Document:

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                                                                   EXHIBIT 10.5

                                  AEROGEN, INC.

                 2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                             ADOPTED AUGUST 24, 2000
            AMENDED FOR 3 FOR 1 REVERSE STOCK SPLIT ___________, 2000
                   APPROVED BY STOCKHOLDERS _______ ___, 2000

                       EFFECTIVE DATE: _________ ___, 2000
                             TERMINATION DATE: NONE

1.    PURPOSES.

      (a)  ELIGIBLE  OPTION  RECIPIENTS. The persons eligible to receive
Options are the Non-Employee Directors of the Company.

      (b)  AVAILABLE OPTIONS. The purpose of the Plan is to provide a means
by which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.

      (c)  GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of its Non-Employee Directors, to secure and retain the
services of new Non-Employee Directors and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.    DEFINITIONS.

      (a)  "ACCOUNTANT" means the independent public accountants of the
Company.

      (b)  "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.

      (c)  "ANNUAL GRANT" means an Option granted annually to all
Non-Employee Directors who meet the specified criteria pursuant to subsection
6(b) of the Plan.

      (d)  "ANNUAL MEETING" means the annual meeting of the stockholders of
the Company.

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

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

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

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

      (i)  "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 of the Company who are not compensated by the Company for
their services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

      (j)  "CONTINUOUS SERVICE" means that the Optionholder's service with
the Company or an Affiliate, whether as an Employee, Director or Consultant,
is not interrupted or terminated. The Optionholder's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Optionholder renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for which the
Optionholder renders such service, provided that there is no interruption or
termination of the Optionholder's Continuous Service. For example, a change
in status from a Non-Employee Director of the Company to a Consultant of an
Affiliate or an Employee of the Company 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.

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

      (l)  "DISABILITY" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate of the Company
because of the sickness or injury of the person.

      (m)  "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.

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

      (o)  "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.

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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.

      (p)  "INITIAL GRANT" means an Option granted to a Non-Employee Director
who meets the specified criteria pursuant to subsection 6(a) of the Plan.

      (q)  "IPO DATE" means the effective date of the initial public offering
of the Common Stock.

      (r)  "NON-EMPLOYEE DIRECTOR" means a Director who is not an Employee.

      (s)  "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

      (t)  "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.

      (u)  "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.

      (v)  "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.

      (w)  "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.

      (x)  "PLAN" means this AeroGen, Inc. 2000 Non-Employee Directors' Stock
Option Plan.

      (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.

3.    ADMINISTRATION.

     (a)   ADMINISTRATION BY BOARD. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.

     (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 the provisions of each Option to the extent not
specified in the Plan.

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         (ii)    To construe and interpret the Plan and Options 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 Option 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 an Option 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 that are not in conflict with the provisions of the Plan.

      (c)  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 the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate two hundred
fifty thousand (250,000) shares of Common Stock.

      (b)  REVERSION OF SHARES TO THE SHARE RESERVE. If any Option 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
Option shall revert to and again become available for issuance under the Plan.

      (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.

      The Options as set forth in section 6  automatically  shall be granted
under the Plan to all  Non-Employee Directors.

6.    NON-DISCRETIONARY GRANTS.

      (a)  INITIAL GRANTS. Without any further action of the Board, each
person who after the IPO Date is elected or appointed for the first time to
be a Non-Employee Director automatically shall, upon the date of his or her
initial election or appointment to be a Non-Employee Director, be granted an
Initial Grant to purchase fifteen thousand (15,000) shares of Common Stock on
the terms and conditions set forth herein.

      (b)  ANNUAL GRANTS. Without any further action of the Board, on the day
of each Annual Meeting, commencing with the Annual Meeting in 2001, each
person who is then a Non-

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Employee Director, automatically shall be granted an Annual Grant to purchase
five thousand (5,000) shares of Common Stock on the terms and conditions set
forth herein.

7.    OPTION PROVISIONS.

      Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. 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.  No Option shall be  exercisable  after the  expiration  of
ten (10) years from the date it was granted.

      (b)  EXERCISE PRICE. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
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.

      (c)  CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes and
regulations, in any combination of (i) cash or check, (ii) delivery to the
Company of other Common Stock or (iii) pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds. 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).

      (d)  TRANSFERABILITY. An Option is transferable by will or by the laws
of descent and distribution. An Option also may be transferable upon written
consent of the Company if, at the time of transfer, a Form S-8 registration
statement under the Securities Act is available for the exercise of the
Option and the subsequent resale of the underlying securities. In addition,
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.

      (e)  VESTING. Options shall vest as follows:

           (i)   Initial  Grants:  1/3rd of the shares  shall vest on the
first  anniversary  of the date of grant and 1/36th of the shares shall vest
monthly for two (2) years thereafter.

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           (ii)  Annual Grants:  1/36th of the shares shall vest monthly for
three (3) years.

      (f)  EARLY EXERCISE. The Option may, but need not, include a provision
where by 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 shared 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.

      (g)  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 it 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 (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.

      (h)  EXTENSION OF TERMINATION DATE. 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 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 7(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.

      (i)  DISABILITY OF OPTIONHOLDER. In the event 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 it 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 (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.

      (j)  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 three-month period 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 the 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, but only within the period ending on the earlier of (1)
the date eighteen (18) months following the date of death or (2) the
expiration of the term of such Option as set forth in the Option Agreement.
If, after death, the Option is not exercised within the time specified
herein, the Option shall terminate.

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8.    COVENANTS OF THE COMPANY.

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

      (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 Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities
Act the Plan, any Option or any stock issued or issuable pursuant to any such
Option. 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 stock under the
Plan, the Company shall be relieved from any liability for failure to issue
and sell stock upon exercise of such Options unless and until such authority
is obtained.

9.    USE OF PROCEEDS FROM STOCK.

      Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

10.   MISCELLANEOUS.

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

      (b)  NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed
or Option granted pursuant thereto shall confer upon any Optionholder any
right to continue to serve the Company as a Non-Employee Director 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.

      (c)  INVESTMENT ASSURANCES. The Company may require an Optionholder, as
a condition of exercising or acquiring stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Optionholder'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 Option; and (ii) to
give written assurances satisfactory to the Company stating that the
Optionholder is acquiring the stock subject to the Option for the
Optionholder's own account and not with any present intention of selling or
otherwise distributing the stock.

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The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares upon the
exercise or acquisition of stock under the Option 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
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

      (d)  WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in
addition to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering
a cash payment; (ii) authorizing the Company to withhold shares from the
shares of the Common Stock otherwise issuable to the Optionholder as a result
of the exercise or acquisition of stock under the Option, 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 the Common Stock.

11.   ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

      (a)  CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Option, 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
both to the Plan pursuant to Section 4 and to the nondiscretionary Options
specified in Section 6, and the outstanding Options will be appropriately
adjusted in the nature, class(es) and number of securities and price per
share of stock subject to such outstanding Options. 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 Options 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 or (iii) a reverse merger in which the Company
is the surviving corporation but the shares of 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, then
with respect to Options held by Optionholders whose Continuous Service has
not terminated, the vesting of such Options

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(and, if applicable, the time during which such Options may be exercised)
shall be accelerated in full, and the Options shall terminate if not
exercised (if applicable) at or prior to such event. With respect to any
Options outstanding under the Plan, such Options shall terminate if not
exercised (if applicable) prior to such event.

      (d)  PARACHUTE PAYMENTS. In the event that the acceleration of the
vesting and exercisability of the Options provided for in subsection 11(c)
and benefits otherwise payable to a Optionholder (i) constitute "parachute
payments" within the meaning of Section 280G of the Code, or any comparable
successor provisions, and (ii) but for this subsection would be subject to
the excise tax imposed by Section 4999 of the Code, or any comparable
successor provisions (the "Excise Tax"), then such Optionholder's benefits
hereunder shall be either

           (i)   provided to such Optionholder in full, or

           (ii)  provided to such Optionholder 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 such
Optionholder, 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 the Company and such Optionholder otherwise
agree in writing, any determination required under this subsection shall be
made in writing in good faith by the Accountants. In the event of a reduction
of benefits hereunder, the Optionholder shall be given the choice of which
benefits to reduce. For purposes of making the calculations required by this
subsection, the Accountants 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. The Company and the Optionholder shall furnish to
the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this subsection.
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this subsection.

           If, notwithstanding any reduction described in this subsection,
the Internal Revenue Service (the "IRS") determines that the Optionholder is
liable for the Excise Tax as a result of the receipt of the payment of
benefits as described above, then the Optionholder shall be obligated to pay
back to the Company, within thirty (30) days after a final IRS determination
or in the event that the Optionholder challenges 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 the Optionholder's 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 the
Optionholder's net after-tax proceeds with respect to the

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payment of such benefits being maximized. If the Excise Tax is not eliminated
pursuant to this paragraph, the Optionholder shall pay the Excise Tax.

           Notwithstanding any other provision of this subsection 11(d), if
(i) there is a reduction in the payment of benefits as described in this
subsection, (ii) the IRS later determines that the Optionholder is liable for
the Excise Tax, the payment of which would result in the maximization of the
Optionholder's net after-tax proceeds (calculated as if the Optionholder's
benefits had not previously been reduced), and (iii) the Optionholder pays
the Excise Tax, then the Company shall pay to the Optionholder those benefits
which were reduced pursuant to this subsection contemporaneously or as soon
as administratively possible after the Optionholder pays the Excise Tax so
that the Optionholder's net after-tax proceeds with respect to the payment of
benefits is maximized.

      If the Optionholder either (i) brings any action to enforce rights
pursuant to this subsection 11(d), or (ii) defend any legal challenge to his
or her rights hereunder, the Optionholder shall be entitled to recover
attorneys' fees and costs incurred in connection with such action, regardless
of the outcome of such action; provided, however, that in the event such
action is commenced by the Optionholder, the court finds the claim was
brought in good faith.

12.   AMENDMENT OF THE PLAN AND OPTIONS.

      (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 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.

      (c)  NO IMPAIRMENT OF RIGHTS. Rights under any Option 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 Optionholder and (ii) the
Optionholder consents in writing.

      (d)  AMENDMENT OF OPTIONS. The Board at any time, and from time to
time, may amend the terms of any one or more Options; provided, however, that
the rights under any Option shall not be impaired by any such amendment
unless (i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

13.   TERMINATION OR SUSPENSION OF THE PLAN.

      (a)  PLAN TERM. The Board may suspend or terminate the Plan at any
time. No Options may be granted under the Plan while the Plan is suspended or
after it is terminated.

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

14.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective on the IPO Date, but no Option shall
be exercised 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.

         All questions concerning the construction, validity and
interpretation of this Plan shall be governed by the law of the State of
California, without regard to such state's conflict of laws rules.

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                                 AEROGEN, INC.
                2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT
                          (NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, AeroGen, Inc. (the "Company") has granted you an option
under its 2000 Non-Employee Directors' Stock Option Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined
terms not explicitly defined in this Stock Option Agreement but defined in
the Plan shall have the same definitions as in the Plan.

The details of your option are as follows:

         1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
Capitalization Adjustments, as provided in the Plan.

         3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions of your
option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all
or part of your option, including the nonvested portion of your option;
provided, however, that:

         (a) a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;

         (b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement; and

         (c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred.

         4. METHOD OF PAYMENT. Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY YOUR GRANT NOTICE, which may include one or more of the
following:

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<PAGE>

         (a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the
sales proceeds.

         (b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery
of already-owned shares of Common Stock either that you have held for the
period required to avoid a charge to the Company's reported earnings
(generally six months) or that you did not acquire, directly or indirectly
from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value
on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the
foregoing, you may not exercise your option by tender to the Company of
Common Stock to the extent such tender would violate the provisions of any
law, regulation or agreement restricting the redemption of the Company's
stock.

         (c) Pursuant to the following deferred payment alternative:

                  (i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4) years
from date of exercise or, at the Company's election, upon termination of your
Continuous Service.

                  (ii) 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
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement.

                  (iii) 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 be made in cash and not by deferred
payment.

                  (iv) In order to elect the deferred payment alternative,
you must, as a part of your written notice of exercise, give notice of the
election of this payment alternative and, in order to secure the payment of
the deferred exercise price to the Company hereunder, if the Company so
requests, you must tender to the Company a promissory note and a security
agreement covering the purchased shares of Common Stock, both in form and
substance satisfactory to the Company, or such other or additional
documentation as the Company may request.

         5. WHOLE SHARES. You may exercise your option only for whole shares
of Common Stock.

                                       2
<PAGE>

         6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt
from the registration requirements of the Securities Act. The exercise of
your option must also comply with other applicable laws and regulations
governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such
laws and regulations.

         7. TERM. You may not exercise your option before the commencement of
its term or after its term expires. The term of your option commences on the
Date of Grant and expires upon the EARLIEST of the following:

         (a) three (3) months after the termination of your Continuous
Service for any reason other than your Disability or death, provided that if
during any part of such three- (3-) month period your option is not
exercisable solely because of the condition set forth in the preceding
paragraph relating to "Securities Law Compliance," your option shall not
expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination
of your Continuous Service;

         (b) twelve (12) months after the termination of your Continuous
Service due to your Disability;

         (c) eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous
Service terminates;

         (d) the Expiration Date indicated in your Grant Notice; or

         (e) the day before the tenth (10th) anniversary of the Date of Grant.

          8. EXERCISE.

         (a) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

         (b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to which
the shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

                                       3
<PAGE>

         9. TRANSFERABILITY. Your option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a
third party who, in the event of your death, shall thereafter be entitled to
exercise your option.

         10. RIGHT OF REPURCHASE. To the extent provided in the Company's
bylaws as amended from time to time, the Company shall have the right to
repurchase all or any part of the shares of Common Stock you acquire pursuant
to the exercise of your option.

         11. OPTION NOT A SERVICE CONTRACT. Your option is not an employment
or service contract, and nothing in your option shall be deemed to create in
any way whatsoever any obligation on your part to continue in the employ of
the Company or an Affiliate, or of the Company or an Affiliate to continue
your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or an Affiliate.

         12. WITHHOLDING OBLIGATIONS.

         (a) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board to the extent permitted by the Company), any
sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise
in connection with your option.

         (b) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of
Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined
by the Company as of the date of exercise, not in excess of the minimum
amount of tax required to be withheld by law. If the date of determination of
any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election under
Section 83(b) of the Code, covering the aggregate number of shares of Common
Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing
of such election, shares of Common Stock shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of your
option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.

         (c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly,
you may not be able to exercise your

                                       4
<PAGE>

option when desired even though your option is vested, and the Company shall
have no obligation to issue a certificate for such shares of Common Stock or
release such shares of Common Stock from any escrow provided for herein.

         13. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by mail by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to
you at the last address you provided to the Company.

         14. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
your option and those of the Plan, the provisions of the Plan shall control.

                                       5
<PAGE>

                                 AEROGEN, INC.
                           STOCK OPTION GRANT NOTICE
                                 INITIAL GRANT
               (2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)

AeroGen, Inc. (the "Company"), pursuant to its 2000 Non-Employee Directors'
Stock Option Plan (the "Plan"), hereby grants to Optionholder an option to
purchase the number of shares of the Company's Common Stock set forth below.
This option is subject to all of the terms and conditions as set forth herein
and in the Stock Option Agreement, the Plan and the Notice of Exercise, all
of which are attached hereto and incorporated herein in their entirety.

Optionholder:
                                     -----------------------------------------
Date of Grant:
                                     -----------------------------------------
Vesting Commencement Date:
                                     -----------------------------------------
Number of Shares Subject to Option:
                                     -----------------------------------------
Exercise Price (Per Share):
                                     -----------------------------------------
Total Exercise Price:
                                     -----------------------------------------
Expiration Date:
                                     -----------------------------------------

<TABLE>
<S>                   <C>                                     <C>
TYPE OF GRANT:        Nonstatutory Stock Option

EXERCISE SCHEDULE:    |_|  Same as Vesting Schedule           |_|  Early Exercise Permitted

VESTING SCHEDULE:     1/3rd of the shares vest one year after the Vesting Commencement Date.
                      1/36th of the shares vest monthly thereafter over the next two years.

PAYMENT:              By one or a combination of the following items (described in the Stock Option Agreement):

                               By cash or check
                               Pursuant to a Regulation T Program if the Shares are publicly traded
                               By delivery of already-owned shares if the Shares are publicly traded
</TABLE>

ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock
Option Agreement and the Plan. Optionholder further acknowledges that as of
the Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan
set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior
oral and written agreements on that subject with the exception of (i) options
previously granted and delivered to Optionholder under the Plan, and (ii) the
following agreements only:

         OTHER AGREEMENTS:           -----------------------------------------

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

AEROGEN, INC.                              OPTIONHOLDER:

By: -------------------------------        -----------------------------------
             Signature                                Signature

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

Date: -----------------------------

ATTACHMENTS:  Stock Option Agreement, 2000 Non-Employee Directors' Stock
              Option Plan and Notice of Exercise

                                       1
<PAGE>

                                 AEROGEN, INC.
                           STOCK OPTION GRANT NOTICE
                                 ANNUAL GRANT
               (2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)

AeroGen, Inc. (the "Company"), pursuant to its 2000 Non-Employee Directors'
Stock Option Plan (the "Plan"), hereby grants to Optionholder an option to
purchase the number of shares of the Company's Common Stock set forth below.
This option is subject to all of the terms and conditions as set forth herein
and in the Stock Option Agreement, the Plan and the Notice of Exercise, all
of which are attached hereto and incorporated herein in their entirety.

Optionholder:
                                             ---------------------------------
Date of Grant:
                                             ---------------------------------
Vesting Commencement Date:
                                             ---------------------------------
Number of Shares Subject to Option:
                                             ---------------------------------
Exercise Price (Per Share):
                                             ---------------------------------
Total Exercise Price:
                                             ---------------------------------
Expiration Date:
                                             ---------------------------------

<TABLE>
<S>                   <C>                                     <C>
TYPE OF GRANT:        Nonstatutory Stock Option

EXERCISE SCHEDULE:    |_|  Same as Vesting Schedule           |_|  Early Exercise Permitted

VESTING SCHEDULE:     1/36th of the shares vest in equal monthly installments over three (3) years.

PAYMENT:              By one or a combination of the following items (described in the Stock Option Agreement):

                               By cash or check
                               Pursuant to a Regulation T Program if the Shares are publicly traded
                               By delivery of already-owned shares if the Shares are publicly traded
</TABLE>

ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock
Option Agreement and the Plan. Optionholder further acknowledges that as of
the Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan
set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior
oral and written agreements on that subject with the exception of (i) options
previously granted and delivered to Optionholder under the Plan, and (ii) the
following agreements only:

         OTHER AGREEMENTS:                  ------------------------------------

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

AEROGEN, INC.                                   OPTIONHOLDER:

By: ------------------------------------    ------------------------------------
                Signature                               Signature

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

Date: ----------------------------------

ATTACHMENTS:  Stock Option Agreement, 2000 Non-Employee Directors' Stock
Option Plan and Notice of Exercise

                                       2
<PAGE>

                              NOTICE OF EXERCISE

AeroGen, Inc
1310 Orleans Drive
Sunnyvale, California 94089                    Date of Exercise: _______________

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

<TABLE>
<S>                                                  <C>
         Type of option (check one):                 Nonstatutory

         Stock option dated:                         _______________

         Number of shares as
         to which option is
         exercised:                                  _______________

         Certificates to be
         issued in name of:                          _______________

         Total exercise price:                       $______________

         Cash payment delivered
         herewith:                                   $______________

         Value of ________ shares of
         AeroGen, Inc. common
         stock delivered herewith(1):                $______________
</TABLE>

By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the 2000 Non-Employee Directors' Stock
Option Plan and (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option.

                                           Very truly yours,

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

--------------------------
(1)      Shares must meet the public trading requirements set forth in the
option. Shares must be valued in accordance with the terms of the option
being exercised, must have been owned for the minimum period required in the
option, and must be owned free and clear of any liens, claims, encumbrances
or security interests. Certificates must be endorsed or accompanied by an
executed assignment separate from certificate.

                                       3<PAGE>
                                                                    EXHIBIT 10.6

                                  AEROGEN, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

                  ADOPTED BY BOARD OF DIRECTORS AUGUST 24, 2000
         AMENDED FOR 3 FOR 1 REVERSE STOCK SPLIT _____________, 2000
                  APPROVED BY STOCKHOLDERS ___________, 2000
                      TERMINATION DATE: AUGUST 24, 2020

1.    PURPOSE.

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

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

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

2.    DEFINITIONS.

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

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

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

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

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

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

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

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

                                 -1-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                 -2-
<PAGE>

3.    ADMINISTRATION.

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

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

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

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

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

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

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

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

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

4.    SHARES SUBJECT TO THE PLAN.

      (a)  Subject to the provisions of Section 13 relating to adjustments
upon changes in securities, the Shares that may be sold pursuant to Rights
granted under the Plan shall not exceed in the aggregate two hundred fifty
thousand (250,000) Shares. If any Right granted under the Plan shall for any
reason terminate without having been exercised, the Shares not purchased
under such Right shall again become available for the Plan.

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

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

                                 -3-
<PAGE>

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

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

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

5.    GRANT OF RIGHTS; OFFERING.

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

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

6.    ELIGIBILITY.

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

                                 -4-
<PAGE>

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

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

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

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

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

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

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

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

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

                                 -5-
<PAGE>

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

7.    RIGHTS; PURCHASE PRICE.

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

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

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

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

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

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

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

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

                                 -6-
<PAGE>

8.    PARTICIPATION; WITHDRAWAL; TERMINATION.

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

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

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

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

9.    EXERCISE.

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

                                 -7-
<PAGE>

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

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

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

10.   COVENANTS OF THE COMPANY.

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

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

                                 -8-
<PAGE>

11.   USE OF PROCEEDS FROM SHARES.

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

12.   RIGHTS AS A STOCKHOLDER.

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

13.   ADJUSTMENTS UPON CHANGES IN SECURITIES.

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

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

                                 -9-
<PAGE>

14.   AMENDMENT OF THE PLAN.

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

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

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

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

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

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

15.   DESIGNATION OF BENEFICIARY.

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

                                -10-
<PAGE>

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

16.   TERMINATION OR SUSPENSION OF THE PLAN.

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

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

17.   EFFECTIVE DATE OF PLAN.

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

                                -11-
<PAGE>

                            AEROGEN, INC.

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

<TABLE>
<CAPTION>

                       ACTION                                        COMPLETE SECTIONS:
<S>                    <C>                                           <C>
-------------------    ----
SECTION 1:                 New Enrollment                            2, 3, 6, 7
-------------------    ----
                           Payroll Deduction Change                  2, 4, 7
                       ----
ACTIONS                    Withdrawal                                2, 5, 7
                       ----
                           Beneficiary Designation                   2, 6, 7
                       ----

==================================================================================================================================
-------------------
SECTION 2:
-------------------
                         Name
                              ------------------------------------------------------------------------------------------
                                  Last                             First                                MI
EMPLOYEE                 Home Address
DATA                                  ----------------------------------------------------------------------------------
                                                                   Street

                              ------------------------------------------------------------------------------------------
                                  City                       State                     Zip Code
                         Social Security #:  |_||_||_| - |_||_| - |_||_||_||_|

==================================================================================================================================
-------------------
SECTION 3:
-------------------
                       Effective:                                 Payroll Deduction Amount:  _____% of Earnings (whole percentage,
NEW                                                               maximum 15%)
ENROLLMENT             |_| _______________, 200__

                       |_| Initial Offering

==================================================================================================================================
-------------------
SECTION 4:
-------------------
                       Effective  _____________________,  200__,  I  authorize  the  following  new  level  of  payroll
                       deduction:   (circle one)

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

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

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

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

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

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

==================================================================================================================================
-------------------
SECTION 6:             BENEFICIARY                                      RELATIONSHIP OF BENEFICIARY
-------------------
</TABLE>

                                -12-
<PAGE>

BENEFICIARY
DESIGNATION
            -------------------------------------------------------------------

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

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

AUTHORIZATION

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

Date:                           Signature:
     ----------------------               -------------------------------------

                                -13-

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