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                                                                  EXHIBIT 10.13

                                  AEROGEN, INC.

                              AMENDED AND RESTATED
                                 1996 STOCK PLAN

                            ADOPTED OCTOBER 21, 1996
                   APPROVED BY SHAREHOLDERS DECEMBER 19, 1996
                            AMENDED JANUARY 23, 1998
                            AMENDED DECEMBER 8, 1999
                             AMENDED MARCH 10, 2000
                              AMENDED JULY 21, 2000
                      AMENDED AND RESTATED AUGUST 24, 2000
                       TERMINATION DATE: OCTOBER 20, 2006

1.   PURPOSES.

     (a)  ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

     (b)  AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

     (c)  GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.   DEFINITIONS.

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

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

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

     (d)  "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

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

                                       1.
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     (f)  "COMPANY" means AeroGen, Inc., a Delaware corporation.

     (g)  "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.

     (h)  "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

     (i)  "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

     (j)  "DIRECTOR" means a member of the Board of Directors of the Company.

     (k)  "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

     (l)  "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

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

     (n)  "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

          (i)  If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Board deems reliable.

                                       2.
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          (ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

     (o)  "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (p)  "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

     (q)  "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.

     (r)  "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (s)  "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

     (t)  "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

     (u)  "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

     (v)  "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

     (w)  "PARTICIPANT" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.

     (x)  "PLAN" means this AeroGen, Inc. Amended and Restated 1996 Stock Plan.

                                       3.
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     (y)  "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

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

     (aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

     (bb) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

     (cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.   ADMINISTRATION.

     (a)  ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).

     (b)  POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

          (i)   To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

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

          (iii) To amend the Plan or a Stock Award as provided in Section 12.

          (iv)  Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

     (c)  DELEGATION TO COMMITTEE.

          (i)  GENERAL. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If

                                       4.
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administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

          (ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

     (d)  EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4.   SHARES SUBJECT TO THE PLAN.

     (a)  SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate seven million eight
hundred thousand (7,800,000) shares of Common Stock.

     (b)  REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan. If
any shares are repurchased, such repurchased shares shall revert back to and
again become available for issuance under the Plan for all Stock Awards other
than Incentive Stock Options.

     (c)  SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.

5.   ELIGIBILITY.

     (a)  ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants.

                                       5.

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     (b)  TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

     (c)  SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million
(1,000,000) shares of Common Stock during any calendar year.

     (d)  CONSULTANTS.

          (i)  A Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, a Form S-8 Registration Statement under the Securities
Act ("Form S-8") is not available to register either the offer or the sale of
the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (E.G.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

          (ii) Form S-8 generally is available to consultants and advisors only
if (i) they are natural persons; (ii) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.

6.   OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:

     (a)  TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.

     (b)  EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions
of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set

                                       6.

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forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.

     (c)  EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

     (d)  CONSIDERATION. The purchase price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

     In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

     (e)  TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

     (f)  TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

                                       7.

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     (g)  VESTING GENERALLY. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

     (h)  TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

     (i)  EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

     (j)  DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

     (k)  DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option

                                       8.

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Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

     (l)  EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate.

7.   PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

     (a)  STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

          (i)   CONSIDERATION. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.

          (ii)  VESTING. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share reacquisition option in
favor of the Company in accordance with a vesting schedule to be determined
by the Board.

          (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.

          (iv)  TRANSFERABILITY. Rights to acquire shares of Common Stock under
the stock bonus agreement shall be transferable by the Participant only upon
such terms and conditions as are set forth in the stock bonus agreement, as the
Board shall determine in its discretion, so long as Common Stock awarded under
the stock bonus agreement remains subject to the terms of the stock bonus
agreement.

     (b)  RESTRICTED STOCK PURCHASE AWARDS. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

          (i)   PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of

                                       9.

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the Common Stock's Fair Market Value on the date such award is made or at the
time the purchase is consummated.

          (ii)  CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i)
in cash at the time of purchase; (ii) at the discretion of the Board,
according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; provided, however, that at any
time that the Company is incorporated in Delaware, then payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law,
shall not be made by deferred payment.

          (iii) VESTING. Shares of Common Stock acquired under the restricted
stock purchase agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.

          (iv)  TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

          (v)   TRANSFERABILITY. Rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.

8.   COVENANTS OF THE COMPANY.

     (a)  AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

     (b)  SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

9.   USE OF PROCEEDS FROM STOCK.

     Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

                                       10.

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10.  MISCELLANEOUS.

     (a)  ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

     (b)  STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

     (c)  NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

     (d)  INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

     (e)  INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with

                                       11.

<PAGE>

applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.

     (f)  WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.

11.  ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

     (a)  CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the nature, class(es) and maximum number of securities subject to
the Plan pursuant to Section 4 and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the nature, class(es) and number of
securities and price per share of Common Stock subject to such outstanding Stock
Awards. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a transaction "without receipt of
consideration" by the Company.)

     (b)  DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.

     (c)  ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event of
(i) a sale, lease or other disposition of all or substantially all of the assets
of the Company; (ii) a merger or consolidation in which the Company is not the
surviving corporation and in which beneficial ownership of securities of the
Company representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of the members of the Board of Directors has
changed; (iii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and in which beneficial
ownership of securities of the Company representing at least fifty percent (50%)
of the combined voting power entitled to vote in the election of the member of
the Board of Directors has changed; (iv) an acquisition by any entity (other
than (A) a controlled affiliate of the Company, (B) any employee benefit plan,
or related trust, sponsored or maintained by the Company or subsidiary of the
Company or other entity controlled by the Company, or (C) any company owned
directly or indirectly by stockholders of the Company in

                                       12.

<PAGE>

substantially the same proportions as their ownership of Common Stock interest
of the Company, immediately prior to the occurrence with respect to which the
evaluation of the Change in Control is being made) of the beneficial ownership,
directly or indirectly, of securities of the Company representing at least fifty
percent (50%) of the combined voting power of the Company's then outstanding
securities; or (v) in the event that the individuals who, as of the date of
adoption of the Plan, are members of the Company's Board of Directors (the
"Incumbent Board"), cease for any reason to constitute at least fifty percent
(50%) of the Board of Directors (if the election, or nomination for election by
the Company's stockholders, of any new Director is approved by a vote of at
least fifty percent (50%) of the Incumbent Board, such new Director shall be
considered to be a member of the Incumbent Board in the future), then any
surviving corporation or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 11(c) for those outstanding under the
Plan). In the event any surviving corporation or acquiring corporation refuses
to assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to such event. With respect to any
other Stock Awards outstanding under the Plan, such Stock Awards shall terminate
if not exercised (if applicable) prior to such event.

12.  AMENDMENT OF THE PLAN AND STOCK AWARDS.

     (a)  AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

     (b)  STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

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

     (d)  NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

                                       13.

<PAGE>

     (e)  AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.  TERMINATION OR SUSPENSION OF THE PLAN.

     (a)  PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

     (b)  NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.

14.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective upon the effective date of the initial
public offering of the Company's Common Stock, but no Stock Award shall be
exercised (or, in the case of a stock bonus, shall be granted) unless and until
the Plan has been approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date the Plan is adopted
by the Board.

15.  CHOICE OF LAW.

     The law of the State of California shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.

                                       14.<PAGE>

                                                                   EXHIBIT 10.14

                                  AEROGEN, INC.
                        EXECUTIVE SEVERANCE BENEFIT PLAN

SECTION 1. INTRODUCTION

         The AeroGen, Inc. Executive Severance Benefit Plan (the "Plan") is
designed to provide separation pay and benefits to certain eligible executive
employees of the Company whose employment is terminated under the conditions
specified herein. This document constitutes the written instrument under which
the Plan is maintained and supersedes any prior plan or practice of the Company
that provides severance benefits to eligible employees. The Plan was initially
approved by the Board of Directors of the Company effective September 29, 2000.

SECTION 2. DEFINITIONS

         For purposes of this Plan, the following terms shall have the meanings
set forth below:

         (a) "BASE SALARY" means base salary paid to you (including all amounts
elected to be deferred that would otherwise have been paid, under any cash or
deferred arrangement established by the Company), bonuses, and commissions but
excluding the cost of employee benefits paid for by the Company, education or
tuition reimbursements, imputed income arising under any Company group insurance
or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation.

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

         (c) "CAUSE" means any of the following: (i) your theft, dishonesty, or
falsification of any Company documents or records; (ii) your improper use or
disclosure of the Company's confidential or proprietary information, which use
or disclosure is not cured within ten (10) days following notification to you by
the Company or the Board; (iii) your refusal to perform any reasonable assigned
duties after written notice from the Company of, and a reasonable opportunity to
cure, such refusal; (iv) any material breach by you of any agreement between you
and the Company, which breach is not cured pursuant to the terms of such
agreement; or (v) your conviction (including any plea of guilty or NOLO
CONTENDERE) of any felony or any crime involving moral turpitude or dishonesty
which impairs your ability to perform your duties with the Company. The Board
shall have the right to reasonably determine whether you have engaged in conduct
constituting "Cause" for purposes of this Plan.

         (d) "CHANGE IN CONTROL" means a (i) a dissolution or liquidation of the
Company; (ii) a sale, lease or other disposition of all or substantially all of
the assets of the Company so long as the Company's stockholders immediately
prior to such transaction will, immediately after such transaction, fail to
possess direct or indirect beneficial ownership of more than fifty percent (50%)
of the voting power of the acquiring entity (for purposes of this clause
2(d)(ii),

                                       1.
<PAGE>

any person who acquired securities of the Company prior to the occurrence of
such asset transaction in contemplation of such transaction and who after such
transaction possesses direct or indirect ownership of at least ten percent (10%)
of the securities of the acquiring entity immediately following such transaction
shall not be included in the group of stockholders of the Company immediately
prior to such transaction); (iii) either a merger or consolidation in which the
Company is not the surviving corporation and the stockholders of the Company
immediately prior to the merger or consolidation fail to possess direct or
indirect beneficial ownership of more than fifty percent (50%) of the voting
power of the securities of the surviving corporation (or if the surviving
corporation is a controlled affiliate of another entity, then the required
beneficial ownership shall be determined with respect to the securities of that
entity which controls the surviving corporation and is not itself a controlled
affiliate of any other entity) immediately following such transaction, or a
reverse merger in which the Company is the surviving corporation and the
stockholders of the Company immediately prior to the reverse merger fail to
possess direct or indirect beneficial ownership of more than fifty percent (50%)
of the securities of the Company (or if the Company is a controlled affiliate of
another entity, then the required beneficial ownership shall be determined with
respect to the securities of that entity which controls the Company and is not
itself a controlled affiliate of any other entity) immediately following the
reverse merger (for purposes of this clause 2(d)(iii), any person who acquired
securities of the Company prior to the occurrence of a merger, reverse merger,
or consolidation in contemplation of such transaction and who after such
transaction possesses direct or indirect beneficial ownership of at least ten
percent (10%) of the securities of the Company or the surviving corporation (or
if the Company or the surviving corporation is a controlled affiliate, then of
the appropriate entity as determined above) immediately following such
transaction shall not be included in the group of stockholders of the Company
immediately prior to such transaction); (iv) an acquisition by any person,
entity or group within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or a subsidiary or other controlled
affiliate of the Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors; or (v) the
individuals who, as of the date of this Agreement, are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least fifty percent
(50%) of the Board. If the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at least fifty
percent (50%) of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board.

         (e) "COMPANY" means AeroGen, Inc., or following a Change in Control,
the surviving entity resulting from such transaction.

         (f) "INVOLUNTARY TERMINATION WITHOUT CAUSE" means your dismissal or
discharge by the Company (or, if applicable, by any successor entity) for any
reason or no reason other than for Cause. The termination of your employment
will not be deemed to be an "Involuntary Termination Without Cause" if your
termination occurs as a result of your death or disability.

                                       2.
<PAGE>

         (g) "VOLUNTARY TERMINATION FOR GOOD REASON" means that you voluntarily
terminate your employment with the Company after any of the following are
undertaken by the Company:

                  (i) the assignment to you of any duties or responsibilities
which result in a material diminution or adverse change of your position,
responsibilities, authority or circumstances of employment;

                  (ii) a reduction by the Company in your Base Salary;

                  (iii) any failure by the Company to continue in effect any
benefit plan or arrangement, including incentive plans or plans to receive
securities of the Company, in which you are participating (hereinafter referred
to as "Benefit Plans"), or the taking of any action by the Company which would
adversely affect your participation in or reduce your benefits under any Benefit
Plans or deprive you of any fringe benefit then enjoyed by you; provided,
however, a Voluntary Termination for Good Reason shall not exist under this
subsection 2(g)(iii) if the Company offers a range of benefit plans and programs
which, taken as a whole, are comparable to the Benefit Plans provided to you as
of the date of this Plan, as determined in good faith by the Company;

                  (iv) a relocation of your or the Company's principal business
offices to a location more than thirty-five (35) miles from the location at
which you have performed duties, except for required travel by you on the
Company's business to an extent substantially consistent with your business
travel obligations as of the date of this Plan;

                  (v) any material breach by the Company of any provision of
this Plan which is not cured by the Company within twenty (20) days of delivery
of written notice from Executive of such breach; or

                  (vi) any failure by the Company to obtain the assumption of
this Plan by any successor or assign of the Company.

SECTION 3. ELIGIBILITY AND PARTICIPATION

         Employees of the Company listed on a separate schedule ("Eligible
Employees") shall receive benefits under the Plan. The Board may determine that
you are eligible for any portion of or all of the benefits set forth in Section
4 or Section 5 of the Plan for reasons other than those specified herein and
such decision by the Board shall in no way obligate the Company to provide such
benefits to any other Eligible Employee, even if similarly situated. The Board
may add employees to the schedule of Eligible Employees from time to time in its
sole discretion or on the recommendation of the Chief Executive Officer.

SECTION 4. BENEFITS FOLLOWING A CHANGE IN CONTROL

         In the event of your Involuntary Termination without Cause or your
Voluntary Termination for Good Reason during the period commencing one (1) month
prior to and ending thirteen (13) months following a Change in Control, you are
entitled to the following benefits, subject to Section 5 hereof:

                                       3.
<PAGE>

         (a) SALARY CONTINUATION. The Company shall, subject to Section 5
hereof, continue your Base Salary for twelve (12) months. Any salary
continuation payments shall be paid to you in monthly installments beginning on
the termination of your employment. Any such amount that you receive shall be
subject to all required tax withholding.

         (b) CONTINUATION OF HEALTH BENEFITS. Provided that you elect continued
coverage under federal COBRA law as applicable, the Company shall pay, on your
behalf, the portion of premiums of your group health insurance, including
coverage for your eligible dependents, that the Company paid prior to your
termination of employment; PROVIDED, HOWEVER, that the Company will pay such
premiums for your eligible dependents only for coverage for which those
dependents were enrolled immediately prior to your termination of employment.
You will continue to be required to pay that portion of the premium of your
health coverage, including coverage for your eligible dependents, that you were
required to pay as an active employee immediately prior to your termination of
employment. The number of months of such premium payments shall equal the number
of months of your salary continuation payments, but in no event shall such
premium payments be made for a period exceeding twelve (12) months or be made
following the effective date of your coverage by a health plan of a subsequent
employer. For the balance of the period that you are entitled to coverage under
federal COBRA law, you shall be entitled to maintain coverage for yourself and
your eligible dependents at your own expense.

         (c) VESTING OF STOCK OPTIONS. The Company, immediately prior to your
termination of employment, shall accelerate one hundred percent (100%) of the
vesting of all of your unvested stock options to purchase stock of the Company
or any successor thereto, such options to vest in 12 equal monthly installments
beginning on the date of the termination of your employment. In addition, if
applicable, the Company's (or any successor corporation's) right to repurchase
unvested stock purchased by you pursuant to an early exercise stock purchase
agreement shall lapse in 12 equal monthly installments beginning on the date of
the termination of your employment. Notwithstanding the provisions in your stock
option agreements, you shall have fifteen (15) months from your date of
termination to exercise your stock options.

         (d) INDEMNIFICATION. For a period no less than six (6) years following
the date or your termination of employment, you shall be indemnified by the
Company (or any successor entity) for any act, or omission, taken while you were
employed by the Company (or any successor entity), and the Company shall
maintain insurance coverage which is either at least equivalent to such
indemnification coverage provided for you prior to such termination, or if such
equivalent coverage is not available at a commercially reasonable price, then at
least equivalent to the indemnification coverage provided to the then current
executive officers of the Company (or in the event of the occurrence of a Change
in Control of the Company, the executive officers of the controlling entity of
which the Company is then a part).

         (e) ADDITIONAL BENEFITS. In addition to the benefits provided in the
foregoing Sections 5(a), 5(b), 5(c) and 5(d), the Board may, in its sole
discretion, provide additional benefits to Eligible Employees chosen by the
Company, in its sole discretion, and the provision of any such additional
benefits to an Eligible Employee shall in no way obligate the Company to provide
such additional benefits to any other Eligible Employee, even if similarly
situated.

                                       4.
<PAGE>

         (f) PARACHUTE PAYMENTS. If any payment or benefit (or any portion
thereof) you would receive pursuant to a Change in Control from the Company or
otherwise ("Payment") would (i) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended, (the
"Code"), or any comparable successor provision, and (ii) but for this section
would be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable successor provision (the "Excise Tax"), then Executive's benefits
hereunder shall be either

                           (i)      provided to you in full, or

                           (ii)     provided to you as to such lesser extent
                                    which would result in no portion of such
                                    benefits being subject to the Excise Tax,

whichever of the foregoing amounts, when taking into account applicable federal,
state, local and foreign income and employment taxes, the Excise Tax, and any
other applicable taxes, results in the receipt by you, on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under the Excise Tax. Unless you and the Company
otherwise agree in writing, any determination required under this section shall
be made in writing in good faith by a qualified third party (the "Professional
Service Firm") selected by the Company prior to the Change in Control (and if
none is selected by the Company prior to the Change in Control, then that
Professional Service Firm selected by the Company at a later time). In the event
of a reduction of benefits hereunder, benefits payable in cash shall be reduced
first. For purposes of making the calculations required by this section, the
Professional Service Firm may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code, and other applicable
legal authority. You and the Company shall furnish to the Professional Service
Firm such information and documents as the Professional Service Firm may
reasonably request in order to make a determination under this section. The
Company shall bear all costs the Professional Service Firm may reasonably incur
in connection with any calculations contemplated by this section.

                  If, notwithstanding any reduction described in this section,
the IRS determines that you are liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then you shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that you challenge the final IRS determination, a
final judicial determination, a portion of the payment equal to the "Repayment
Amount." The Repayment Amount with respect to the payment of benefits shall be
the smallest such amount, if any, as shall be required to be paid to the Company
so that your net after-tax proceeds with respect to any payment of benefits
(after taking into account the payment of the Excise Tax and all other
applicable taxes imposed on such payment) shall be maximized. The Repayment
Amount with respect to the payment of benefits shall be zero if a Repayment
Amount of more than zero would not result in your net after-tax proceeds with
respect to the payment of such benefits being maximized. If the Excise Tax is
not eliminated pursuant to this paragraph, you shall pay the Excise Tax.

                  Notwithstanding any other provision of this Section 5(f), if
(i) there is a reduction in the payment of benefits as described in this
section, (ii) the IRS later determines that you are

                                       5.
<PAGE>

liable for the Excise Tax, the payment of which would result in the maximization
of your net after-tax proceeds (calculated as if your benefits had not
previously been reduced), and (iii) you pay the Excise Tax, then the Company
shall pay to you those benefits which were reduced pursuant to this section
contemporaneously or as soon as administratively possible after you pay the
Excise Tax so that your net after-tax proceeds with respect to the payment of
benefits is maximized.

SECTION 5. LIMITATIONS AND CONDITIONS ON BENEFITS

         (a) RELEASE. To receive benefits under this Plan, you must execute a
release of claims in favor of the Company, in substantially the form attached to
this Plan as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release
must become effective in accordance with its terms.

         (b) TERMINATION OF BENEFITS. Benefits under this Plan shall terminate
immediately if you, at any time, violate any proprietary information or
confidentiality obligation to the Company, which violation is not cured pursuant
to the terms of such agreement or within ten (10) days following notification to
you of such a violation by the Company or the Board.

         (c) CERTAIN REDUCTIONS. Notwithstanding any other provision of this
Plan to the contrary, any benefits payable to you under this Plan shall be
reduced by any severance benefits payable by the Company or an affiliate of the
Company to you under any other policy, plan, program or arrangement, including,
without limitation, a contract between you and any entity (other than any letter
addressed from the Company to you which sets forth your eligibility under this
Plan), under which you are covered. Furthermore, to the extent that any federal,
state or local laws, including, without limitation, so-called "plant closing"
laws, require the Company to give advance notice or make a payment of any kind
to you because of your involuntary termination due to a layoff, reduction in
force, plant or facility closing, sale of business, change of control, or any
other similar event or reason, the benefits payable under this Plan shall either
be reduced or eliminated.

         (d) NO MITIGATION. You shall not be required to mitigate the amount of
any payment provided for in this Plan by seeking other employment or otherwise
nor, except for your eligibility for COBRA continuation coverage, shall the
amount of any payment or benefit provided for in this Plan be reduced or
otherwise affected by any compensation or benefits received by you as a result
of employment by another employer or self-employment, by any retirement benefits
regardless of source, by offset against any amount claimed to be owed by you to
the Company, or otherwise.

         (e) NON-DUPLICATION OF BENEFITS. You are eligible to receive benefits
under this Plan one (1) time.

         (f) NON-COMPETITION. If requested by the Company at the time of
termination of your employment under circumstances giving rise to benefits under
this Plan, you will enter into an agreement with the Company providing that you
will not become employed as an executive, within twelve (12) months following
the termination of your employment with the Company, by any of Inhale
Therapeutics, Dura Pharmaceuticals, Aradigm Corporation, Battelle Pulmonary

                                       6.
<PAGE>

Therapeutics or Sheffield Pharmaceuticals, without the prior written consent of
the Company. In the event that you commence any such employment during such 12
month period without the prior written consent of the Company, the benefits
otherwise due to you under Section 4 will terminate, effective on the date you
commence such employment.

SECTION 6. ADMINISTRATION AND OPERATION OF THE PLAN

         The Company is the "Plan Sponsor" and the "Plan Administrator" of the
Plan, as such terms are defined in the Employee Retirement Income Security Act
of 1974 ("ERISA"). The Company, in its capacity as Plan Administrator of the
Plan, is the named fiduciary that has the authority to control and manage the
operation and administration of the Plan. The Company has the sole discretion to
make such rules, regulations, and interpretations of the Plan and to make such
computations and shall take such other action to administer the Plan as it may
deem appropriate in its sole discretion. Such rules, regulations,
interpretations, computations, and other actions shall be conclusive and binding
upon all persons. The Company may engage the services of such persons or
organizations to render advice or perform services with respect to its
responsibilities under the Plan as it shall determine to be necessary or
appropriate. Such persons or organizations may include (without limitation)
actuaries, attorneys, accountants and consultants.

         Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan. The responsibilities of the Company under the
Plan shall be carried out on its behalf by its directors, officers, employees
and agents, acting on behalf or in the name of the Company in their capacity as
directors, officers, employees and agents and not as individual fiduciaries. The
Company may delegate any of its fiduciary responsibilities under the Plan to
another person or persons pursuant to a written instrument that specifies the
fiduciary responsibilities so delegated to each such person.

SECTION 7. CLAIMS, INQUIRIES AND APPEALS

         (a) APPLICATIONS FOR BENEFITS AND INQUIRIES. Applications for benefits
should be in writing, signed and submitted to: Plan Administrator, Executive
Severance Benefit Plan, AeroGen, Inc., 1310 Orleans Drive, Sunnyvale, California
94089.

         (b) DENIAL OF CLAIMS. If any application for benefits is denied in
whole or in part, the Plan Administrator must notify you, in writing, of the
denial of the application, and of your right to review the denial. The written
notice of denial will be set forth in a manner designed to be understood, and
will include specific reasons for the denial, specific references to the Plan
provision upon which the denial is based, a description of any information or
material that the Plan Administrator needs to complete the review and an
explanation of the Plan's review procedure.

                  This written notice will be given to you within ninety (90)
days after the Plan Administrator receives the application, unless special
circumstances require an extension of time, in which case, the Plan
Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice
of the extension will be furnished to you before the end of the initial 90-day
period.

                                       7.
<PAGE>

                  This notice of extension will describe the special
circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the application. If written notice of
denial of the application for benefits is not furnished within the specified
time, the application shall be deemed to be denied. You will then be permitted
to appeal the denial in accordance with the review procedure described below.

         (c) REQUEST FOR REVIEW. You (or your authorized representative) may
appeal a denied benefit claim by submitting a written request for a review to:
Review Panel, Executive Severance Benefit Plan, AeroGen, Inc., 1310 Orleans
Drive, Sunnyvale, California 94089. The Review Panel shall be comprised of two
(2) or more persons to be appointed by the Company. Your appeal must be
submitted within sixty (60) days after the application is denied (or deemed
denied). The Review Panel will give you (or your representative) an opportunity
to review pertinent documents in preparing a request for a review.

                  A request for review must set forth all of the grounds on
which it is based, all facts in support of the request and any other matters
that you or your representative feel are pertinent. The Review Panel may require
you or your representative to submit additional facts, documents or other
material as it may find necessary or appropriate in making its review.

         (d) DECISION ON REVIEW. The Review Panel will act on each request for
review within sixty (60) days after receipt of the request, unless special
circumstances require an extension of time (not to exceed an additional sixty
(60) days) for processing the request for a review. If an extension for review
is required, written notice of the extension will be furnished within the
initial 60-day period. The Review Panel will give written notice of its decision
to the applicant. In the event that the Review Panel confirms the denial of the
application for benefits in whole or in part, the notice will outline the
specific Plan provisions upon which the decision is based. If written notice of
the Review Panel's decision is not given within the time prescribed above, the
application will be deemed denied on review.

         (e) RULES AND PROCEDURES. The Plan Administrator and/or the Review
Panel may establish rules and procedures, consistent with the Plan and with
ERISA, as necessary and appropriate in carrying out their responsibilities in
reviewing benefit claims. If you wish to submit additional information in
connection with an appeal from the denial (or deemed denial) of benefits, you
may be required to do so at your own expense.

         (f) EXHAUSTION OF REMEDIES. No legal action for benefits under the Plan
may be brought until (i) a written application for benefits has been submitted
in accordance with the procedures described above, (ii) the person claiming
benefits has been notified by the Plan Administrator that the application is
denied (or the application is deemed denied due to the Plan Administrator's
failure to act on it within the time prescribed), (iii) a written request for a
review of the application has been submitted in accordance with the appeal
procedure described above and (iv) the person appealing the denial has been
notified in writing that the Review Panel has denied the appeal (or the appeal
is deemed to be denied due to the Review Panel's failure to take any action on
the claim within the time prescribed).

                                       8.
<PAGE>

SECTION 8. BASIS OF PAYMENTS TO AND FROM THE PLAN

         All benefits under the Plan shall be paid by the Company. The Plan
shall be unfunded and benefits hereunder shall be paid only from the general
assets of the Company.

SECTION 9. LEGAL FEES.

         If there is termination of your employment with the Company pursuant to
Section 4 hereof followed by a dispute as to whether you are entitled to the
benefits provided under this Agreement, then, during the period of that dispute
the Company shall pay you fifty percent (50%) of the amount specified in Section
4 (except that the Company shall pay one hundred percent (100%) of any insurance
premiums provided for in Section 4), if, and only if, you agree in writing that
if the dispute is resolved against you, you shall promptly refund to the Company
all payments you receive plus interest at the rate provided in Section 1274(d)
of the Code, compounded quarterly. If the dispute is resolved in your favor,
promptly after resolution of the dispute the Company shall pay you the sum that
was withheld during the period of the dispute plus interest at the rate provided
in Section 1274(d) of the Code, compounded quarterly.

         Notwithstanding any other provisions of this Plan, if you either (i)
bring any action to enforce your rights pursuant to Section 4 of this Plan, or
(ii) defend any legal challenge to your rights under Section 4 hereof, you shall
be entitled to recover reasonable attorneys' fees and costs incurred in
connection with such action from the Company, payable on a monthly basis,
regardless of the outcome of such action; provided, however, that in the event
such action is commenced by you, the court finds the claim was brought in good
faith.

SECTION 10. AMENDMENT AND TERMINATION

         The Company reserves the right to amend or terminate this Plan at any
time; PROVIDED, HOWEVER, that this Plan may not be amended or terminated
following the effective date of a Change in Control, and no amendment or
termination of the Plan shall adversely affect any benefits to which you have
become entitled prior to such amendment or termination.

SECTION 11. NON-ALIENATION OF BENEFITS

         No Plan benefit may be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered or charged, and any attempt to do so will be void.

SECTION 12. SUCCESSORS AND ASSIGNS

         This Plan shall be binding upon any surviving entity resulting from a
Change in Control and upon any other person who is a successor by merger,
acquisition, consolidation or otherwise to the business formerly carried on by
the Company without regard to whether or not such person actively adopts or
formally continues the Plan. Eligible Employees, to the extent they are
otherwise eligible for benefits under the Plan, are intended third party
beneficiaries of this provision.

                                       9.
<PAGE>

SECTION 13.       LEGAL CONSTRUCTION

         This Plan shall be interpreted in accordance with ERISA and, to the
extent not preempted by ERISA, with the laws of the State of California. This
Plan constitutes both a plan document and a summary plan description for
purposes of ERISA.

SECTION 14. OTHER PLAN INFORMATION

         Plan Identification Number:                   502

         Employer Identification Number:               33-0488580

         Ending of the Plan's Fiscal Year:             December 31

         Agent for the Service of Legal Process:       AeroGen, Inc., 1310
                                                       Orleans Drive, Sunnyvale,
                                                       California 94089

SECTION 15. STATEMENT OF ERISA RIGHTS

         As a participant in this Plan (which is a welfare benefit plan
sponsored by the Company) you are entitled to certain rights and protections
under ERISA, including the right to:

         (a) Examine, without charge, at the Plan Administrator's office and at
other specified locations, such as work sites, all Plan documents and copies of
all documents filed by the Plan with the U.S. Department of Labor, such as
detailed annual reports;

         (b) Obtain copies of all Plan documents and Plan information upon
written request to the Plan Administrator. The Plan Administrator may make a
reasonable charge for the copies; and

         (c) Receive a summary of the Plan's annual financial report, in the
case of a plan which is required to file an annual financial report with the
Department of Labor. (Generally, all pension plans and welfare plans with 100 or
more participants must file these annual reports.)

         In addition to creating rights for Plan participants, ERISA imposes
duties upon the people responsible for the operation of the employee benefit
plan. The people who operate the Plan, called "fiduciaries" of the Plan, have a
duty to do so prudently and in the interest of you and other Plan participants
and beneficiaries.

         No one, including your employer or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining a
Plan benefit or exercising your rights under ERISA. If your claim for a Plan
benefit is denied in whole or in part, you must receive a written explanation of
the reason for the denial. You have the right to have the Plan review and
reconsider your claim.

         Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within thirty (30) days, you may file suit in a federal court. In such a case,
the court may require the Plan Administrator to

                                       10.
<PAGE>

provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator. If you have a claim for benefits that is
denied or ignored, in whole or in part, you may file suit in a state or federal
court. If it should happen that the Plan fiduciaries misuse the Plan's money, or
if you are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a federal
court. The court will decide who should pay court costs and legal fees. If you
are successful, the court may order the person you have sued to pay these costs
and fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.

         If you have any questions about this statement or about your rights
under ERISA, you should contact the nearest office of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, listed in your telephone
directory, or the Division of Technical Assistance and Inquiries, Pension and
Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution
Avenue N.W., Washington, D.C. 20210.

Exhibit A: Release (For Persons 40 Years of Age or Older-Group Termination)
Exhibit B: Release (For Persons 40 Years of Age or Older-Individual Termination)
Exhibit C: Release (For Persons Under 40 Years of Age)

                                       11.
<PAGE>

                                    EXHIBIT A

        RELEASE (FOR PERSONS 40 YEARS OF AGE OR OLDER-GROUP TERMINATION)

         I understand and agree completely to the terms set forth in the
AeroGen, Inc. Executive Severance Benefit Plan (the "Plan").

         In consideration of benefits I will receive under the Plan, I hereby
release, acquit and forever discharge the Company, its parents and subsidiaries,
and their respective officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a result
of any third party action against me based on my employment with the Company),
arising out of or in any way related to agreements, events, acts or conduct at
any time prior to and including the date I execute this Agreement, including but
not limited to: all such claims and demands directly or indirectly arising out
of or in any way connected with my employment with the Company or the
termination of that employment, including but not limited to, claims of
intentional and negligent infliction of emotional distress, any and all tort
claims for personal injury, claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other ownership interests in the
Company, vacation pay, fringe benefits, expense reimbursements, severance pay,
or any other form of compensation; claims pursuant to any federal, state or
local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"); the federal Americans with Disabilities Act of
1990; the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing.

         I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after I execute this Agreement; (b) I have the right to consult with an
attorney prior to executing this Agreement; (c) I have forty-five (45) days from
the date I receive this Agreement and the information specified in (f) below to
consider this Agreement (although I voluntarily may choose to execute this
Agreement earlier); (d) I have seven (7) days following the execution of this
Agreement to revoke the Agreement; and (e) this Agreement shall not be effective
until the later of (i) the date upon which the revocation period has expired,
which shall be the eighth (8th) day after I execute this Agreement, and (ii) the
date I return this Agreement, fully executed, to the Company; and (f) I have
received with this Agreement a detailed list of the job titles and ages of all
employees who were terminated in this group termination and the ages of all
employees of the Company and its affiliates in the same job classification or
organizational unit who were not terminated.

                                       1.
<PAGE>

         I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company, its affiliates, and the entities and persons specified
above.

EMPLOYEE

Name:                                  Date:

                                       2.
<PAGE>

                                    EXHIBIT B

      RELEASE (FOR PERSONS 40 YEARS OF AGE OR OLDER-INDIVIDUAL TERMINATION)

         I understand and agree completely to the terms set forth in the
AeroGen, Inc. Executive Severance Benefit Plan (the "Plan").

         In consideration of benefits I will receive under the Plan, I hereby
release, acquit and forever discharge the Company, its parents and subsidiaries,
and their respective officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a result
of any third party action against me based on my employment with the Company),
arising out of or in any way related to agreements, events, acts or conduct at
any time prior to and including the date I execute this Agreement, including but
not limited to: all such claims and demands directly or indirectly arising out
of or in any way connected with my employment with the Company or the
termination of that employment, including but not limited to, claims of
intentional and negligent infliction of emotional distress, any and all tort
claims for personal injury, claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other ownership interests in the
Company, vacation pay, fringe benefits, expense reimbursements, severance pay,
or any other form of compensation; claims pursuant to any federal, state or
local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"); the federal Americans with Disabilities Act of
1990; the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing.

         I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA, as amended. I also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Release Agreement; (b) I have been
advised hereby that I have the right to consult with an attorney prior to
executing this Agreement; (c) I have twenty-one (21) days to consider this
Agreement (although I may choose to voluntarily execute this Agreement earlier);
(d) I have seven (7) days following the execution of this Agreement by the
parties to revoke the Agreement; and (e) this Agreement will not be effective
until the date upon which the revocation period has expired, which will be the
eighth day after this Agreement is executed by me, provided that the Company has
also executed this Agreement by that date ("Effective Date").

         I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN

                                       1.
<PAGE>

BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby
expressly waive and relinquish all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to my release of any
claims I may have against the Company, its affiliates, and the entities and
persons specified above.

EMPLOYEE

Name:                                  Date:

                                       2.
<PAGE>

                                    EXHIBIT C

                   RELEASE (FOR PERSONS UNDER 40 YEARS OF AGE)

         I understand and agree completely to the terms set forth in the
AeroGen, Inc. Executive Severance Benefit Plan (the "Plan").

         In consideration of benefits I will receive under the Plan, I hereby
release, acquit and forever discharge the Company, its parents and subsidiaries,
and their respective officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a result
of any third party action against me based on my employment with the Company),
arising out of or in any way related to agreements, events, acts or conduct at
any time prior to and including the date I execute this Agreement, including but
not limited to: all such claims and demands directly or indirectly arising out
of or in any way connected with my employment with the Company or the
termination of that employment, including but not limited to, claims of
intentional and negligent infliction of emotional distress, any and all tort
claims for personal injury, claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other ownership interests in the
Company, vacation pay, fringe benefits, expense reimbursements, severance pay,
or any other form of compensation; claims pursuant to any federal, state or
local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964 as amended; the federal Americans with Disabilities Act of
1990; the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing.

         I acknowledge that to become effective, I must sign and return this
Agreement to the Company so that it is received not later than fourteen (14)
days following the date of my employment termination. I acknowledge that I have
read and understand Section 1542 of the California Civil Code which reads as
follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR." I hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to
my release of any claims I may have against the Company, its affiliates, and the
entities and persons specified above.

EMPLOYEE

Name:                                  Date:

                                       1.

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