

 

(a)           Registration Statements.

 

(i)            Promptly following the Closing of the purchase and sale
of the Preferred Stock contemplated by the Purchase Agreement (the “Closing Date”), but in no event after
the earlier of (x) ten (10) calendar days after the Second Closing Date and (y)
the 65th calendar day after the First Closing Date (such earlier
date, the “Filing Deadline”),
the Company shall prepare and file with the SEC one Registration Statement on
Form S-3 (or, if Form S-3 is not then available to the Company, on such form of
Registration Statement as is then available to effect a registration for resale
of the Registrable Securities, subject to the Requisite Holders’ consent),
covering the resale of all of the Registrable Securities without regard to any
limitation on the conversion of shares of Series A-1 Preferred Stock or
exercise of the Warrants and assuming that all dividends payable on the
Preferred Stock pursuant to the term thereof shall be payment-in-kind
dividends.  Such Registration Statement
shall include the plan of distribution attached hereto as Exhibit A.  Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.  The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c)
to the Holders and their respective counsel prior to its filing or other
submission.  If a Registration Statement
covering the Registrable Securities is not filed with the SEC on or prior to
the Filing Deadline, the Company will make pro rata payments to each Holder, as
liquidated damages and not as a penalty, in an amount equal to 1.5% of the
aggregate amount invested by such Holder (the amount invested by a Holder shall
include the purchase price of the Shares acquired by such Holder and shall
exclude any amount attributable to the Warrants acquired by such Holder
pursuant to the Purchase Agreement) for each 10-day period or pro rata for any
portion thereof following the date by which such Registration Statement should
have been filed for which no Registration Statement is filed with respect to
the Registrable Securities.  Such
payments shall be in partial compensation to the Holders, and shall not
constitute the Holders’ exclusive remedy for such events.  Such payments shall be made to each Holder
in cash.  The amounts payable as

 

2

 

liquidated
damages pursuant to this paragraph shall be payable in lawful money of the
United States, and amounts payable as liquidated damages shall be paid within
two (2) Business Days of the last day of each such 10-day period during which
the Registration Statement should have been filed for which no Registration
Statement was filed with respect to the Registrable Securities.

 

(ii)           Additional Registrable Securities.  Upon the written demand of the Lead Investor
and upon any change in the “Series A-1 Conversion Price” (as that term is
defined in the Certificate of Designations) or the number of “Warrant Shares”
(as that term is defined in the Warrants) purchasable under the Warrants such
that additional shares of Common Stock become issuable upon conversion of the
outstanding Series A-1 Preferred Stock or exercise of such Warrants, the
Company shall prepare and file with the SEC one or more Registration Statements
on Form S-3 (or, if Form S-3 is not then available to the Company, on such form
of Registration Statement as is then available, subject to the Requisite
Holders’ consent, to effect a registration for resale of such additional shares
of Common Stock (the “Additional Shares”))
covering the resale of the Additional Shares, but only to the extent the
Additional Shares are not at the time covered by an effective Registration
Statement.  Such Registration Statement
shall include the plan of distribution attached hereto as Exhibit A.  Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Additional Shares.  The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided in accordance with Section 3(c) to the Holders and their counsel
prior to its filing or other submission. 
If a Registration Statement covering the Additional Shares is required
to be filed under this Section 2(a)(ii) and is not filed with the SEC
within ten (10) days of the request of any Holder, the Company will make pro
rata payments to each Holder, as liquidated damages and not as a penalty, in an
amount equal to 1.5% of the aggregate amount invested by such Holder (the
amount invested by a Holder shall include the purchase price of the Shares
acquired by such Holder and shall exclude any amount attributable to the
Warrants acquired by such Holder pursuant to the Purchase Agreement) for each
10-day period or pro rata for any portion thereof following the date by which
such Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Additional Shares.  The amounts payable as liquidated damages
pursuant to this paragraph shall be payable in lawful money of the United
States, and amounts payable as liquidated damages shall be paid within two (2)
Business Days of the last day of each such 10-day period during which the
Registration Statement should have been filed for which no Registration Statement
was filed with respect to the Additional Shares.

 

(b)          Expenses. 
The Company will pay all expenses associated with each registration,
including filing and printing fees, counsel and accounting fees and expenses,
costs associated with clearing the Registrable Securities for sale under
applicable state securities laws and listing fees, but excluding the fees and
disbursements of more than one law firm serving as counsel to the Holders and
one law firm serving as counsel to the Lead Investor, and discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.

 

3

 

(c)           Effectiveness.

 

(i)            The Company shall use its best efforts to have the
Registration Statement declared effective not later than the earlier to occur
of (x) the 180th day immediately following the Signing Date, (y) the
90th day immediately following the Second Closing Date, or (z) five (5)
Business Days following the Company’s receipt of a no-review letter from the
SEC relating to the Registration Statement; provided, however, if
the Registration Statement is not declared effective within the time period set
forth above, the Company shall continue to use its best efforts to have the
Registration Statement declared effective as soon as possible thereafter.  If (A) the Registration Statement has not
been declared effective by the earlier of (y) or (z) in the preceding sentence,
or (B) after a Registration Statement has been declared effective by the SEC,
sales cannot be made pursuant to such Registration Statement for any reason
(including, without limitation, by reason of a stop order, or the Company’s
failure to update the Registration Statement), but except as excused pursuant
to subsection (ii) below, then the Company will make pro rata payments to
each Holder, as liquidated damages and not as a penalty, in an amount equal to
1.5% of the aggregate amount invested by such Holder (the amount invested by a
Holder shall include the purchase price of the Shares acquired by such Holder
and shall exclude any amount attributable to the Warrants acquired by such
Holder pursuant to the Purchase Agreement) for each 10-day period or pro rata
for any portion thereof following the date (1) by which such Registration
Statement should have been effective as described in (A) above had the Company
used its best efforts to have the Registration Statement declared effective or
(2) sales cannot be made pursuant to such Registration Statement after it has
been declared effective as described in (B) above (the “Blackout Period”).  Such payments shall be in partial
compensation to the Holders, and shall not constitute the Holders’ exclusive
remedy for such events.  The Blackout
Period shall terminate upon (x) the effectiveness of the Registration Statement
in the case of (A) above; and (y) the Registration Statement again being
available for sales by the Holders in the case of (B) above.  The amounts payable as liquidated damages
pursuant to this paragraph shall be payable in lawful money of the United
States, and amounts payable as liquidated damages shall be paid within two (2)
Business Days of the last day of each 10-day period following the commencement
of the Blackout Period until the termination of the Blackout Period.

 

(ii)           For not more than fifteen (15) consecutive days or for a
total of not more than thirty (30) days in any twenty-four (24) month period,
the Company may delay the disclosure of material non-public information
concerning the Company, by terminating or suspending effectiveness of any
registration contemplated by this Section 2, if the disclosure of such
material non-public information at the time is not, in the good faith opinion
of the Company, in the best interests of the Company (an “Allowed Delay”); provided, that
the Company shall promptly (a) notify the Holders in writing of the existence
of (but in no event, without the prior written consent of a Holder, shall the
Company disclose to such Holder any of the facts or circumstances regarding)
material non-public information giving rise to an Allowed Delay, and (b) advise
the Holders in writing to cease all sales under the Registration Statement
until the end of the Allowed Delay.

 

(d)          Underwritten Offering.  If any offering pursuant to a Registration Statement filed
pursuant to Section 2(a) hereof involves an underwritten offering, the
Company

 

4

 

shall have the
right to select an investment banker and manager to administer the offering,
which investment banker or manager shall be reasonably satisfactory to the
Requisite Holders.

 

3.             Company
Obligations.  The Company will use
its best efforts to effect the registration of the Registrable Securities in
accordance with the terms hereof, and pursuant thereto the Company will, as
expeditiously as possible:

 

(a)           use its best efforts to cause such Registration Statement
to become effective and to remain continuously effective for a period that will
terminate upon the date on which all Registrable Securities covered by such
Registration Statement, as amended from time to time, have been sold;

 

(b)          prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the Prospectus as
may be necessary to keep the Registration Statement effective for the period
specified in Section 3(a) and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all Registrable
Securities;

 

(c)           provide copies to and permit counsel to the Investors to
review each Registration Statement and all amendments and supplements thereto
no fewer than five (5) days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects within four (4) days
following receipt by such counsel of such Registration Statement and/or
amendments and supplements thereto;

 

(d)          furnish to the Holders and their legal counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be), at least five
(5) copies of any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion
thereof which contains information for which the Company has sought
confidential treatment), and (ii) such number of copies of a Prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as each Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
which in any event, shall not exceed ten (10) Prospectuses;

 

(e)           in the event the Company selects an underwriter for the
offering, the Company shall enter into and perform its reasonable obligations
under an underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution obligations,
with the underwriter of such offering;

 

(f)           if required by the underwriter, the Company shall furnish,
on the effective date of the Registration Statement (i) an opinion, dated as of
such date, from independent legal counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public

 

5

 

offering,
addressed to the underwriter and (ii) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriter and the
Holders;

 

(g)          use its reasonable best efforts to prevent the issuance of
any stop order or other suspension of effectiveness and, if such order is
issued, obtain the withdrawal of any such order at the earliest possible
moment;

 

(h)          prior to any public offering of Registrable Securities, use
its reasonable best efforts to register or qualify or cooperate with the
Holders and their counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions reasonably requested by the Holders and do any
and all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
Registration Statement;

 

(i)            cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;

 

(j)            immediately notify the Holders, at any time when a
Prospectus relating to the Registrable Securities is required to be delivered
under the 1933 Act, upon discovery that, or upon the happening of any event as
a result of which, the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and at the request of any such Holder, promptly prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing; and

 

(k)           otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act
and take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period
of at least twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933 Act (for the purpose of this
subsection 3(k), “Availability Date” means the 45th day following the end
of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company’s fiscal year, “Availability Date” means the 90th day
after the end of such fourth fiscal quarter).

 

6

 

4.             Due Diligence
Review; Information.  The Company
shall make available, during normal business hours, for inspection and review
by the Holders, advisors to and representatives of the Holders (who may or may
not be affiliated with the Holders), and any underwriter participating in any
disposition of Common Stock on behalf of the Holders pursuant to a Registration
Statement or amendments or supplements thereto or any blue sky, NASD or other
filing, all financial and other records, all filings with the SEC, and all
other corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company’s officers,
directors and employees, within a reasonable time period, to supply all such information
reasonably requested by the Holders or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling
the Holders and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.

 

Notwithstanding
the foregoing, the Company shall not disclose material nonpublic information to
the Holders, or to advisors to or representatives of the Holders, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Holders, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review.

 

5.             Obligations
of the Holders.

 

(a)           Each Holder shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.  At least fifteen (15) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Holder of the information the Company requires from such Holder if such
Holder elects to have any of the Registrable Securities included in the
Registration Statement.  A Holder shall
provide such information to the Company at least five (5) Business Days prior
to the first anticipated filing date of such Registration Statement if such
Holder elects to have any of the Registrable Securities included in the
Registration Statement.

 

(b)          Each Holder, by its acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of a Registration
Statement hereunder, unless such Holder has notified the Company in writing of
its election to exclude all of its Registrable Securities from such
Registration Statement.

 

(c)           In the event the Company, at the request of the Holders,
determines to engage the services of an underwriter, each such Holder agrees to
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the

 

7

 

managing
underwriter of such offering and take such other actions as are reasonably
required in order to expedite or facilitate the dispositions of the Registrable
Securities.

 

(d)          Each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event rendering a Registration Statement no
longer effective, such Holder will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities, until the Holder’s receipt of copies of the
supplemented or amended Prospectus filed with the SEC and declared effective
and, if so directed by the Company, the Holder shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Holder’s possession of the
Prospectus covering the Registrable Securities current at the time of receipt
of such notice.

 

(e)           No Holder may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions.  Notwithstanding the
foregoing, no Holder shall be required to make any representations to such
underwriter, other than those with respect to itself and the Registrable
Securities owned by it, including its right to sell the Registrable Securities,
and any indemnification in favor of the underwriter by the Holders shall be
several and not joint and limited in the case of any Holder, to the net
proceeds received by such Holder from the sale of its Registrable
Securities.  The scope of any such
indemnification in favor of an underwriter shall be limited to the same extent
as the indemnity provided in Section 6(b) hereof.

 

6.             Indemnification.

 

(a)           Indemnification by the Company.  The Company will indemnify and hold harmless
each Holder and their respective Affiliates, officers, directors, members,
employees and agents, successors and assigns, against any losses, claims,
damages or liabilities, joint or several, to which such Holder, Affiliate,
officer, director, member, employee, agent, successor or assign may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof; (ii) any blue sky application or other document executed by
the Company specifically for blue sky compliance or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information herein called a “Blue Sky Application”);
(iii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (iv) any violation by the Company, or its directors, officers,
employees or agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its directors, officers, employees or agents and
relating to action or inaction required of the

 

8

 

Company or any
of them in connection with such registration; or (v) any failure to register or
qualify the Registrable Securities included in any such Registration Statement
in any state where the Company or its agents has affirmatively undertaken or
agreed in writing that the Company will undertake such registration or
qualification on a Holder’s behalf (the undertaking of any underwriter chosen
by the Company being attributed to the Company) and will reimburse such Holder,
and each such officer, director or member and each such controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in conformity with information furnished in writing by
such Holder or any such controlling person specifically for use in such
Registration Statement or Prospectus.

 

(b)          Indemnification by the Holders.  In connection with any Registration
Statement pursuant to the terms of this Agreement, each Holder will furnish to
the Company in writing such information as the Company reasonably requests
concerning such Holder or the proposed manner of such Holder’s distribution for
use in connection with any Registration Statement or Prospectus and agrees,
severally but not jointly, to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its Subsidiaries and its and their
respective directors, officers, employees, shareholders and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses (including reasonable attorney fees)
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Holder to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement
thereto.  In no event shall the
liability of a Holder be greater in amount than the aggregate dollar amount of
the proceeds (net of all expenses paid by such Holder and the amount of any
damages such Holder has otherwise been required to pay by reason of such untrue
statement or omission) received by such Holder upon the sale of the Registrable
Securities included in the Registration Statement giving rise to such indemnification
obligation.

 

(c)           Conduct of Indemnification Proceedings.  Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled
to indemnification hereunder shall have the right to employ separate counsel
and to participate in the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (c) in the reasonable judgment of any
such person, based upon advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ

 

9

 

separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection
with any proceeding in the same jurisdiction, be liable for fees or expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties.  No indemnifying party will,
except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.

 

(d)          Contribution. 
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an indemnified party or insufficient
to hold it completely harmless, other than as expressly specified therein, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation.  In no event shall
the contribution obligation of a Holder be greater in amount than the aggregate
dollar amount of the proceeds (net of all expenses paid by such holder and the
amount of any damages such Holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving rise to such
contribution obligation.

 

7.             Miscellaneous.

 

(a)           Amendments and Waivers.  This Agreement shall not be amended except by a writing signed by
(i) the Company and (ii) the Requisite Holders.  The Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of the Requisite Holders.

 

(b)          Notices.  All
notices and other communications provided for or permitted hereunder shall be
made as set forth in Section 10.4 of the Purchase Agreement.

 

(c)           Assignments and Transfers by Holders.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the Holders and their respective
successors and assigns.  A Holder may
transfer or assign, in whole or from time to time in part, to one or more persons
its rights hereunder in connection with the transfer of Registrable Securities
by such Holder to such person, provided, that, such Holder
complies with all applicable laws thereto and provides written notice of
assignment to the Company promptly after such assignment is effected.

 

10

 

(d)          Assignments and Transfers by the Company.  This Agreement shall not be assigned by the
Company without the prior written consent of each Holder, except that without
the prior written consent of the Holders, but after notice duly given, the
Company shall assign its rights and delegate its duties hereunder to any
successor-in-interest corporation, and such successor-in-interest shall assume
such rights and duties, in the event of a merger or consolidation of the
Company with or into another corporation or the sale of all or substantially
all of the Company’s assets.

 

(e)           Benefits of the Agreement.  The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. 
Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

 

(f)           Counterparts; Faxes.  This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. 
This Agreement may also be executed via facsimile, which shall be deemed
an original.

 

(g)          Titles and Subtitles.  The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Agreement.

 

(h)          Severability. 
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law,
the parties hereby waive any provision of law which renders any provisions
hereof prohibited or unenforceable in any respect.

 

(i)            Further Assurances.  The parties shall execute and deliver all such further instruments
and documents and take all such other actions as may reasonably be required to
carry out the transactions contemplated hereby and to evidence the fulfillment
of the agreements herein contained.

 

(j)            Entire Agreement. 
This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.  This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

 

(k)           Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably

 

11

 

submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement and the transactions contemplated
hereby.  Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. 
Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of
venue in such court.  Each party hereto
irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.  THE COMPANY
AND EACH OF THE HOLDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

[Signature Pages Follow]

 

12

 

[Company Signature Page to Registration
Rights Agreement]

 

IN WITNESS WHEREOF, the Company has executed this Agreement or caused
its duly authorized officer to execute this Agreement as of the date first
above written.

 

 

	
  The Company:

  	
  AEROGEN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

13

 

[Holder Signature Page to Registration Rights
Agreement]

 

IN WITNESS WHEREOF, the undersigned has executed this Agreement or
caused its duly authorized officers to execute this Agreement as of the date
first above written.

 

 

	
  IF AN INDIVIDUAL:

  	
  IF A CORPORATION, PARTNERSHIP,

  TRUST, ESTATE OR OTHER ENTITY:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Signature)

  	
  Print name of entity

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  (Printed Name)

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
								

 

14

 

Exhibit A

 

Plan of Distribution

 

The selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions.  These dispositions may be at fixed prices,
at prevailing market prices at the time of sale, at prices related to the prevailing
market price, at varying prices determined at the time of sale, or at
negotiated prices.

 

The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:

 

- 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;

 

- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;

 

- 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, from time to time, pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the 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
amending the

 

15

 

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

 

In connection with the sale of our common stock or interests therein,
the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common stock in the course of hedging the positions they
assume.  The selling stockholders may
also sell shares of our common stock short and deliver these securities to
close out their short positions, or loan or pledge the common stock to
broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The
aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any.  Each
of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents.  We will not receive any of the proceeds from
this offering. Upon any exercise of the warrants by payment of cash, however,
we will receive the exercise price of the warrants.

 

The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements
of that rule.

 

The selling stockholders and any underwriters, broker-dealers or
agents that participate in the sale of the common stock or interests therein
may be “underwriters” within the meaning of Section 2(11) of the
Securities Act.  Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act.  Selling stockholders who are “underwriters”
within the meaning of Section 2(11) of the Securities Act will be subject
to the prospectus delivery requirements of the Securities Act.

 

To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.

 

In
order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers.  In
addition, in some states the common stock may not be sold unless it has been
registered or

 

16

 

qualified for sale or an exemption from
registration or qualification requirements is available and is complied with.

 

We
have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates.  In addition, we will make copies of this
prospectus (as it may be supplemented or amended from time to time) available
to the selling stockholders for the purpose of satisfying the prospectus
delivery requirements of the Securities Act. 
The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.

 

We
have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.

 

We
have agreed with the selling stockholders to keep the registration statement of
which this prospectus constitutes a part effective until the earlier of (1)
such time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (2) the date
on which the shares may be sold pursuant to Rule 144(k) of the Securities Act.

 

17

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