
<PAGE>

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                                                  EXHIBIT 10.10

                                 INSULIN INHALER

                                   DEVELOPMENT

                                    AGREEMENT

                                 BY AND BETWEEN

                          BECTON, DICKINSON AND COMPANY

                                       AND

                                  AEROGEN, INC.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>

<TABLE>
<S>                                                                                                            <C>
1.       DEFINITIONS..............................................................................................1

         1.1      "AeroGen Know-How"..............................................................................1

         1.2      "AeroGen Patents"...............................................................................1

         1.3      "AeroGen Technology"............................................................................2

         1.4      "Affiliate".....................................................................................2

         1.5      "BD Cartridge"..................................................................................2

         1.6      "BD Know-How"...................................................................................2

         1.7      "BD Patents"....................................................................................2

         1.8      "BD Percentage".................................................................................2

         1.9      "BD Technology".................................................................................2

         1.10     "Cartridge".....................................................................................2

         1.11     "Confidential Information"......................................................................2

         1.12     "Controlled"....................................................................................2

         1.13     "Critical System Specifications"................................................................2

         1.14     "Development Patents"...........................................................................2

         1.15     "Development Invention".........................................................................2

         1.16     "Development Technology"........................................................................2

         1.17     "Development Term"..............................................................................2

         1.18     "Drug"..........................................................................................3

         1.19     "Field".........................................................................................3

         1.20     "Final Specifications"..........................................................................3

         1.21     "Information"...................................................................................3

         1.22     "Inhaler".......................................................................................3

         1.23     "Initial Phase II Trials".......................................................................3

         1.24     "[*]"...........................................................................................3

         1.25     "[*] Technology"................................................................................3

         1.26     "Interim Technical Specifications"..............................................................3

         1.27     "Joint Development Team" or "JDT"...............................................................3

         1.28     "Joint Know-How"................................................................................3

         1.29     "Joint Patents".................................................................................3

         1.30     "Joint Technology"..............................................................................3

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       i
<PAGE>

         1.31     "Marketing Partner".............................................................................3

         1.32     "NDA"...........................................................................................3

         1.33     "Net Sales".....................................................................................4

         1.34     "Partnering Agreement"..........................................................................4

         1.35     "Patent"........................................................................................4

         1.36     "Preliminary Final Specifications"..............................................................4

         1.37     "Product".......................................................................................4

         1.38     "Qualified Supplier"............................................................................4

         1.39     "Retail Product"................................................................................4

         1.40     "Royalty" or "Royalties"........................................................................4

         1.41     "Specifications"................................................................................4

         1.42     "Steering Committee"............................................................................4

         1.43     "Stock Purchase Agreement"......................................................................4

         1.44     "Supply Agreement"..............................................................................4

         1.45     "Technical Development Plan"....................................................................4

         1.46     "Technical Development Program".................................................................4

         1.47     "Third Party"...................................................................................5

         1.48     "Valid Claim"...................................................................................5

         1.49     "Validation Studies"............................................................................5

2.       OVERVIEW.................................................................................................5

         2.1      Development of the Product......................................................................5

         2.2      Commercialization...............................................................................5

3.       MANAGEMENT...............................................................................................5

         3.1      Joint Development Team..........................................................................5

         3.2      Steering Committee..............................................................................6

         3.3      Limitation of Powers............................................................................8

         3.4      Liaisons........................................................................................8

4.       TECHNICAL DEVELOPMENT PROGRAM............................................................................8

         4.1      Technical Development Plan......................................................................8

         4.2      AeroGen Development Activities..................................................................8

         4.3      BD Development Activities.......................................................................8

         4.4      Conduct of Technical Development Program........................................................9

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       ii
<PAGE>

         4.5      Development of Product Specifications...........................................................9

         4.6      Records and Reports.............................................................................9

         4.7      Invention Assignment Agreements................................................................10

5.       CLINICAL DEVELOPMENT....................................................................................10

         5.1      AeroGen Responsibilities.......................................................................10

         5.2      BD Participation...............................................................................11

6.       COMMERCIALIZATION.......................................................................................11

         6.2      BD Right to Secure Marketing Partner...........................................................11

         6.3      Failure to Obtain a Marketing Partner..........................................................11

         6.4      Services by BD.................................................................................12

7.       MANUFACTURING AND SUPPLY................................................................................12

         7.1      Supply of the Drug.............................................................................12

         7.2      Manufacture and Supply of the Cartridge........................................................12

         7.3      Exclusivity....................................................................................13

         7.4      Use of AeroGen Intellectual Property...........................................................14

         7.5      Cost Standards.................................................................................14

8.       LICENSE GRANTS..........................................................................................14

         8.1      To BD..........................................................................................14

         8.2      To AeroGen.....................................................................................15

         8.3      Use of the [*].................................................................................15

         8.4      Reservation of Rights..........................................................................15

9.       ROYALTIES...............................................................................................16

         9.1      Royalties......................................................................................16

         9.2      Pre-Paid Royalties.............................................................................16

         9.3      Calculation of BD Percentage in Certain Circumstances..........................................16

         9.4      Upfront Payments...............................................................................17

         9.5      Payment of the BD Percentage...................................................................17

         9.6      Audits.........................................................................................17

10.      INTELLECTUAL PROPERTY...................................................................................18

         10.1     Ownership......................................................................................18

         10.2     Patent Matters.................................................................................19

         10.3     Defense and Settlement of Third Party Claims...................................................20

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      iii
<PAGE>

         10.4     Infringement By Third Parties..................................................................20

         10.5     Settlements....................................................................................20

11.      CONFIDENTIALITY.........................................................................................20

         11.1     Treatment of Confidential Information..........................................................21

         11.2     Publications...................................................................................21

         11.3     Publicity......................................................................................21

         11.4     Terms of the Agreement.........................................................................22

         11.5     Required Disclosure............................................................................22

         11.6     Survival of Confidentiality....................................................................22

12.      REPRESENTATIONS AND COVENANTS...........................................................................22

         12.1     Mutual Authority...............................................................................22

         12.2     BD Representations and Warranties..............................................................22

         12.3     AeroGen Representations and Warranties.........................................................23

         12.4     Disclaimer.....................................................................................23

13.      TERM AND TERMINATION....................................................................................23

         13.1     Term...........................................................................................23

         13.2     Termination For Other Than Cause...............................................................23

         13.3     Termination For Breach.........................................................................26

         13.4     Effect of Termination..........................................................................27

         13.5     Bankruptcy Rights..............................................................................27

         13.6     Survival.......................................................................................27

14.      INDEMNIFICATION.........................................................................................27

         14.1     By AeroGen.....................................................................................27

         14.2     By BD..........................................................................................27

         14.3     Apportionment..................................................................................28

         14.4     Notice and Procedures..........................................................................28

15.      MISCELLANEOUS...........................................................................................28

         15.1     Entire Agreement; Amendment....................................................................28

         15.2     Dispute Resolution.............................................................................28

         15.3     Force Majeure..................................................................................29

         15.4     Notices........................................................................................29

         15.5     Limitation of Liability........................................................................30

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       iv
<PAGE>

         15.6     Consents Not Unreasonably Withheld or Delayed..................................................30

         15.7     Independent Contractors........................................................................30

         15.8     Maintenance of Records.........................................................................30

         15.9     United States Dollars..........................................................................30

         15.10    No Strict Construction.........................................................................30

         15.11    Assignment.....................................................................................30

         15.12    Performance by Affiliates......................................................................30

         15.13    Counterparts...................................................................................31

         15.14    Further Actions................................................................................31

         15.15    Severability...................................................................................31

         15.16    Ambiguities....................................................................................31

         15.17    Headings.......................................................................................31

         15.18    No Waiver......................................................................................31

EXHIBIT 1  CRITICAL SYSTEM SPECIFICATIONS........................................................................33

EXHIBIT 2  TECHNICAL DEVELOPMENT PLAN............................................................................34

EXHIBIT 4  POTENTIAL INVENTORS...................................................................................43

EXHIBIT 5  FORM OF STANDARD EMPLOYMENT AGREEMENT.................................................................44

EXHIBIT 6  [*]...................................................................................................45
</TABLE>


[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       v
<PAGE>

                      INSULIN INHALER DEVELOPMENT AGREEMENT

         THIS INSULIN INHALER DEVELOPMENT AGREEMENT (the "Agreement") is
executed as of May 10, 2000 (the "Signing Date") and effective as of the 1st day
of January, 2000 (the "Effective Date") by and between AEROGEN, INC., a Delaware
corporation having its principal place of business at 1310 Orleans Drive,
Sunnyvale, CA 94089 ("AeroGen"), and BECTON, DICKINSON AND COMPANY, a New Jersey
corporation having its principal place of business at 1 Becton Drive, Franklin
Lakes, New Jersey 07417-1866 ("BD"). AeroGen and BD are sometimes referred to
herein individually as a "Party" and collectively as the "Parties."

                                    RECITALS

WHEREAS, AeroGen has developed and possesses proprietary drug delivery
technology, including without limitation an aerosol generator device useful for
the systemic delivery of insulin as further described herein; and

WHEREAS, BD possesses extensive experience in the development and
commercialization of medical devices and components thereof, including without
limitation devices for the delivery of insulin; and

WHEREAS, AeroGen and BD desire to enter into a collaboration for the development
of a product for the systemic delivery of insulin to humans, pursuant to the
terms and conditions of this Agreement, with the goal of achieving rapid,
effective development and worldwide registration of a pulmonary insulin inhaler
with a [*] that has broad commercial appeal;

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises
contained herein, the Parties hereby agree as follows:

1.       DEFINITIONS

         The following capitalized terms shall have the following meanings as
used in this Agreement:

         1.1      "AEROGEN KNOW-HOW" means all Information Controlled by AeroGen
during the term of this Agreement that is necessary or useful for [*] hereunder.
"AeroGen Know-How" includes the [*], but specifically excludes [*].

         1.2      "AEROGEN PATENTS" means all Patents Controlled by AeroGen
during the term of this Agreement to the extent that such Patents contain one or
more claims covering an invention that is practiced by BD [*]. "AeroGen Patents"
includes [*], but specifically excludes [*].

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       1.
<PAGE>

         1.3      "AEROGEN TECHNOLOGY" means the AeroGen Know-How and the
AeroGen Patents.

         1.4      "AFFILIATE" means any company or entity controlled by,
controlling or under common control with a Party. As used in this Section 1.4,
"control" means that (a) an entity or company owns, directly or indirectly,
fifty percent (50%) or more of the voting stock of another entity, or (b) an
entity, person or group has the actual ability to control and direct the
management of the entity, whether by contract or otherwise.

         1.5      "BD CARTRIDGE" means [*].

         1.6      "BD KNOW-HOW" means all Information Controlled by BD during
the term of this Agreement that is [*]. "BD Know-How" includes the [*], but
specifically excludes [*].

         1.7      "BD PATENTS" means all Patents Controlled by BD during the
term of this Agreement to the extent that such Patents contain one or more
claims covering an invention that is practiced by AeroGen (or its sublicensees
hereunder) in [*].

         1.8      "BD PERCENTAGE" shall have the meaning ascribed in Section
9.1.

         1.9      "BD TECHNOLOGY" means the BD Patents and the BD Know-How.

         1.10     "CARTRIDGE" means a [*].

         1.11     "CONFIDENTIAL INFORMATION" shall have the meaning ascribed in
Section 11.1.

         1.12     "CONTROLLED" means, with respect to any material, Information
or intellectual property right, possession of the ability by a Party to grant
access, a license, or a sublicense to such material, Information or intellectual
property right as provided for herein without violating an agreement with a
Third Party as of the time such Party would be first required hereunder to grant
the other Party such access, license or sublicense.

         1.13     "CRITICAL SYSTEM SPECIFICATIONS" means the [*] for the Product
set forth in Exhibit 1 hereto.

         1.14     "DEVELOPMENT PATENTS" means any Patents claiming a Development
Invention; provided, however, that such Patents do not include [*].

         1.15     "DEVELOPMENT INVENTION" means an invention in the Development
Technology.

         1.16     "DEVELOPMENT TECHNOLOGY" means all Information created or
developed pursuant to the Technical Development Program or thereafter pursuant
to this Agreement, either solely by a Party or jointly by the Parties, and all
Patents covering such Information.

         1.17     "DEVELOPMENT TERM" means the period beginning on the Effective
Date and ending on the earlier of (a) [*], or (b) [*], unless extended by mutual
written agreement of the Parties.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       2.
<PAGE>

         1.18     "DRUG" means a [*] of [*] insulin, including without
limitation [*].

         1.19     "FIELD" means the treatment of diabetes mellitus in humans.

         1.20     "FINAL SPECIFICATIONS" mean the final specifications for the
Product that are required for the use of the Product in Phase III clinical
studies in the Field, to be developed by the JDT pursuant to Section 4.5(c).

         1.21     "INFORMATION" means (a) techniques, data, inventions,
practices, methods, knowledge, know-how, skill, experience, test data including
pharmacological, toxicological and clinical test data, analytical and quality
control data, regulatory submissions, correspondence and communications,
marketing, pricing, distribution, cost, sales, manufacturing, patent and legal
data or descriptions, and (b) compositions of matter, assays and biological
materials, and all intellectual property rights in and to any of the foregoing.

         1.22     "INHALER" means AeroGen's proprietary aerosol generator and
related components [*] for the pulmonary delivery of the Drug for use in the
Field.

         1.23     "INITIAL PHASE II TRIALS" means the first clinical study for
the use of the Inhaler in patients in the Field conducted in any location.

         1.24     "[*]" means the [*].

         1.25     "[*] TECHNOLOGY" shall have the meaning ascribed in Section
10.1(a)(iii).

         1.26     "INTERIM TECHNICAL SPECIFICATIONS" means the technical
specifications for the [*] for the Product, to be determined by the JDT pursuant
to Section 4.5(a) based upon [*] and the work conducted pursuant to the
Technical Development Plan.

         1.27     "JOINT DEVELOPMENT TEAM" OR "JDT" means the joint development
team described in Section 3.1 that shall oversee the Parties' activities under
the Technical Development Program.

         1.28     "JOINT KNOW-HOW" means all Information in the Development
Technology jointly owned by the Parties in accordance with Section 10.1(a),
provided that "Joint Know-How" shall specifically exclude the Joint Patents.

         1.29     "JOINT PATENTS" means any Patents claiming a Development
Invention and jointly owned by the Parties in accordance with Section 10.1(a).

         1.30     "JOINT TECHNOLOGY" means the Joint Know-How and the Joint
Patents.

         1.31     "MARKETING PARTNER" means a Third Party with whom AeroGen has
entered into a Partnering Agreement.

         1.32     "NDA" means a New Drug Application filed with the U.S. Food
and Drug Administration.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       3.
<PAGE>

         1.33     "NET SALES" means, with respect to each Partnering Agreement,
net sales of the Retail Product as defined in such agreement; provided that [*].

         1.34     "PARTNERING AGREEMENT" means a written agreement between
AeroGen and a Third Party for the commercial development, promotion, manufacture
(other than manufacture of [*]), marketing and/or sale and distribution of the
Product in any country of the world.

         1.35     "PATENT" means (a) unexpired letters patent which have not
been held invalid or unenforceable by a court of competent jurisdiction from
which no appeal can be taken or has been taken within the required time period,
including without limitation any substitution, extension, registration,
confirmation, inventor's certificate, reissue, re-examination, renewal or any
like filing thereof; and (b) pending applications for letters patent, including
without limitation any continuation, division or continuation-in-part thereof
and any provisional applications.

         1.36     "PRELIMINARY FINAL SPECIFICATIONS" means the [*] required for
the conduct of the Validation Studies, to be developed by the JDT pursuant to
Section 4.5(b).

         1.37     "PRODUCT" means any product for the pulmonary delivery of the
Drug comprising the Inhaler and the BD Cartridge.

         1.38     "QUALIFIED SUPPLIER" shall have the meaning ascribed in
Section 7.1(a).

         1.39     "RETAIL PRODUCT" means either (a) the Product; (b) the BD
Cartridge filled with the Drug; or (c) the Inhaler, in such case packaged
separately for retail sale.

         1.40     "ROYALTY" OR "ROYALTIES" means a percentage of Net Sales
actually received by AeroGen from a Marketing Partner pursuant to a Partnering
Agreement from sales of the Retail Product in any country covered by such
Partnering Agreement.

         1.41     "SPECIFICATIONS" means the Critical System Specifications, the
Interim Technical Specifications, the Preliminary Final Specifications or the
Final Specifications, as applicable.

         1.42     "STEERING COMMITTEE" means the committee described in Section
3.2 that shall oversee the commercialization activities of the Parties
hereunder.

         1.43     "STOCK PURCHASE AGREEMENT" means that certain stock purchase
agreement entered into as of the Signing Date, whereby BD shall purchase from
AeroGen shares of AeroGen Series E Preferred Stock.

         1.44     "SUPPLY AGREEMENT" means the agreement described in Section
7.2.

         1.45     "TECHNICAL DEVELOPMENT PLAN" shall have the meaning ascribed
in Section 4.1.

         1.46     "TECHNICAL DEVELOPMENT PROGRAM" means the collaborative
activities to be conducted by the Parties to develop the Product under the
direction of the JDT during the Development Term, as further described in
Article 4.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       4.
<PAGE>

         1.47     "THIRD PARTY" means any entity other than AeroGen or BD or
their respective Affiliates.

         1.48     "VALID CLAIM" shall mean a claim of an issued and unexpired
Patent that (a) is included within the AeroGen Technology, BD Technology or the
Joint Technology, (b) claims the manufacture, use or sale of the Product and (c)
has not been held unenforceable, unpatentable, or invalid by a court or other
governmental agency of competent jurisdiction, and that has not been admitted to
be invalid or unenforceable through reissue, disclaimer or otherwise.

         1.49     "VALIDATION STUDIES" shall have the meaning ascribed in
Section 5.1(b).

2.       OVERVIEW

         2.1      DEVELOPMENT OF THE PRODUCT. Commencing promptly following the
Effective Date and during the Development Term, the Parties shall undertake the
Technical Development Program in accordance with the Technical Development Plan,
pursuant to which AeroGen shall develop the Inhaler and a manufacturing process
therefor, BD shall develop the [*] therefor and the Parties shall jointly
develop [*], all as further described in Article 4. The Parties' efforts under
the Technical Development Program shall be overseen by the JDT, as further
described in Section 3.1.

         2.2      COMMERCIALIZATION. AeroGen shall seek [*] Marketing Partners
for the commercialization of the Product, as further described in Section 6.1.
AeroGen shall be responsible for identifying and qualifying a source of the Drug
for use with the Product. BD shall exclusively supply to AeroGen and its
Marketing Partner(s), and AeroGen and its Marketing Partner(s) shall exclusively
purchase from BD, AeroGen's clinical and commercial requirements for the BD
Cartridge pursuant to the Supply Agreement. AeroGen shall be responsible for
manufacturing or having manufactured the Product for clinical trials and
commercial use. The Steering Committee shall oversee the Parties' activities
with respect to the clinical and commercial supply of the Product, and shall
advise the Parties with respect to the commercialization of the Product
hereunder, as further described in Section 3.2.

3.       MANAGEMENT

         3.1      JOINT DEVELOPMENT TEAM.

                  (a)      FORMATION. Within ten (10) days after the Effective
Date, AeroGen and BD shall establish the Joint Development Team ("JDT").

                  (b)      PURPOSE AND PRINCIPLES. The general purposes of the
JDT shall be (i) to determine the overall technical strategy for the development
of the Product, including without limitation developing an integrated system
design for the Product and establishing appropriate specifications, (ii) to
develop the Technical Development Plan and to modify or amend it as necessary,
(iii) to develop and propose for the Parties' approval the Interim Technical
Specifications, the Preliminary Final Specifications and the Final
Specifications in accordance with Section 4.5 and to modify or amend them as
necessary, and (iv) to coordinate the Parties'

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       5.
<PAGE>

activities under the Technical Development Program, all based on the principles
of prompt and diligent development of the Product consistent with good
pharmaceutical and medical device practices. The JDT shall perform such other
functions as appropriate to further the purposes of the Technical Development
Program as determined by the Parties, including the periodic evaluation of
performance against goals.

                  (c)      MEMBERSHIP. The JDT shall initially have three (3)
representatives of each Party with the requisite levels of skill and experience
in engineering and such other matters as the Parties may agree. The JDT may
change its size from time to time by written agreement of the Parties; provided
that the JDT at all times shall be composed of an equal number of
representatives appointed by each of AeroGen and BD. Each Party may replace its
JDT representatives at any time upon written notice to the other Party; provided
that each Party's representatives shall at all times be persons possessing the
appropriate level of skill, experience and familiarity with the Product.

                  (d)      MEETINGS. The JDT shall hold meetings at such times
as the JDT elects to do so, but in no event shall such meetings be held less
frequently than once every calendar quarter. The JDT shall meet alternately at
AeroGen's facilities in Sunnyvale, CA and BD's facilities in Franklin Lakes, NJ
or at such locations as the Parties may otherwise agree. With the consent of the
representatives of each Party serving on the JDT, other representatives of each
Party or of Third Parties involved in the development, manufacture or
commercialization of the Product may attend meetings of the JDT as nonvoting
observers. Meetings of the JDT may be held by audio or video teleconference with
the consent of each Party, provided that at least half of the minimum number of
meetings set forth above shall be held in person. Each Party shall be
responsible for all of its own expenses of participating in the JDT. Meetings of
the JDT shall be effective only if a representative of each Party is present or
participating.

                  (e)      CHAIRPERSONS. The JDT shall be chaired first by a
representative of AeroGen from the Effective Date through June 30, 2000, and the
Chairperson position shall rotate thereafter on a semi-annual basis with BD to
appoint the Chairperson for the six month period beginning July 1, 2000. The
Chairperson shall be responsible for calling meetings, preparing and circulating
an agenda in advance of each meeting, and preparing and issuing minutes of each
meeting within thirty (30) days thereafter. From time to time, the JDT may
establish subcommittees or subordinate committees (which may or may not include
members of the JDT itself) to oversee particular projects or activities, and
such subcommittees or subordinate committees shall be constituted and shall
operate as the JDT agrees.

                  (f)      DECISION-MAKING. Each of AeroGen's and BD's
representatives shall have one vote. All decisions of the JDT shall be
unanimous. Any disagreement among the members of the JDT will be resolved in
light of the principles set forth in this Article 3. Should the JDT be unable to
reach a unanimous decision on an issue within thirty (30) days, such issue shall
be referred to the Steering Committee for resolution.

                  (g)      TERM. The JDT shall remain in operation for the
duration of the Development Term unless otherwise agreed by the Parties in
writing.

         3.2      STEERING COMMITTEE.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       6.
<PAGE>

                  (a)      FORMATION. Within thirty (30) days following the
Effective Date, the Parties shall establish the Steering Committee, which shall
advise the Parties with respect to the commercial development of the Product.

                  (b)      PURPOSE AND PRINCIPLES. The general purposes of the
Steering Committee shall be (i) to play an advisory role with respect to the
Product positioning and the overall commercialization strategy, (ii) to
determine strategies for supply of the Drug for the Product, (iii) to oversee
the JDT, and (iv) to coordinate the Parties' manufacturing and supply activities
hereunder with respect to the initial commercial introduction of the Product,
all based on the principles of prompt and diligent development of the Product
consistent with good pharmaceutical and medical device practices. The Steering
Committee shall perform such other functions as appropriate to further the
purposes of this Agreement as determined by the Parties, including the periodic
evaluation of performance against goals. In addition to its overall
responsibility for the collaboration established by this Agreement, the Steering
Committee shall explore further collaborative opportunities between the Parties,
including [*].

                  (c)      MEMBERSHIP. The Steering Committee shall initially
have three (3) representatives of each Party, provided that neither Party's
Chief Executive Officer may serve as a member of the Steering Committee. The
Steering Committee may change its size from time to time by written agreement of
the Parties; provided that the Steering Committee at all times shall be composed
of an equal number of representatives appointed by each of AeroGen and BD. Each
Party may replace its Steering Committee representatives at any time upon
written notice to the other Party, provided that each Party's representatives
shall at all times be persons possessing the appropriate level of skill,
experience and familiarity with the Product.

                  (d)      MEETINGS. The Steering Committee shall hold meetings
at such times as the Steering Committee elects to do so, but in no event shall
such meetings be held less frequently than once every quarter. The Steering
Committee shall meet alternately at AeroGen's facilities in Sunnyvale, CA and
BD's facilities in Franklin Lakes, NJ or at such locations as the Parties may
otherwise agree. With the consent of the representatives of each Party serving
on the Steering Committee, other representatives of each Party or of Third
Parties involved in the manufacture or commercialization of the Product may
attend meetings of the Steering Committee as nonvoting observers. Meetings of
the Steering Committee may be held by audio or video teleconference with the
consent of each Party, provided that at least half of the minimum number of
meetings set forth above shall be held in person. Each Party shall be
responsible for all of its own expenses of participating in the Steering
Committee. Meetings of the Steering Committee shall be effective only if a
representative of each Party is present or participating.

                  (e)      CHAIRPERSONS. The Steering Committee shall be chaired
by an AeroGen representative. The Chairperson shall be responsible for calling
meetings, preparing and circulating an agenda in advance of each meeting, and
preparing and issuing minutes of each meeting within thirty (30) days
thereafter. From time to time, each Committee may establish subcommittees or
subordinate committees (which may or may not include members of the Committee
itself) to oversee particular projects or activities, and such subcommittees or
subordinate committees shall be constituted and shall operate as the Committee
agrees.

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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Notwithstanding the foregoing, BD shall have the right to call a special
meeting of the Steering Committee on two (2) weeks written notice to AeroGen.

                  (f)      DISPUTE RESOLUTION. In the event that the Steering
Committee is unable to reach agreement on an issue within thirty (30) days,
including any dispute referred to it by the JDT, such issue shall be subject to
dispute resolution as set forth in Section 15.2.

                  (g)      TERM. The Steering Committee shall remain in
operation for the period extending from its date of formation under subsection
(a) above until the longer of: [*].

         3.3      LIMITATION OF POWERS. The powers of the JDT and the Steering
Committee are limited to those expressly set forth in this Agreement. Without
limiting the generality of the foregoing, neither the JDT nor the Steering
Committee shall have the right to amend this Agreement. The actions of the JDT
and/or the Steering Committee shall not substitute for either Party's ability to
exercise any right, nor excuse the performance of any obligation, set forth
herein.

         3.4      LIAISONS. Each Party will designate in writing to the other an
individual to serve as the liaison between the Parties to undertake and
coordinate any day-to-day communications as may be required between the Parties
relating to their activities under this Agreement. Each Party may change such
liaison from time to time during the term of this Agreement upon written notice
thereof to the other Party.

4.       TECHNICAL DEVELOPMENT PROGRAM

         4.1      TECHNICAL DEVELOPMENT PLAN. The specific tasks of each Party
under the Technical Development Program and a time-table therefor, i.e., the
"Technical Development Plan," is attached as Exhibit 2 hereto. Any changes or
modifications to the Technical Development Plan shall be agreed upon in writing
by the Parties.

         4.2      AEROGEN DEVELOPMENT ACTIVITIES. AeroGen shall undertake its
assigned activities under the Technical Development Program in accordance with
the Technical Development Plan, at its own expense, and shall use commercially
reasonable, diligent efforts to (a) itself develop the Inhaler and (b) jointly
with BD develop the Interface, all in accordance with the applicable
Specifications and the timetable as set forth in the Technical Development Plan.
AeroGen shall have the overall responsibility for the development of the
Product, except with respect to the BD Cartridge and other development
activities assigned to BD under the Technical Development Plan. AeroGen shall
have the responsibility for final design review for the Product, including
without limitation system engineering and sign-off.

         4.3      BD DEVELOPMENT ACTIVITIES. BD shall undertake its assigned
activities under the Technical Development Program in accordance with the
Technical Development Plan, at its own expense, and shall use commercially
reasonable, diligent efforts to (a) itself develop the BD Cartridge and (b)
jointly with AeroGen develop the Interface, all in accordance with the
applicable Specifications and the timetable as set forth in the Technical
Development Plan.

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         4.4      CONDUCT OF TECHNICAL DEVELOPMENT PROGRAM. AeroGen and BD each
shall conduct their activities under the Technical Development Program in good
scientific and engineering manner, and shall use commercially reasonable
diligent efforts to achieve their objectives efficiently and expeditiously in
compliance in all material respects with all requirements of applicable laws,
rules and regulations and all applicable good laboratory practices and design
controls. AeroGen and BD shall each proceed diligently with the work set out in
the Technical Development Plan using their respective good faith efforts.

         4.5      DEVELOPMENT OF PRODUCT SPECIFICATIONS.

                  (a)      INTERIM TECHNICAL SPECIFICATIONS. The JDT shall
develop and recommend to the Parties for their approval the Interim Technical
Specifications, including any necessary and appropriate changes or modifications
to the Technical Development Plan. [*].

                  (b)      PRELIMINARY FINAL SPECIFICATIONS. The JDT shall
develop and recommend to the Parties for their approval the Preliminary Final
Specifications for the Product, including any necessary and appropriate changes
to the Technical Development Plan. [*].

                  (c)      FINAL SPECIFICATIONS. The JDT shall develop and
recommend to the Parties for their approval the Final Specifications for the
Product, including any necessary and appropriate changes or modifications to the
Technical Development Plan. [*].

                  (d)      RESPONSIBILITIES. BD shall be primarily responsible
for the development of such portion of each of such Specifications as relates
specifically to the BD Cartridge. AeroGen shall be primarily responsible for the
development of all other portions of each of such Specifications, including such
as relate specifically to the Inhaler, except as relate specifically to the [*].
The Parties shall be jointly responsible for [*]. Each Party shall use diligent,
commercially reasonable, good faith efforts to expeditiously develop and approve
each of such Specifications pursuant to this Section 4.5 by the relevant target
date.

                  (e)      REVISION OR MODIFICATION. The Parties may revise or
modify the Specifications from time to time as necessary by mutual written
agreement.

                  (f)      FAILURE TO AGREE ON FINAL SPECIFICATIONS. In the
event that the Parties are unable to agree upon the Final Specifications by [*],
and following completion of the Parties' efforts to resolve such dispute
pursuant to Section 15.2, either Party may terminate this Agreement pursuant to
Section 13.2(a).

         4.6      RECORDS AND REPORTS.

                  (a)      RECORD KEEPING. AeroGen and BD each shall maintain
records which shall be complete and accurate and shall fully and properly
reflect all work done and results achieved in the performance of the Technical
Development Program in sufficient detail and in good scientific manner
appropriate for patent and regulatory purposes.

                  (b)      INSPECTION. Each Party shall have the right, during
normal business hours and upon reasonable notice to inspect and copy all of the
records of the other Party described in

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subsection (a) above. Such records and the information disclosed therein shall
be deemed Confidential Information and subject to Article 11. Each Party shall
have the right to arrange for a reasonable number of its employees, agents and
outside consultants to visit the other Party at its offices and laboratories
during normal business hours and upon reasonable notice, and to discuss the
Technical Development Program and its results in detail with the technical
personnel and consultants of the other Party. All inspections, copying and
visits hereunder shall be conducted in a manner so as not to disrupt the other
Party's business or cause any disclosure of any other Party's confidential and
proprietary information.

                  (c)      REPORTS. Within thirty (30) days following the end of
each calendar quarter during the Development Term, each Party shall provide to
the other Party a written progress report which shall describe the work
performed by such Party to date on the Technical Development Program, evaluate
the work performed by such Party in relation to the goals of the Technical
Development Program and provide such other information required by the Technical
Development Program or reasonably requested by the other Party relating to the
progress of the goals or performance of the Technical Development Program. Upon
request, each Party shall provide to the other Party copies of the records
described in subsection (a) above.

         4.7      INVENTION ASSIGNMENT AGREEMENTS. Each Party hereby covenants
that each of such Party's employees, consultants and agents performing any work
under the Technical Development Program will have entered into a written
invention assignment agreement requiring that each such individual assign to
such Party all right, title and interest in any Information conceived of or
reduced to practice by such individual pursuant to the Technical Development
Program.

5.       CLINICAL DEVELOPMENT

         5.1      AEROGEN RESPONSIBILITIES.

                  (a)      AeroGen shall be responsible for the preclinical
development and clinical development of the Product and its use with the Drug in
the Field, and for the development of an appropriate formulation of the Drug for
use with the Product, in collaboration with one or more Marketing Partners;
PROVIDED, HOWEVER, that BD acknowledges that it is not AeroGen's intent to
solely fund the clinical development of the Product beyond the [*], and that
AeroGen will have no obligations under this Agreement with respect to such
clinical development of the Product beyond the [*] in the event that AeroGen is
unable to enter into [*].

                  (b)      Notwithstanding subsection (a) above, AeroGen shall
conduct, at its expense, [*] (the "Validation Studies"); provided that the
foregoing obligation shall not apply to such studies that are required due to a
failure of [*] in a prior study and such failure was solely due to BD's
negligence or wrongful act.

                  (c)      All clinical data (including, without limitation,
pharmacological, toxicological and other test data) generated by or on behalf of
AeroGen pursuant to its activities under this Section 5.1 shall be deemed
AeroGen's Confidential Information, and AeroGen shall retain sole ownership
thereof. BD shall not use such clinical data for any purpose other than its

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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activities under the Technical Development Program and the Supply Agreement
without AeroGen's prior written consent.

                  (d)      AeroGen (or its Marketing Partner) shall be
responsible for filing for, and obtaining all applications for regulatory
approval of the Retail Product, as further provided in the Supply Agreement.

         5.2      BD PARTICIPATION. BD will furnish AeroGen with such assistance
and cooperation as AeroGen may reasonably request in connection with the
securing of regulatory approvals required for the conduct of clinical trials and
Product registrations in any country of the world including, to the extent
applicable, rights of reference to all regulatory filings of BD, if any,
regarding the [*]. AeroGen agrees to share the protocol for any clinical trials
with BD, to permit BD to observe such clinical trials and to share results of
each such clinical trials with BD, in each case solely to the extent necessary
for BD's compliance with its regulatory obligations. All Information received by
BD in connection with such clinical trials shall be deemed to be AeroGen's
Confidential Information and subject to Article 11.

6.       COMMERCIALIZATION

         6.1      COLLABORATION WITH MARKETING PARTNER(S) AeroGen shall use
commercially reasonable efforts to identify potential Marketing Partner(s) and
to enter into Partnering Agreements therewith and to keep BD regularly apprised
of its progress on at least a monthly basis. BD will cooperate reasonably with
AeroGen in such efforts consistent with BD's lead responsibilities set forth in
Exhibit 2A. AeroGen may carry out any or all of its development and
commercialization obligations under this Agreement in collaboration with or
solely through its Marketing Partner(s). Notwithstanding the foregoing, BD
acknowledges that AeroGen may not enter into a Partnering Agreement, and that
such failure shall not be deemed to be a breach of this Agreement.

         6.2      BD RIGHT TO SECURE MARKETING PARTNER. In the event that
AeroGen has not [*], BD then shall have the right, but not the obligation, to
secure a Marketing Partner reasonably acceptable to AeroGen on reasonable terms
to be negotiated by such potential Marketing Partner and BD and with AeroGen's
reasonable assistance; PROVIDED THAT AeroGen shall not be obligated to enter
into any Partnering Agreement, except on terms reasonably acceptable to AeroGen.
BD may exercise such right at any time following such [*] period by providing
AeroGen thirty (30) days prior written notice thereof. Notwithstanding the
foregoing, BD may not exercise such right if at such time AeroGen is [*]. BD
shall not have the right to enter into a Partnering Agreement except with
AeroGen's prior written consent.

         6.3      FAILURE TO OBTAIN A MARKETING PARTNER. In the event that
AeroGen has not executed a Partnering Agreement as provided in Section 6.1 and
BD has not secured a Marketing Partner as provided in Section 6.2 [*] following
completion of the Validation Studies, then either Party may terminate this
Agreement as set forth in Section 13.2(b). Notwithstanding the foregoing,
neither Party shall have the right to terminate this Agreement under this
Section 6.3 at any time during which a Party with the right to secure a
Marketing Partner is [*].

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         6.4      SERVICES BY BD. In the event that a Marketing Partner desires
that BD perform certain services in connection with a Partnering Agreement, BD
shall negotiate in good faith with such Marketing Partner the commercially
reasonable terms under which BD would provide such services, including without
limitation the reasonable compensation to be paid therefor. Upon reaching
agreement on such terms, BD shall enter into a written agreement with such
Marketing Partner for such services on such terms.

7.       MANUFACTURING AND SUPPLY

         7.1      SUPPLY OF THE DRUG.

                  (a)      AeroGen shall be responsible for identifying and
qualifying a supplier of the Drug for use with the Product (a "Qualified
Supplier"), and shall use commercially reasonable, good faith efforts to
identify, qualify and enter into a supply agreement with a Qualified Supplier
for the Drug for use with the Product (a "Drug Supply Agreement").
Notwithstanding the foregoing, BD acknowledges that AeroGen may not be able to
identify or qualify a Qualified Supplier and/or may not enter into a Drug Supply
Agreement with a Qualified Supplier, and that such failure shall not be deemed a
breach of this Agreement.

                  (b)      In the event that AeroGen has not [*], BD then shall
have the right, but not the obligation, to secure a Qualified Supplier
reasonably acceptable to AeroGen on reasonable terms to be negotiated by such
potential Qualified Supplier and BD and with AeroGen's reasonable assistance;
PROVIDED that AeroGen shall not be obligated to enter into any Drug Supply
Agreement, except on terms reasonably acceptable to AeroGen. BD may exercise
such right at any time following such [*] period by providing AeroGen written
notice thereof. Notwithstanding the foregoing, BD may not exercise such right if
at such time AeroGen is [*]. BD shall not enter into a Drug Supply Agreement
with any Qualified Supplier without AeroGen's prior written consent.

                  (c)      In the event that AeroGen has not executed a Drug
Supply Agreement as provided in subsection (a) above, and BD has not secured a
Qualified Supplier as provided in subsection (b) above within [*] following
completion of the Validation Studies, then either Party may terminate this
Agreement as set forth in Section 13.2(b). Notwithstanding the foregoing,
neither Party shall have the right to terminate the Agreement under this
subsection (c) at any time during which a Party with the right to secure a
Qualified Supplier is [*].

         7.2      MANUFACTURE AND SUPPLY OF THE CARTRIDGE.

                  (a)      The Parties agree to negotiate in good faith and
enter into, as soon as is reasonably practicable, a supply agreement under which
BD would agree to exclusively manufacture and supply AeroGen and its Marketing
Partner(s) with their requirements of [*] BD Cartridges, and AeroGen and its
Marketing Partner(s) would agree to exclusively purchase such requirements from
BD, on mutually acceptable terms and conditions (the "Supply Agreement").
Neither Party shall be obligated to enter into such Supply Agreement before
finalization of the Final Specifications under Section 4.5(c).

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                  (b)      Such Supply Agreement shall include the terms, or
terms in accordance with the principles, set forth in Exhibit 3 attached hereto,
and shall include such other terms and conditions as are appropriate and
customary, including without limitation: (i) minimum purchase and supply
requirements to be agreed upon by the Parties in good faith following
finalization of the Final Specifications under Section 4.5(c); (ii) inventory
requirements, if applicable; and (iii) provisions to ensure continuity of supply
in the event of a catastrophe, BD's default or, if such a provision is agreed
upon by the Parties, BD's termination of the Supply Agreement for convenience.
In addition, AeroGen shall have the right to assign the Supply Agreement to a
Marketing Partner with BD's prior written consent, which consent shall not be
unreasonably withheld or delayed.

                  (c)      Notwithstanding anything to the contrary contained in
either this Agreement or the Supply Agreement, either explicitly or by
implication, BD shall not be required to commit or otherwise expend capital
resources to [*] unless and until, (i) AeroGen has [*], and (ii) AeroGen and/or
its Marketing Partner has [*].

         7.3      EXCLUSIVITY.

                  (a)      BD agrees that, during the Development Term and for
[*] thereafter (the "Exclusivity Period") it shall not:

                           (i)      develop, have developed, manufacture, have
manufactured or sell and/or otherwise transfer to any Third Party, directly or
indirectly, either itself or on behalf of a Third Party, any [*] for use in [*],
except as provided in this Agreement or the Supply Agreement; or

                           (ii)     purchase any [*] from any Third Party
directly or indirectly, for use [* ]; in each case, without the prior written
consent of AeroGen.

                  (b)      AeroGen agrees that, during the Exclusivity Period it
shall not:

                           (i)      develop, have developed, manufacture, or
have manufactured any [*] either itself or with or on behalf of a Third Party
for use [*]; or

                           (ii)     purchase from any Third Party any [*] either
itself or with or on behalf of any Third Party for use [*]; or

                           (iii)    sell and/or otherwise transfer, directly or
indirectly, to any Third Party any [*] for use [*].

                  (c)      Notwithstanding anything to the contrary contained in
either this Agreement or the Supply Agreement, either explicitly or by
implication, BD shall be free to manufacture, have manufactured, import, use,
offer for sale and/or sell, or otherwise transfer to any Third Party, directly
or indirectly, any [*] for the pulmonary delivery of any drug solely for use
outside of the Field, subject to Section 8.3, Section 13.2(e)(i)(B), and Section
7.3(e).

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                  (d)      The negative covenants set forth in this Section
7.3(a) and (b) shall not survive any early termination of this Agreement by
either Party.

                  (e)      BD covenants that it shall not, during the
Exclusivity Period manufacture, have manufactured, sell, offer for sale or
import, directly or indirectly, any [*]. BD further covenants that it shall not,
during the Exclusivity Period manufacture any [*] with the intent that such
Development Patent Cartridge [*], for use [*], nor shall it have manufactured,
use in Phase III clinical trials, sell and/or otherwise transfer to any Third
Party, directly or indirectly, either itself or on behalf of a Third Party, any
such [*].

         7.4      USE OF AEROGEN INTELLECTUAL PROPERTY.

                  (a)      AeroGen shall notify BD in writing, prior to the
adoption of the Final Specifications for the BD Cartridge, to the extent any
AeroGen intellectual property is incorporated into the [*]. Promptly following
BD's receipt of such notice, the JDT shall discuss in good faith whether it is
appropriate and desirable for such intellectual property to be incorporated into
the [*]. If the Parties agree to so incorporate such intellectual property, [*],
the Parties shall also agree in writing on [*] in the event that BD
manufactures, has manufactured, imports, uses, offers for sale or sells the [*]
incorporating such AeroGen intellectual property, for use [*].

                  (b)      If AeroGen fails to notify BD of any AeroGen
intellectual property that is incorporated into the [*] as provided in Section
(a) above, BD's sole and exclusive remedy for such breach shall be the grant of
the following covenant, which covenant shall only apply to the intellectual
property for which AeroGen failed to provide such notice (the "AeroGen [*] IP"):
AeroGen shall covenant that it shall not, and shall not permit its Affiliates
and sublicensees to, [*] solely for use [*].

                  (c)      Except as expressly provided in this Section 7.4, BD
is not granted any license or rights to, or covenant not to sue under, any
intellectual property right of AeroGen covering the manufacture, use,
importation, offer sale, or sale of the [*] for use [*]. AeroGen grants no
license or rights to, or covenant not to sue under, any intellectual property
right of AeroGen covering any [*] to the extent incorporating the AeroGen [*] IP
that was incorporated in the [*].

         7.5      COST STANDARDS. Prior to entering into the Supply Agreement,
BD shall provide to AeroGen such information as AeroGen reasonably requests with
respect to BD's accounting practices as they relate to the calculation of the
cost of goods, including without limitation BD's standard costs and standard
methods of calculating costs.

8.       LICENSE GRANTS

         8.1      TO BD.

                  (a)      DEVELOPMENT LICENSE. Subject to the terms and
conditions of this Agreement, AeroGen hereby grants to BD a non-exclusive,
worldwide, royalty-free license under the AeroGen Technology solely to conduct
its assigned activities under the Technical

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Development Program with respect to the [*]. BD may grant sublicenses under the
foregoing license only with AeroGen's prior written consent.

                  (b)      MANUFACTURING LICENSE. Subject to the terms and
conditions of this Agreement and of the Supply Agreement, AeroGen hereby grants
to BD an exclusive, worldwide, royalty-free license under the AeroGen Technology
and AeroGen's interest in the Joint Technology to manufacture [*] solely for
AeroGen (or its assignee under the Supply Agreement) or its Marketing Partners
pursuant to the Supply Agreement. BD may grant sublicenses under the foregoing
license only with AeroGen's prior written consent.

                  (c)      BD COVENANT. BD hereby covenants that it shall not
use the AeroGen Technology for any purpose other than is expressly permitted
under this Section 8.1 and Section 7.4.

         8.2      TO AEROGEN.

                  (a)      DEVELOPMENT LICENSE. Subject to the terms and
conditions of this Agreement, BD hereby grants to AeroGen a non-exclusive,
worldwide, royalty-free license under the BD Technology solely to conduct its
assigned activities under the Technical Development Program with respect to [*].
AeroGen may grant sublicenses under the foregoing license only with BD's prior
written consent.

                  (b)      AEROGEN COVENANT. AeroGen hereby covenants that it
shall not use the BD Technology for any purpose other than is expressly
permitted under this Section 8.2.

                  (c)      BD COVENANT. BD acknowledges and agrees that it is
not BD's intent that AeroGen be prevented from developing, making, having made,
using, selling, offering for sale or importing the Product for use in the Field
in accordance with the terms of this Agreement, as the Product is envisioned by
the Parties as of the Effective Date, and as the Product may be developed in
accordance with the Specifications to be mutually agreed upon by the Parties
pursuant to this Agreement. Therefore, BD hereby covenants that during the
longer of (i) the [*] or (ii) the [*], it shall not, and shall not permit its
Affiliates and sublicensees to, [*].

         8.3      USE OF THE [*]. At AeroGen's request, the Parties shall
negotiate in good faith the commercially reasonable terms under which [*].

         8.4      RESERVATION OF RIGHTS.

                  (a)      BY AEROGEN. AeroGen reserves all rights under the
AeroGen Technology, except as otherwise expressly stated herein, including
without limitation the right to freely use, assign, transfer, grant licenses
thereunder and otherwise dispose of the AeroGen Technology for any purpose
consistent with the terms of this Agreement.

                  (b)      BY BD. BD reserves all rights under the BD
Technology, except as otherwise expressly stated herein, including without
limitation the right to freely use, assign, transfer, grant licenses thereunder
and otherwise dispose of the BD Technology for any purpose consistent with the
terms of this Agreement.

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9.       ROYALTIES

         9.1      ROYALTIES.

                  (a)      In partial consideration for the rights granted
hereunder, AeroGen shall pay BD a percentage of all Royalties received from each
Marketing Partner pursuant to the applicable Partnering Agreement (the "BD
Percentage"), in accordance with this Section 9.1. The BD Percentage with
respect to the Royalty paid by each Marketing Partner shall be calculated as
follows, except as otherwise set forth in Section 9.3 below:

                           (i)      If the Royalty paid by such Marketing
Partner is [*], then the BD Percentage with respect to such Royalty shall be [*]
of such Royalty. Solely for purposes of example, if AeroGen receives a Royalty
of [*], then the amount due to BD with respect to such Royalty under this
subsection (a) would be [*]; and

                           (ii)     If the Royalty paid by such Marketing
Partner is [*] of Net Sales, then the BD Percentage with respect to such Royalty
shall be [*] of the [*]. Solely for purposes of example, if AeroGen receives a
Royalty of [*], then the amount due to BD with respect to such Royalty under
this subsection (a) would be: [*].

                  (b)      Notwithstanding the foregoing, in no event will the
BD Percentage as calculated under this Section 9.1 be [*].

                  (c)      AeroGen's obligations under this Section 9.1 shall
expire concurrently with the last to expire obligation of a Marketing Partner to
pay Royalties to AeroGen.

         9.2      PRE-PAID ROYALTIES. In the event that AeroGen receives any
Pre-Paid Royalties (as defined below), AeroGen shall pay to BD [*]. As used in
this Section 9.2, "Pre-Paid Royalties" means any [*].

         9.3      CALCULATION OF BD PERCENTAGE IN CERTAIN CIRCUMSTANCES.

                  (a)      NO ROYALTY. In the event a Partnering Agreement does
not include payment of a Royalty, the BD Percentage shall be [*].

                  (b)      NO MARKETING PARTNER. In the event AeroGen (or its
successor-in-interest) either alone or in combination with a Third Party (E.G. a
hired sales force), other than a Marketing Partner, commercializes the Product,
the BD Percentage shall be [*].

                  (c)      ADJUSTMENTS TO BD PERCENTAGE. In the event that [*],
and (i) [*], and (ii) [*], then the BD Percentage as calculated under
subsections (a) and (b) above shall be [*] with respect to such sale.

                  (d)      DEFINITION OF "NET SALES." As used in this Section
9.3, "net sales" shall mean the gross sales of the Retail Product sold by
AeroGen and its Affiliates and its sublicensees to Third Party purchasers, less:

                           (i)      sales returns (including for defective
products);

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      16.
<PAGE>

                           (ii)     discounts given for volume purchases;

                           (iii)    cost of distribution and freight, as billed
on the relevant invoice; and

                           (iv)     sales, turnover applicable or value-added or
excise taxes (but not income taxes).

         Sales between AeroGen, its Affiliates and its sublicensees shall not be
deemed a sale for the purposes of this subsection (d).

                  (e)      TERM OF ROYALTY OBLIGATION. AeroGen's obligations
under subsections (a) and (b) above shall expire, on a country-by-country basis,
on the later of [*] years from the date of the first commercial sale of the
Product in such country, or the date of expiration of the last to expire Patent
in such country containing a Valid Claim.

         9.4      UPFRONT PAYMENTS.

                  (a)      In the event that a Partnering Agreement includes an
Upfront Payment (as defined below) to AeroGen, whether in addition to or in lieu
of a royalty on sales of the Product, AeroGen shall pay to BD [*], within thirty
(30) days of the receipt by AeroGen of such Upfront Payment.

                  (b)      As used in subsection (a) above, "Upfront Payment"
means a cash payment [*].

         9.5      PAYMENT OF THE BD PERCENTAGE.

                  (a)      AeroGen shall provide BD with a copy of a written
report of all Net Sales of the Retail Product as is provided by each Marketing
Partner for each calendar quarter following the first commercial sale of the
Product within fifteen (15) days of its receipt of such report. AeroGen shall
make payment to BD of the BD Percentage due BD on such Net Sales within ten (10)
days of receipt of any payments on sales of the Retail Product under Sections
9.1 and 9.3(a)-(c).

                  (b)      In the event that a Marketing Partner, in breach of
the applicable Partnering Agreement, fails to pay to AeroGen any amount due to
AeroGen under such Partnering Agreement on Net Sales of the Product by such
Marketing Partner (the "Royalties Due"), and following AeroGen's (i) good faith
attempts to collect the Royalties Due, (ii) exhaustion of all applicable
contractual procedures under such Partnering Agreement with respect to such
Marketing Partner's failure to pay the Royalties Due, and (iii) failure to
timely initiate, or cessation of its pursuit of, any legal or equitable remedies
available to AeroGen with respect to such failure to pay the Royalties Due, BD
then shall have the right, but not the obligation, to [*]; BD then shall pay to
AeroGen any remaining amounts less the BD Percentage of such amounts.

         9.6      AUDITS. At the request (and expense) of BD, AeroGen shall
permit an independent certified public accountant appointed by BD and reasonably
acceptable to AeroGen,

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      17.
<PAGE>

at reasonable times and upon reasonable notice, but not more than once a year,
to examine only those records as may be necessary to determine the correctness
or completeness of any report or payment made under this Agreement, with respect
to any calendar year ending not more than two (2) years prior to BD's request.
Results of any such examination shall be (a) limited to information relating to
the Product, (b) made available to both Parties and (c) deemed Confidential
Information subject to Article 11. Such accountant shall not disclose any of
AeroGen's confidential or proprietary information. BD shall bear the full cost
of the performance of any such audit, unless such audit discloses a variance of
more than ten percent (10%) from the amount of the original report, royalty or
payment calculation. In such case, AeroGen shall bear the full cost of the
performance of such audit, as well as promptly paying any shortfall reported,
provided that BD shall promptly refund any overage to AeroGen. In addition,
AeroGen shall use commercially reasonable efforts to include a similar provision
in any Partnering Agreement so that upon the reasonable request of BD under this
provision, AeroGen will audit such Marketing Partner, at BD's expense.

10.      INTELLECTUAL PROPERTY

         10.1     OWNERSHIP.

                  (a)      GENERAL. Each Party shall disclose to the other Party
all Development Technology. The rights of ownership in such Development
Technology shall be retained by the Party that employs or otherwise engages the
inventor. Inventorship shall be determined in accordance with the U.S. patent
laws. Accordingly, AeroGen shall own Development Technology invented solely by
employees of or persons otherwise engaged by AeroGen, BD shall own Development
Technology invented solely by employees of or persons otherwise engaged by BD,
and BD and AeroGen shall own jointly any Development Technology invented jointly
by employees of or persons otherwise engaged by BD and AeroGen, except as
follows:

                           (i)      [*] TECHNOLOGY. Development Technology
(including without limitation all Patents therein) relating [*], whether the
same is invented jointly by employees of or persons otherwise engaged by AeroGen
and BD or solely by employees of or persons otherwise engaged by AeroGen or BD,
shall be owned [*].

                           (ii)     [*] TECHNOLOGY. Development Technology
(including without limitation all Patents therein) relating [*], whether the
same is invented jointly by employees of or persons otherwise engaged by AeroGen
and BD or solely by employees of or persons otherwise engaged by AeroGen or BD,
shall be owned [*].

                           (iii)    [*] TECHNOLOGY. Development Technology
(including without limitation all Patents therein) relating [*], whether the
same is invented jointly by employees of or persons otherwise engaged by AeroGen
and BD or solely by employees of or persons otherwise engaged by AeroGen or BD
[*], shall be owned [*].

                  (b)      PREVIOUSLY OWNED TECHNOLOGY. AeroGen shall remain the
sole owner of the AeroGen Technology and any other intellectual property that it
owned as of the Effective Date. BD shall remain the sole owner of the BD
Technology and any other intellectual property that it owned as of the Effective
Date.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      18.
<PAGE>

         10.2     PATENT MATTERS.

                  (a)      BD PATENTS. BD shall have the sole right, but not the
obligation, to file, prosecute and maintain the BD Patents.

                  (b)      AEROGEN PATENTS. AeroGen shall have the sole right,
but not the obligation, to file, prosecute and maintain the AeroGen Patents.

                  (c)      JOINT PATENTS.

                           (i)      Each Party shall be responsible for filing
and prosecuting patent applications covering Development Technology exclusively
owned by it and shall keep the other Party advised of the status of such patent
prosecution. However, with respect to Joint Technology, and except as described
in subsection (ii) below, the Parties shall mutually agree on whether and in
which countries to file and prosecute patent applications covering the Joint
Technology, and to maintain patents granted thereunder; with each Party having
an opportunity to review and comment on any such filings prior to submission and
to discuss the strategy for preparing, filing, prosecuting, maintaining and
defending of any such patent applications or resulting patents, and with the
Parties sharing equally any out-of-pocket costs and expenses incurred with
respect to such actions.

                           (ii)     Notwithstanding subsection (i) above,
AeroGen shall have the first right, but not the obligation, to file and
prosecute patent applications covering the [*], and to maintain patents granted
thereunder. In the event that AeroGen fails to file a patent application
claiming a particular invention in the [*] in a particular country within one
hundred and twenty (120) days of its receipt of BD's written request, then BD
shall have the right, but not the obligation, to file and prosecute such patent
application, and to maintain patents granted thereunder. In any event, the Party
that files and prosecutes a patent application under this subsection (ii) shall
provide the other Party an opportunity to review and comment on any such filings
prior to submission and to discuss the strategy for preparing, filing,
prosecuting, maintaining and defending of any such patent applications or
resulting patents, and with the Parties sharing equally any out-of-pocket costs
and expenses incurred with respect to such actions.

                           (iii)    Neither Party shall use any Confidential
Information solely owned by the other Party in filing and/or prosecution of any
patent application under this subsection (c) without such other Party's prior
written consent. In the event that a Party filing and/or prosecuting a patent
application under this subsection (c) wishes to use Confidential Information
jointly owned by the Parties in such filing and/or prosecution, such Party shall
give the other Party at least ten (10) days prior written notice thereof, and
shall consider any objections of such other Party reasonably and in good faith.

                  (d)      COOPERATION. Upon request, each Party shall execute
and deliver to the other Party all descriptions, applications, assignments and
other documents and instruments necessary or proper to carry out the provisions
of this Agreement without further compensation; and the Parties shall cooperate
with and assist each other or their nominees in all reasonable ways and at all
reasonable times, including, but not limited to, testifying in all legal
proceedings,


                                      19.
<PAGE>

signing all lawful papers and in general performing all lawful acts reasonable,
necessary or proper, to aid the other Party in obtaining, maintaining, defending
and enforcing all lawful patent, copyright, trade secret, know-how and like
rights in the United States and elsewhere.

         10.3     DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. If a Third Party
asserts that a patent or other intellectual property right owned by it is
infringed by a Party's activities under this Agreement, then such Party shall
immediately provide the other Party with notice of such claim and the related
facts in reasonable detail. The Party against whom the claim of infringement is
made shall have the right, but not the obligation, to control such defense, at
its expense. The Party not controlling such defense shall cooperate reasonably
with the Party controlling such defense and shall have the right to be
represented separately by counsel of its own choice. The Party that controls the
defense of a given claim shall also have the right to control settlement of such
claim, subject to Section 10.5.

         10.4     INFRINGEMENT BY THIRD PARTIES. BD and AeroGen shall promptly
notify the other in writing of any alleged or threatened infringement of the
AeroGen Patents, BD Patents or Joint Patents relating to the manufacture, use or
sale or the Product of which they become aware. The Parties shall then proceed
as follows:

                  (a)      AeroGen, or its Marketing Partner, shall have the
right, but not the obligation, to control the prosecution of any infringement
described in this Section 10.4 with respect to the AeroGen Patents.

                  (b)      BD shall have the right, but not the obligation, to
control the prosecution of any infringement described in this Section 10.4 with
respect to the BD Patents.

                  (c)      AeroGen shall have the right, but not the obligation,
to control the prosecution of any infringement described in this Section 10.4
with respect to Joint Patents, either itself or through its Marketing Partner.
In the event AeroGen decides not to control such prosecution, either itself or
through its Marketing Partner, BD then shall have the right, but not the
obligation, to control such prosecution. AeroGen may assign its rights under
this subsection (c) to a Marketing Partner with BD's prior written consent,
which consent shall not be unreasonably withheld or delayed.

                  (d)      Each Party shall cooperate fully in any action
brought under this Section 10.4 by the other Party, including, if required to
bring such action, naming the other Party only if a court of competent
jurisdiction determines that the other Party is a necessary party to such suit,
in which event the Party shall hold the other Party free, clear and harmless
from any and all liability of such litigation, including costs, expenses and
attorneys' fees. In addition, each Party at all times shall have the right to be
represented separately in such action by counsel of its own choice. [*].

         10.5     SETTLEMENTS. Neither Party may enter into any settlement or
consent judgment or other voluntary final disposition of a suit under this
Article 10 that would adversely affect the rights of the other Party without the
prior written consent of such Party.

11.      CONFIDENTIALITY

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      20.
<PAGE>

         11.1     TREATMENT OF CONFIDENTIAL INFORMATION. A Party receiving or
gaining access to Confidential Information, as defined below, (the "Receiving
Party") of the other Party (the "Disclosing Party") will (i) maintain in
confidence such Confidential Information to the same extent the Receiving Party
maintains its own proprietary information (but at a minimum the Receiving Party
shall use commercially reasonable efforts), (ii) not disclose such Confidential
Information to any Third Party without prior written consent of the Disclosing
Party, except for disclosures made in confidence to any Third Party pursuant to
a plan approved by the JDT or the Steering Committee, and (iii) not use such
Confidential Information for any purpose except as expressly permitted by this
Agreement. As used herein, "Confidential Information" shall mean all
Information, and any other information and materials, received by the Receiving
Party from the Disclosing Party pursuant to this Agreement. Without limiting the
generality of the foregoing, the AeroGen Technology shall be deemed Confidential
Information of AeroGen, the BD Technology shall be deemed Confidential
Information of BD, and the Joint Technology shall be deemed Confidential
Information of both Parties. Notwithstanding the foregoing, "Confidential
Information" shall not include any Information that:

                  (a)      is at the time of receipt by the Receiving Party, or
later becomes, generally available to the public without restriction through no
breach of this Article 11; or

                  (b)      was known to the Receiving Party, without obligation
to keep it confidential, prior to its receipt from the Disclosing Party; or

                  (c)      is subsequently disclosed to the Receiving Party by a
Third Party lawfully in possession thereof without obligation to keep it
confidential; or

                  (d)      has been independently developed by the Receiving
Party without the aid, application or use of the Disclosing Party's Confidential
Information.

         11.2     PUBLICATIONS. Neither Party shall publish or present the
results of studies carried out under this Agreement without the opportunity for
prior review by the other Party. Each Party agrees to provide the other Party
the opportunity to review any proposed abstracts, manuscripts or presentations
(including verbal presentations) which relate to any Product at least thirty
(30) days prior to their intended submission for publication and agrees, upon
request, not to submit any such abstract or manuscript for publication until the
other Party is given a reasonable period of time to secure patent protection for
any material in such publication which it believes to be patentable. The Parties
agree to review and consider delay of publication and filing of patent
applications as appropriate. The Steering Committee will review such requests
and recommend subsequent action. Neither Party shall have the right to publish
or present Confidential Information of the other Party.

         11.3     PUBLICITY. The Parties agree that the public announcement of
the execution of this Agreement shall be in the form of a press release mutually
agreed upon. Any other publication, news release or other public announcement
relating to this Agreement or to the performance hereunder, shall first be
reviewed and approved by both Parties, which approval shall not be unreasonably
withheld or delayed; provided, however, that any disclosure which is required by
law as advised by the disclosing Party's counsel may be made without the prior
consent of the other Party, although the other Party shall be given prompt
notice of any such

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      21.
<PAGE>

legally required disclosure and to the extent practicable shall provide the
other Party an opportunity to comment on the proposed disclosure.

         11.4     TERMS OF THE AGREEMENT. The Parties agree that the material
terms of this Agreement will be considered Confidential Information of both
Parties. Notwithstanding the foregoing, each Party shall have the right to
disclose the material terms of this Agreement in confidence to any bona fide
potential investor, investment banker, acquirer, merger partner or other
potential financial partner (including without limitation a potential Marketing
Partner), and where reasonably practicable, shall obtain an adequate binder of
confidentiality consistent with the terms of this Agreement.

         11.5     REQUIRED DISCLOSURE. If the Receiving Party is required by any
governmental agency, court or other quasi-judicial or regulatory body to provide
Confidential Information received under this Agreement, the Receiving Party
shall not be liable for such disclosure PROVIDED THAT the Receiving Party, as
promptly as reasonably possible, gives notice to the Disclosing Party of the
requirement in order that the Disclosing Party may contest the requirement to
provide such information and cooperates reasonably with the Disclosing Party in
such efforts. In the event that this Agreement is required to be filed with the
U.S. Securities Exchange Commission, the Party making such filing shall use
commercially reasonable, diligent efforts to avoid the public disclosure of as
much Confidential Information as possible, and to consult in good faith with the
other Party prior to making such filing.

         11.6     SURVIVAL OF CONFIDENTIALITY. All obligations of
confidentiality and non-use imposed upon the Parties under this Agreement shall
continue indefinitely until such time as the information that is subject to such
obligations no longer comprises Confidential Information under one of the
exceptions set forth in Section 11.1.

12.      REPRESENTATIONS AND COVENANTS

         12.1     MUTUAL AUTHORITY. AeroGen and BD each represents and warrants
to the other that (a) it has the authority and right to enter into and perform
this Agreement, and (b) its execution, delivery and performance of this
Agreement will not conflict in any material fashion with the terms of any other
agreement to which it is or becomes a party or by which it is or becomes bound.

         12.2     BD REPRESENTATIONS AND WARRANTIES. BD represents and warrants
to AeroGen that as of the Signing Date:

                  (a)      To the best of BD's knowledge and belief, [*];

                  (b)      To the best of BD's knowledge and belief, [*]; and

                  (c)      To the best of BD's knowledge and belief, the
individuals listed on Exhibit 4 have signed BD's standard employment agreement,
a form of which is attached as Exhibit 5.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      22.
<PAGE>

         12.3     AEROGEN REPRESENTATIONS AND WARRANTIES. AeroGen represents and
warrants to BD that as of the Signing Date:

                  (a)      To the best of AeroGen's knowledge and belief, [*];

                  (b)      To the best of AeroGen's knowledge and belief, [*];

                  (c)      To the best of AeroGen's knowledge and belief, [*];
and

                  (d)      To the best of AeroGen's knowledge and belief, [*].

         12.4     DISCLAIMER. EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 4.7,
THIS ARTICLE 12, EXHIBIT 3, AND THE STOCK PURCHASE AGREEMENT, NEITHER PARTY
MAKES ANY WARRANTY CONCERNING ITS PATENT RIGHTS OR INFORMATION LICENSED UNDER
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE VALIDITY OR SCOPE OF ITS PATENT
RIGHTS OR THAT PRODUCTS WILL BE FREE FROM INFRINGEMENT OF THE PATENT RIGHTS OF
THIRD PARTIES. EACH PARTY SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO BOTH ITS TECHNOLOGY AND THE
PRODUCT.

13.      TERM AND TERMINATION

         13.1     TERM. This Agreement shall become effective on the Effective
Date and shall remain in effect until the later of (a) expiration of the last to
expire Valid Claim, or (b) expiration of all of AeroGen's payment obligations
under this Agreement unless terminated as earlier provided in Section 13.2 or
13.3 below. In addition, this Agreement may be extended by mutual written
consent of the Parties.

         13.2     TERMINATION FOR OTHER THAN CAUSE.

                  (a)      FOR FAILURE TO AGREE ON FINAL SPECIFICATIONS. Either
Party may terminate this Agreement upon thirty (30) days written notice to the
other Party in the event the Parties fail to agree upon the Final
Specifications, as set forth in Section 4.5(f).

                  (b)      FAILURE TO SECURE A MARKETING PARTNER OR A QUALIFIED
SUPPLIER. Either Party may terminate this Agreement on thirty (30) days written
notice in the event that (a) neither Party secures a Marketing Partner, as set
forth in Section 6.3, or (b) neither Party secures a Qualified Supplier, as set
forth in Section 7.1.

                  (c)      THIRD PARTY PATENTS. Either Party may terminate this
Agreement at any time in the event that such Party determines, in its sole,
reasonable, good faith judgment, that the BD Cartridge, Inhaler or Product
cannot be developed or commercialized under this Agreement or the Supply
Agreement because of a Third Party Patent that covers the manufacture, having
manufactured, use, importation, offering for sale or sale of the BD Cartridge,
Inhaler or Product in the United States, subject to the following:

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      23.
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                           (i)      Prior to providing such notice, such Party
shall refer the issue to the JDT for its analysis of whether the development,
manufacture, use, importation, offer for sale or sale of the [*] by a Party
pursuant to this Agreement would infringe such Patent, and if so, whether a
license under such Patent can be obtained on commercially reasonable terms (as
determined in the sole discretion of the Party required to obtain such license)
and/or whether it is commercially feasible to redesign the BD Cartridge, Inhaler
and/or the Product so that such Patent would not be so infringed, and shall
recommend a course of action to the Parties; and

                           (ii)     Such Party shall take the JDT's
recommendation under good faith consideration, and if such Party still desires
to terminate this Agreement despite such recommendation and the other Party does
not desire such termination, then the Parties shall attempt to resolve such
dispute first through referral to the Steering Committee and then, if necessary,
pursuant to Section 15.2.

         If the Parties are unable to resolve such issue as set forth in
subsections (i) and (ii) above, then such Party may terminate this Agreement
upon thirty (30) days written notice to the other Party.

                  (d)      INABILITY TO DEVELOP A SAFE AND EFFECTIVE PRODUCT. In
the event that AeroGen and/or its Marketing Partner is unable to file an NDA for
the Product for use in the Field because the data from the Phase III clinical
trial for the Product will not support such an NDA, then either Party may
terminate this Agreement upon thirty (30) days written notice to the other
Party; PROVIDED THAT if the Parties disagree as to whether such data will
support such an NDA, such termination shall not be effective until such issue is
resolved by the Steering Committee, and, if necessary, through the dispute
resolution procedures set forth in Section 15.2.

                  (e)      TERMINATION FOR CONVENIENCE. BD may terminate this
Agreement without cause and without explanation upon ninety (90) days written
notice to AeroGen; PROVIDED THAT in no event will such termination become
effective prior to the expiration of the Development Term.

                           (i)      BD OBLIGATIONS. In the event of termination
by BD under this subsection (e), BD's only obligations and liabilities to
AeroGen with respect to such termination shall be to:

                                    (A)      Grant AeroGen a royalty-free,
fully paid-up, non-exclusive, sublicenseable, irrevocable license under the
BD Technology, [*] in the event BD has any rights thereto, and BD's interest
in the Joint Technology, limited to develop, use, make, have made, import,
offer for sale and sell the BD Cartridge for use with the Drug in the Field
world-wide to the extent legally permissible by BD and subject to any rights
or obligations placed upon BD; and

                                    (B)      Covenant (1) not to make, have
made, import, offer for sale and sell [*]; (2) not to make have made, import,
offer for sale or sell any [*] for the pulmonary delivery of [*]; and (3) not to
manufacture any Royalty-Bearing Cartridge (as defined below in subsection
(i)(F)) [*], for use within or outside the Field, nor to have manufactured, use
in

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      24.
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Phase III clinical trials, sell and/or otherwise transfer to any Third Party,
directly or indirectly, either itself or on behalf of a Third Party, any such
Royalty-Bearing Cartridge;

                                    (C)      Promptly disclose to AeroGen all BD
Know-How necessary for the manufacture of the BD Cartridge, and upon AeroGen's
written request, BD shall provide diligent, commercially reasonable, good-faith
assistance and cooperation to enable a Third Party manufacturer to manufacture
and supply the BD Cartridge to AeroGen and its Marketing Partner(s) as rapidly
as possible;

                                    (D)      provide AeroGen with any dedicated
tooling developed directly as a result of the Technical Development Program [*],
for a period of [*] months after the effective date of each termination, at a
price equal to [*]; and

                                    (E)      Pay to AeroGen [*] within ten (10)
business days of AeroGen's receipt of such termination notice; and

                                    (F)      Pay to AeroGen a running royalty
equal to [*] of the net sales (as defined below) of any Drug-filled Cartridge
used in connection with the pulmonary delivery of the Drug in the Field sold
after the effective date of such termination by either BD or any licensee or any
other third party with which BD contracts and covered by a claim of an issued
and unexpired Patent as provided in subsection (ii)(B) below ("Royalty-Bearing
Cartridge"). As used herein, "net sales" shall have the meaning set forth in
Section 9.3(d), except that references to "AeroGen" therein shall be changed to
"BD".

                           (ii)     TERM OF NON-COMPETE OBLIGATION & ROYALTY
OBLIGATION.

                                    (A)      BD's obligation under subsection
(i)(B) above not to [*] shall commence with the effective date of such
termination and expire, on a country-by-country basis, on the later of [*] from
the effective date of such termination or the date of expiration of the last to
expire Patent in such country containing a claim of an issued and unexpired
Patent that [*]; and

                                    (B)      BD's obligation under subsection
(i)(F) above to pay a royalty to AeroGen in connection with [*] shall commence
with and continue, on a country-by-country basis, with the date of issuance of
the first to issue until the date of expiration of the last to expire Patent in
such country containing a claim of an issued and unexpired Patent that (1) is
included within the Development Patents, (2) claims the manufacture, use or sale
of the BD Cartridge and the Royalty-Bearing Cartridge, and (3) has not been held
unenforceable, unpatentable, or invalid by a court or other governmental agency
of competent jurisdiction, and that has not been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.

                           (iii)    AEROGEN'S RIGHTS OUTSIDE THE FIELD. In the
event of termination by BD under this Subsection (e), and notwithstanding
Section 8.3, AeroGen shall be granted the right and license by BD, to make, have
made, use, sell, offer for sale or import the BD Cartridge for the pulmonary
delivery of certain drugs (other than the Drug) as provided herein. Within
thirty (30) days following the effective date of termination of this Agreement
under this Section

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      25.
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13.2(e), AeroGen shall select no more than [*] with respect to which it desires
a license under this Subsection 13.2(e)(iii) and identify such drugs in writing
to BD (the "Initial Licensed Drugs"). Upon receipt of such notice of the Initial
Licensed Drugs by AeroGen, BD shall promptly inform AeroGen in writing as to
whether such drugs have not been exclusively licensed, exclusively optioned or
otherwise subject to any prior commitments to a Third Party and thus are
available for non-exclusive license grant to AeroGen (each, an "Available
Drug"). In the event any such identified drugs are not Available Drugs, AeroGen
shall have an additional thirty days in which to select a replacement for each
prior selected drug which was not an Available Drug. Such election and
notification period shall continue until AeroGen has identified [*] Available
Drugs, whereupon BD shall grant to AeroGen a royalty-bearing, non-exclusive,
worldwide license (with the right to sublicense to licensees of the AeroGen
technology only with respect to AeroGen's right to use, sell and offer for sale
the BD Cartridge), to make, have made, use, sell, offer for sale or import the
BD Cartridge for the pulmonary delivery of such Available Drugs, including the
right to modify the BD Cartridge to the extent necessary to use it in connection
with the pulmonary delivery of such Available Drugs. In exchange for such
license, AeroGen shall pay to BD a royalty of [*] of the net sales of all BD
Cartridges filled with Available Drug. Notwithstanding the foregoing, such
license shall expire and the rights revert to BD, on an Available Drug by
Available Drug basis, in the event AeroGen or its sublicensee fails to both (i)
[*] and (ii) [*]. BD further agrees that, in the event AeroGen desires to obtain
a license under the above described terms with respect to any other Available
Drug other than the initial [*] Available Drugs, AeroGen shall notify BD within
such thirty (30) day period described above, and each such license shall be
granted subject to the payment by AeroGen to BD of [*] at the time of grant of
such license, such fee to be creditable against royalties at the rate provided
above. As used in this Subsection (iii), "Net sales" shall be defined as
provided in Section 9.3(d). The royalty hereunder shall commence with, and
continue, on a country by country basis, with the date of issuance of the first
to issue until the date of expiration of the last to Expire Patent in such
country containing a claim of an issued and unexpired Patent owned or controlled
by BD and covering the manufacture, use, sale, offer for sale or importation of
the BD Cartridge.

         13.3     TERMINATION FOR BREACH.

                  (a)      If either Party believes that the other is in
material breach of this Agreement, then the non-breaching Party may deliver
notice of such breach to the other Party. In such notice the non-breaching Party
shall identify the actions or conduct that such Party would consider to be an
acceptable cure of such breach. The allegedly breaching Party shall have sixty
(60) days to either cure such breach or, if cure cannot be reasonably effected
within such 60-day period, to deliver to the other Party a reasonably acceptable
plan for curing such breach. Such a plan shall set forth a program for achieving
cure as rapidly as practicable. Following delivery of such plan, the breaching
Party shall use commercially reasonable diligent efforts to carry out the plan
and cure the breach, subject to the non-breaching Party's acceptance of such
plan.

                  (b)      If the Party receiving notice of material breach
fails to cure such breach within the 60-day period, or the Party providing the
notice reasonably determines that the proposed corrective plan or the actions
being taken to carry it out is not commercially

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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practicable, the Party originally delivering the notice may terminate this
Agreement upon thirty (30) days advance written notice.

         13.4     EFFECT OF TERMINATION. Except as provided in Section 13.2(e),
upon termination of this Agreement:

                  (a)      All licenses granted by each Party to the other
pursuant to Article 8 shall terminate.

                  (b)      Each Party shall, within sixty (60) days of such
termination, return all Confidential Information of the other Party in its
possession; PROVIDED, HOWEVER, that each Party may retain an archival copy of
such Confidential Information solely for determining the scope of its
confidentiality obligations hereunder.

         13.5     BANKRUPTCY RIGHTS. In the event that this Agreement is
terminated or rejected by a Party or its receiver or trustee under applicable
bankruptcy laws due to such Party's bankruptcy, then all rights and licenses
granted under or pursuant to this Agreement by such Party to the other Party
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code and any similar law or regulation in any other country, licenses
of rights to "intellectual property" as defined under Section 101(52) of the
Bankruptcy Code. The Parties agree that all intellectual property rights
licensed hereunder, including without limitation any patents or patent
applications of a Party in any country covered by the license grants under this
Agreement, are part of the "intellectual property" as defined under Section
101(52) of the Bankruptcy Code subject to the protections afforded the
non-terminating Party under Section 365(n) of the Bankruptcy Code, and any
similar law or regulation in any other country.

         13.6     SURVIVAL. The following provisions shall survive termination
of this Agreement: Sections 7.3(c), 9.6, 12.4, 13.2(e), 13.4 and 13.6, and
Articles 10, 11, 14 and 15. Termination of this Agreement shall not relieve
either Party of any liability which accrued hereunder prior to the effective
date of such termination, nor preclude either Party from pursuing all rights and
remedies it may have hereunder or at law or in equity with respect to any breach
of this Agreement, nor prejudice either Party's right to obtain performance of
any obligation. The remedies provided under this Agreement are cumulative, and
are not exclusive of other remedies available to a Party in law or equity.

14.      INDEMNIFICATION

         14.1     BY AEROGEN. AeroGen hereby agrees to indemnify, defend and
hold harmless BD and its officers, directors, agents and employees from and
against any and all Losses from any Third Party claim resulting directly or
indirectly from (a) AeroGen's breach of any of its covenants or representations
and warranties hereunder, or (b) the negligence or wrongdoing of AeroGen, but
only to the extent such Losses do not result from the negligence or wrongdoing
of BD.

         14.2     BY BD. BD hereby agrees to indemnify, defend and hold harmless
AeroGen and its officers, directors, agents and employees from and against any
and all Losses from any Third Party claim resulting directly or indirectly from
(a) BD's breach of any of its covenants or

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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representations and warranties hereunder, or (b) the negligence or wrongdoing of
BD, but only to the extent such Losses do not result from the negligence or
wrongdoing of AeroGen. Additional indemnification obligations of BD with respect
to its manufacture and supply of the BD Cartridge shall be set forth in the
Supply Agreement.

         14.3     APPORTIONMENT. Consistent with the foregoing, in the event any
Losses from any Third Party relate specifically to the Interface, each Party
hereby agrees to indemnify, defend and hold harmless the other Party and its
officers, directors, agents and employees with respect to that portion of any
such Losses apportioned between the Parties based upon each Party's percentage
of all Royalties received from each Marketing Partner; provided, however, that
this Section 14.3 shall not apply to any such Losses arising from the
indemnifying Party's breach of any of its covenants or representations and
warranties hereunder.

         14.4     NOTICE AND PROCEDURES. In all cases where one Party seeks
indemnification by the other under this Article 14, the Party seeking
indemnification shall promptly notify the indemnifying Party of receipt of any
claim or lawsuit covered by such indemnification obligation and shall cooperate
fully with the indemnifying Party in connection with the investigation and
defense of such claim or lawsuit. The indemnifying Party shall have the right to
control the defense, with counsel of its choice, provided that the
non-indemnifying Party shall have the right to be represented by advisory
counsel at its own expense. The indemnifying Party shall not settle or dispose
of the matter in any manner which could negatively and materially affect the
rights or liability of the non-indemnifying Party without the non-indemnifying
Party's prior written consent, which shall not be unreasonably withheld or
delayed.

15.      MISCELLANEOUS

         15.1     ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Supply
Agreement and the Stock Purchase Agreement sets forth the complete, final and
exclusive agreement between the Parties with respect to the subject matter
hereof, and all of the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto with
respect to such subject matter, and supersedes and terminates all prior
agreements and understandings between the Parties with respect to such subject
matter. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties with respect to such subject matter other than as are set forth
herein and therein. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties unless reduced to writing and
signed by an authorized officer of each Party.

         15.2     DISPUTE RESOLUTION. In the event of any controversy or claim
arising out of, relating to or in connection with any provision of this
Agreement, or the rights or obligations of the Parties hereunder, the Parties
shall try to settle their differences amicably between themselves by referring
the disputed matter to the Chief Executive Officer of AeroGen and the Vice
President and General Manager of BD Consumer Healthcare for discussion and
resolution. Either Party may initiate such informal dispute resolution by
sending written notice of the dispute to the other Party, and within ten (10)
days of such notice the Chief Executive Officer of AeroGen and the Vice
President and General Manager of BD Consumer Healthcare shall meet for attempted
resolution by good faith negotiations. If such personnel are unable to resolve
such

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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dispute within thirty (30) days of initiating such negotiations, each Party may
thereafter pursue any and all rights and remedies it may have at law or equity.
If mutually agreeable, the Parties may explore alternative forms of dispute
resolution, such as mediation and/or arbitration. Notwithstanding any other
provision of this Section 15.2, either Party may seek a temporary restraining
order or injunction against the other Party in the event of a breach of any
confidentiality obligation hereunder, or to prevent a Party's wrongful use of
any intellectual property hereunder.

         15.3     FORCE MAJEURE. Both Parties shall be excused from the
performance of their obligations under this Agreement to the extent that such
performance is prevented by force majeure and the non-performing Party promptly
provides notice of the prevention to the other Party. Such excuse shall be
continued so long as the condition constituting force majeure continues and the
non-performing Party takes reasonable efforts to remove the condition. For
purposes of this Agreement, "force majeure" shall include conditions beyond the
control of the Parties, including without limitation, an act of God, voluntary
or involuntary compliance with any regulation, law or order of any government,
war, civil commotion, labor strike or lock-out, epidemic, failure or default of
public utilities or common carriers, destruction of production facilities or
materials by fire, earthquake, storm or like catastrophe; provided, however, the
payment of invoices due and owing hereunder shall not be delayed by the payor
because of a force majeure affecting the payor.

         15.4     NOTICES. Any notice required or permitted to be given under
this Agreement shall be in writing, shall specifically refer to this Agreement
and shall be deemed to have been sufficiently given for all purposes if mailed
by first class certified or registered mail, postage prepaid, express delivery
service or personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.

                  For AeroGen:    AeroGen, Inc.
                                  1310 Orleans Drive
                                  Sunnyvale, CA 94089
                                  Attention: Chief Executive Officer

                  With a copy to: Cooley Godward LLP
                                  Five Palo Alto Square
                                  3000 El Camino Real
                                  Palo Alto, CA  94306
                                  Attention:  Barbara A. Kosacz, Esq.

                  For BD:         Becton, Dickinson and Company
                                  1 Becton Drive
                                  Franklin Lakes, NJ 07417-1866
                  Attention:      VP and General Manager, BD Consumer Healthcare

                  With a copy to: Becton, Dickinson and Company
                                  1 Becton Drive
                                  Franklin Lakes, NJ 07417-1866
                                  Attention: VP and General Counsel

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         15.5     LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, COLLATERAL, CONSEQUENTIAL, SPECIAL
OR PUNITIVE DAMAGES ARISING IN CONNECTION WITH THIS AGREEMENT.

         15.6     CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED. Whenever
provision is made in this Agreement for either Party to secure the consent or
approval of the other, that consent or approval shall not unreasonably be
withheld or delayed, and whenever in this Agreement provisions are made for one
Party to object to or disapprove a matter, such objection or disapproval shall
not unreasonably be exercised, unless expressly stated that such consent is to
be given in such Party's sole discretion.

         15.7     INDEPENDENT CONTRACTORS. The status of the Parties under this
Agreement shall be that of independent contractors. Neither Party shall have the
right to enter into any agreements on behalf of the other Party, nor shall it
represent to any person that it has any such right or authority. Nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship between the Parties.

         15.8     MAINTENANCE OF RECORDS. Each Party shall keep and maintain all
records required by law or regulation with respect to the Product and shall make
copies of such records available to the other Party upon request.

         15.9     UNITED STATES DOLLARS. References in this Agreement to
"Dollars" or "$" shall mean the legal tender of the United States of America.

         15.10    NO STRICT CONSTRUCTION. This Agreement has been prepared
jointly and shall not be strictly construed against either Party.

         15.11    ASSIGNMENT. Neither Party may assign or transfer this
Agreement or any rights or obligations hereunder without the prior written
consent of the other, except a Party may make such an assignment without the
other Party's consent to a successor-in-interest to substantially all of the
business assets of such Party to which this Agreement relates, whether in a
merger, sale of stock, sale of assets or other transaction. Any permitted
successor or assignee of rights and/or obligations hereunder shall, in a writing
to the other Party, expressly assume performance of such rights and/or
obligations. Any permitted assignment shall be binding on the successors of the
assigning Party. Any assignment or attempted assignment by either Party in
violation of the terms of this Section 15.11 shall be null and void and of no
legal effect. This Agreement shall be binding upon and shall inure to the
benefit of each Party's successors-in-interest and permitted assigns.

         15.12    PERFORMANCE BY AFFILIATES. The Parties recognize that each
Party may perform some or all of its obligations under this Agreement through
one or more of its Affiliates, provided, however, that each Party shall remain
responsible for and shall guarantee such performance by its Affiliates and shall
cause its Affiliates to comply with the provisions of this Agreement in
connection with such performance. Each Party hereby expressly waives any
requirement that the other Party exhaust any right, power or remedy, or proceed
against an

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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Affiliate, for any obligation or performance hereunder prior to proceeding
directly against such Party.

         15.13    COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         15.14    FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

         15.15    SEVERABILITY. If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable, the provision shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof. The Parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

         15.16    AMBIGUITIES. Ambiguities, if any, in this Agreement shall not
be construed against any Party, irrespective of which Party may be deemed to
have authored the ambiguous provision.

         15.17    HEADINGS. The headings for each article and section in this
Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section.

         15.18    NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         IN WITNESS WHEREOF, the Parties have executed this Agreement in by
their proper officers as of the date and year first above written.

BECTON, DICKINSON AND COMPANY                   AEROGEN, INC.

By:/s/ Gary M. Cohen                            By: /s/ Jane E. Shaw
   -----------------------------------------       --------------------

Name:  Gary M. Cohen                            Name:  Jane E. Shaw
     ---------------------------------------         ------------------

Title: President - Worldwide Medical Systems    Title:  Chairman / Ceo
      --------------------------------------          -----------------


EXHIBIT 1  CRITICAL SYSTEM SPECIFICATIONS

EXHIBIT 2  TECHNICAL DEVELOPMENT PLAN

EXHIBIT 3  SUPPLY AGREEMENT TERMS

EXHIBIT 4  POTENTIAL INVENTORS

EXHIBIT 5  FORM OF EMPLOYMENT AGREEMENT

EXHIBIT 6  DIAGRAM OF [*]


[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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                                    EXHIBIT 1

                         CRITICAL SYSTEM SPECIFICATIONS

                                      [*]










[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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                                    EXHIBIT 2

                           TECHNICAL DEVELOPMENT PLAN

                                      [*]
                                          [*]






[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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                                    EXHIBIT 3

                             SUPPLY AGREEMENT TERMS

1.       PURCHASE AND SUPPLY OBLIGATIONS. AeroGen shall purchase its and its
         Marketing Partners' requirements of BD Cartridges from BD, except as
         provided herein in the event of a supply default. BD shall manufacture
         and supply to AeroGen and its Marketing Partners their requirements for
         the BD Cartridge in accordance with binding purchase orders provided by
         AeroGen as described below.

2.       EXCLUSIVITY.

         During the term of the Supply Agreement, BD agrees that it shall not:

                           (i)      manufacture, have manufactured, use in Phase
         III clinical trials or sell and/or otherwise transfer to any Third
         Party, directly or indirectly, either itself or on behalf of a Third
         Party, the [*];

                           (ii)     manufacture, have manufactured, use in Phase
         III clinical trials or sell and/or otherwise transfer to any Third
         Party, directly or indirectly, either itself or on behalf of a Third
         Party, [*]; and

                           (iii)    manufacture, have manufactured, use in Phase
         III clinical trials or sell and/or otherwise transfer to any Third
         Party, directly or indirectly, either itself or on behalf of a Third
         Party, any [*].

3.       TRANSFER PRICE.

         BD will manufacture the BD Cartridge [*] and transfer the same to
         AeroGen for a [*] during the first year of commercial sale; and for a
         [*] during the second year of commercial sale.

         Following the second full year following commercial sale of the Retail
         Product and each subsequent year, provided that AeroGen orders at least
         [*] BD Cartridges during such year, the Transfer Price of the [*] BD
         Cartridge shall be equal to [*], but in no event greater than [*]. Any
         reduction in Cost of Goods of the [*] BD Cartridge below [*] shall be
         [*]. For example, should the Cost of Goods be reduced to [*], then BD
         would receive a Transfer Price [*]. In the event the [*] or any
         subsequent year production volume is less than [*] units, then the
         steady state transfer price shall be the [*] per [*] BD Cartridge. In
         the event BD sells or otherwise transfers to a Third Party any [*] for
         use in the Field, such [*] unit threshold shall be reduced
         proportionately.

         In the event the [*] of the BD Cartridge includes a [*] shall be
         transferred to AeroGen as follows: [*] For example, should the Cost
         of Goods equal [*], the transfer price of [*] mechanism shall be [*].

         "COST OF GOODS" means the cost of manufacturing, supplying and shipping
         the BD

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         Cartridge, and shall consist of (i) in the case of products and/or
         services acquired from Third Parties, payments to such Third Parties
         (including, for example, charges by such Third Parties for an
         allocation of overhead for production of components of the BD
         Cartridge), and (ii) in the case of manufacturing services performed by
         BD, including manufacturing services in support of Third Party
         manufacturing, the actual unit costs of the manufacture, plus the
         variances and other costs specifically provided for herein. Actual unit
         costs shall consist of direct material and direct labor costs plus
         manufacturing overhead attributable directly to the BD Cartridge, all
         calculated in accordance with BD Financial Policies and Generally
         Accepted Accounting Principles ("GAAP").

                           (a)      As used herein, "direct material costs"
         shall include the costs of materials (including waste), including
         applicable taxes imposed thereon, shipping costs and customs duty and
         charges levied by government authorities, and the costs of packaging
         components.

                           (b)      As used herein, "direct labor" shall include
         the cost of employees engaged in direct manufacturing activities and
         direct or indirect quality control and quality assurance activities who
         are directly employed in the manufacture, testing and/or packaging of
         the BD Cartridge.

                           (c)      "Overhead attributable directly to the BD
         Cartridge" shall include a reasonable and customary allocation of
         indirect labor (not previously included in direct labor), a reasonable
         allocation of administrative costs, and a reasonable allocation of
         facilities costs (including but not limited to, electricity, water,
         sewer, waste disposal, property taxes, and depreciation over the
         expected life of buildings and equipment), unless otherwise agreed upon
         by the Steering Committee. Such allocations shall be in accordance with
         BD's general business practice, and GAAP. Attributable overhead shall
         not include corporate overhead or plant start-up costs not otherwise
         allocable to the manufacture of the BD Cartridge, nor shall
         attributable overhead include costs associated with capacity not used
         in the manufacture of the BD Cartridge. Actual costs shall exclude
         costs associated with excess capacity not directly related to the BD
         Cartridge.

                           (d)      Cost of Goods shall also include
         manufacturing variances and other attributable non-standard costs.

4.       FORECASTS. In order to assist BD in its production planning, AeroGen
         would submit to BD at least six (6) months prior to the commencement of
         the market launch of the Product a non-binding forecast of its best
         estimate of its purchase requirements of the BD Cartridge for the first
         twelve (12) months of marketing of the BD Cartridge by month.
         Thereafter, AeroGen would provide BD with an updated non-binding
         rolling estimate of its purchase requirements for the BD Cartridge on a
         monthly basis for the subsequent twelve (12) month period. Forecasts in
         excess of BD's capacity would need to be mutually agreed upon between
         BD and AeroGen.

5.       ORDERS.  Within thirty (30) days of signing a Supply Agreement,
         AeroGen would submit to BD a binding purchase order for its
         requirements for the BD Cartridge for the first [*] months of
         marketing. Thereafter, AeroGen would provide BD with an updated binding

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         purchase order of its requirements for the BD Cartridge, each month, at
         least [*] months before requested delivery ("Purchase Order"), and BD
         would confirm all Purchase Orders within at least twenty (20) days of
         receipt. In each Purchase Order for any month, AeroGen would state,
         after consultation with BD, a reasonable delivery schedule for the BD
         Cartridge to be delivered. BD would make a reasonable business effort
         to comply with unplanned changes in Purchase Orders but would not be
         required to accept orders for the BD Cartridge that are not within [*]
         of the quantity forecasted subject to BD's capacity. Orders for the BD
         Cartridge in excess of such amounts would be subject to acceptance by
         BD in its reasonable discretion. However, BD would exercise reasonable
         business efforts to meet any changes, including schedule and quantity
         changes.

6.       SHIPMENT AND DELIVERY. The BD Cartridge would be packed and shipped in
         accordance with a shipping specifications to be mutually agreed to in
         writing between the Parties. Each such shipment shall contain any
         documents and/or information mutually agreed upon by the Parties in
         connection with the manufacture and shipment of the BD Cartridge
         (collectively, "Documentation"). The BD Cartridge would be shipped
         F.O.B. point of origin, unless otherwise mutually agreed. Risk of loss
         or damage would pass to AeroGen upon delivery to the common carrier.
         AeroGen would specify in the applicable purchase order the destination
         for each shipment. The quantity shipped may vary within [*] of the
         confirmed order; provided that AeroGen shall only be required to pay
         for those quantities actually shipped. No provision on AeroGen's
         purchase order forms which may purport to impose different conditions
         upon a Party, nor any other modifications of the Supply Agreement,
         would be of any force or effect, unless in writing and signed by the
         Parties claimed to be bound thereby. All Documentation required in
         connection with a shipment would be forwarded to the attention of
         AeroGen, unless otherwise specified in writing by AeroGen.

7.       INSPECTION, REJECTION AND ACCEPTANCE.

                  (a)      Within thirty (30) days of receipt of each shipment
         of BD Cartridges, in addition to any usual and customary incoming
         inspection including examination of the external appearance and
         integrity of the packaging, and before any use of the BD Cartridge,
         AeroGen or its designee, shall inspect each shipment of the BD
         Cartridges, in accordance with a mutually agreed upon inspection
         procedure. If AeroGen finds that the BD Cartridges do not conform to
         the Final Specifications, AeroGen shall within ten (10) days after the
         discovery of the non-conforming BD Cartridges, give BD written notice
         of any claim setting forth the details of such non-conformity, or
         otherwise shall be deemed to have accepted the BD Cartridges. BD in its
         discretion shall either repair or replace any non-conforming the BD
         Cartridge at BD's expense and at no cost to AeroGen. In accordance with
         BD's request, any the BD Cartridge which does not conform to the
         Specifications shall either be returned to BD or destroyed at BD's
         expense.

                  (b)      In the event the Parties disagree as to whether a
         shipment of the BD Cartridges or a portion thereof conforms to the
         Final Specifications, the rejected BD Cartridges would be submitted to
         a mutually acceptable third party testing laboratory, which would
         determine whether such BD Cartridges meet the Final Specifications. The
         Parties agree that such testing laboratory's determination would be
         final and

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         determinative. The Party against whom the testing laboratory rules
         would bear the reasonable costs of the testing laboratory. If the
         testing laboratory rules that the BD Cartridges meet the Final
         Specifications, AeroGen would purchase the BD Cartridges at the
         agreed-upon price, irrespective of whether BD has already replaced
         same. If the testing laboratory rules that the BD Cartridges do not
         meet the Final Specifications and the BD Cartridges were not replaced,
         BD would credit AeroGen's account in an amount equal to the purchase
         price of the rejected BD Cartridges, or refund that sum to AeroGen, as
         appropriate.

8.       TITLE. Title to the BD Cartridges shipped by BD for a given purchase
         order would pass to AeroGen upon delivery to the common carrier. BD
         shall warrant that upon such delivery, BD shall convey good title
         thereto, free and clear from any lawful security interest or lien or
         encumbrance.

9.       INVOICES. BD would invoice AeroGen upon each shipment of the BD
         Cartridge, and AeroGen would pay the full balance of each invoice in
         U.S. Dollars, less any applicable credits for rejected goods or if
         volumes rise so as to meet the next qualified price levels or charge
         backs if volumes fall below quoted levels, including those within
         thirty (30) days of delivery by BD to the common carrier. All such
         invoices would be forwarded as specified by AeroGen.

10.      INTELLECTUAL PROPERTY REPRESENTATIONS AND WARRANTIES.

                  (a)      AeroGen represents and warrants that to the best of
         its knowledge and belief the manufacture, use, sale, offer for sale or
         importation of the Product will not infringe any valid and enforceable
         claim of any third party patent.

                  (b)      BD represents and warrants that to the best of its
         knowledge and belief, the manufacture, use, sale, offer for sale or
         importation of the BD Cartridge will not infringe any valid and
         enforceable claim of any third party patent.

11.      PRODUCT WARRANTIES AND DISCLAIMER.

                  (a)      BD shall warrant to AeroGen that (a) all BD
         Cartridges manufactured and supplied under the Supply Agreement (i)
         will meet the Final Specifications, (ii) will be manufactured and
         supplied in accordance with quality systems regulations and other
         mutually agreeable standards, and (iii) will be free from defects in
         materials and workmanship. Claims on account of quality, loss or damage
         to the BD Cartridge will need to be made by AeroGen in writing within
         thirty (30) days following delivery to BD, unless otherwise mutually
         agreed to in writing between the Parties. AeroGen's sole and exclusive
         remedy, and BD's sole obligation under the warranty (except with
         respect to Latent Defects as defined in Sub-Section 15(c)) will be the
         repair or replacement, at BD's sole option, of any defective BD
         Cartridges. The warranty will not apply to (a) any BD Cartridge that
         had been misused, neglected, altered, abused or used by a party other
         than BD for any purpose other than the one for which it was
         manufactured or (b) any damages or defects caused by unauthorized
         repair or use of unauthorized parts or components. If no claim is made
         by AeroGen within the thirty (30) day period of time, the BD Cartridge

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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         will be deemed acceptable to AeroGen, and BD will no longer have any
         liability with respect thereto.

                  (b)      ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
         WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE
         HEREBY DISCLAIMED. IN ADDITION, BD EXPRESSLY DISCLAIMS ANY
         REPRESENTATIONS AND WARRANTIES REGARDING THE PERFORMANCE, SAFETY AND
         EFFICACY OF [*] IN COMBINATION WITH THE [*] COMPONENTS.

12.      CHANGES TO THE BD CARTRIDGE.

                  BD shall not make any material or process changes that would
         affect any regulatory approvals obtained with respect to the BD
         Cartridge. Notwithstanding the foregoing, BD may make such changes if
         they would not have any material effect on the BD Cartridge or the
         Product, solely to the extent permitted by QSR and other applicable
         laws and regulations.

13.      PRODUCT DISCONTINUANCE AND SUPPLY DEFAULT.

                  In the event BD wishes to discontinue the manufacture and
         supply of the BD Cartridge, BD shall provide AeroGen with at least [*]
         months prior, written notice of discontinuation. In addition, BD agrees
         to continue to supply AeroGen with the BD Cartridge for at least [*]
         months from the date of such notice, during which period of time, BD
         shall provide AeroGen with diligent, commercially reasonable,
         good-faith assistance and cooperation to enable a Third Party
         manufacturer to manufacture and supply the BD Cartridge to AeroGen and
         its Marketing Partner(s) as rapidly as possible.

14.      REGULATORY MATTERS.

                  (a)      AeroGen shall be responsible, at its expense, for
         diligently filing and prosecuting any authorizations or approvals for
         the commercial manufacture and sale of the Product, including the BD
         Cartridge, and shall diligently respond to any comments or concerns
         raised by such regulatory authorities. AeroGen shall provide BD with
         any registration dossier or materials, and any amendment thereof, that
         are in its possession or control in respect of the Product, including
         the BD Cartridge. In addition, AeroGen shall promptly notify BD of an
         inquires from or comments or concerns raised by any regulatory
         authorities with respect to the Product or the BD Cartridge.

                  (b)      BD shall have full access and the right of reference
         to the other AeroGen's regulatory filings and approvals, but only to
         the extent necessary and appropriate for the filing of any necessary
         regulatory submissions.

15.      INSPECTIONS AND AUDITS.

                  (a)      Upon written request to BD, AeroGen shall have the
         right to have representatives visit BD's manufacturing facilities
         during normal business hours to

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      39.
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         review BD's manufacturing operations and assess its compliance with QSR
         and quality assurance standards and to discuss any related issues with
         BD's manufacturing and management personnel.

                  (b)      BD shall notify AeroGen within two (2) business days
         of any planned inspection by any regulatory agency which may have an
         impact on the manufacturing of the BD Cartridge. BD shall forward to
         AeroGen copies of all regulatory communications with respect to the BD
         Cartridge within two (2) business days of receipt of such
         communications by BD.

16.      ADVERSE EVENT REPORTING AND RECALLS.

                  (a)      The Parties shall, throughout the duration of the
         Supply Agreement, notify one-another within two (2) business days after
         receiving any information concerning any complaint, injury, or
         sensitivity reaction associated with the use of the Product or the BD
         Cartridge, whether or not considered related to the Product or the BD
         Cartridge. The information shall be collected by the recipient of such
         information in accordance with a Standard Operating Procedure to be
         agreed to by the Parties and provided to the other in the form of a
         report. The report shall indicate if the performance of the Product or
         the BD Cartridge contributed to the event. The Parties shall require
         any third party under contract with either of the Parties to provide
         such information to both Parties on an expedited basis, the receipt of
         which information shall trigger the notification requirements set forth
         in this Section. If the adverse event is serious (including an adverse
         event that is fatal or life-threatening, is permanently or
         significantly disabling, or requires or prolongs in-patient
         hospitalization), then the recipient of such information shall use its
         best efforts to notify the other Party within one (1) business day
         after receipt of such information. In addition, moderately severe
         adverse events requiring medical intervention such as significant
         unexplained hypoglycemia, allergic bronchospasms requiring emergency
         room treatment, new abnormal liver function tests or abnormal CBC shall
         be reported to the other Party within three (3) business days. All
         notifications pursuant to this Section shall be by facsimile with
         confirmation copy by Certified or Registered mail and shall be written
         out on designated adverse event forms to be agreed to by the Parties.

                  (b)      If customer complaints other than those described
         above are received by either Party regarding the performance of the
         Product or the BD Cartridge, the Parties will exchange this information
         within five (5) business days after receipt of such information.
         Monthly reports summarizing any complaints or defects relating to the
         performance of the Product or the BD Cartridge shall be exchanged by
         the Parties. Efforts will be made to retrieve defective Product or the
         BD Cartridge and return them in the case of the Inhaler to AeroGen and
         in the case of the BD Cartridge to BD. All such reports and information
         obtained by either Party or exchanged under this Section shall be
         treated as Confidential Information in accordance with the terms of the
         Insulin Inhaler Development Agreement.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      40.
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                  (c)      AeroGen shall notify BD promptly if any Product or
         any BD Cartridge manufactured by BD hereunder is the subject of a
         recall or correction, and AeroGen and/or its designee shall have the
         sole responsibility for the handling and disposition of such recall or
         correction. In the event that a recall is required during the
         shelf-life of the BD Cartridge as a result of any non-compliance of the
         BD Cartridge with the Final Specification and if such non-compliance
         was not reasonably discoverable by AeroGen with the inspection
         performed pursuant to Section 6 in accordance with the mutually agreed
         inspection procedure (hereinafter referred to as "Latent Defect"), and
         AeroGen recalls either the Product or the BD Cartridge primarily due to
         such Latent Defect of the BD Cartridge, then, in addition to repair or
         replacement, BD shall reimburse AeroGen for the reasonable costs and
         expenses associated with such recall or correction, but only to the
         extent that the foregoing costs and expenses are directly attributable
         to BD's breach of its warranties under Sub-Section 10(a)(i). In all
         other events of a recall, all costs and expenses incurred in connection
         with such recall or correction shall be borne by AeroGen. AeroGen
         and/or its designee shall serve as the sole point of contact with the
         FDA or other applicable regulatory authority concerning any recall or
         correction with respect to the Product and the BD Cartridge.

17.      INDEMNITIES.

                  (a)      INDEMNIFICATION BY AEROGEN. AeroGen shall indemnify,
         defend (subject to Sub-Section (e) below) and hold BD harmless from and
         against any and all claims, demands, actions, suits, causes of action,
         damages and expenses (including but not limited to expenses of
         investigation, settlement, litigation and reasonable attorneys' fees
         incurred in connection therewith) which are hereafter made, sustained
         or brought against BD by any third party (i) for the recovery of
         damages to personal property or bodily injury, illness or death of any
         third party caused or alleged to be caused by the use, distribution, or
         sale of the Retail Product, or the BD Cartridge by AeroGen or its
         sublicensees, or (ii) arising out of or resulting from allegations
         against BD that the manufacture, use, offer for sale, sale or
         importation of the Inhaler infringes a third party patent or trademark
         to which BD has no ownership or license rights thereunder, unless in
         each such case, such claims, demands, actions, suits, causes of action,
         damages or expenses allegedly occurred as a result of BD's negligence,
         willful misconduct, or breach of its representations and warranties
         contained herein.

                  (b)      INDEMNIFICATION BY BD. BD shall indemnify, defend
         (subject to Sub-Section (e) below) and hold AeroGen harmless from and
         against any and all claims, demands, actions, suits, causes of action,
         damages and expenses (including, but not limited to expenses of
         investigation, settlement, litigation and reasonable attorneys' fees
         incurred in connection therewith) which are hereafter made, sustained
         or brought against AeroGen by any third party (i) to the extent arising
         out of or resulting from BD's negligence, willful misconduct or breach
         of its representations and warranties contained herein, or (ii) arising
         out of or resulting from allegations against AeroGen that the
         manufacture, use, sale, offer for sale or importation of the BD
         Cartridge infringes a third party patent or trademark to which AeroGen
         has no ownership or license rights thereunder; provided, unless such
         claims, demands, actions, suits, causes of action,

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      41.
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         damages or expenses allegedly occurred as a result of AeroGen's
         negligence, willful misconduct, or breach of its representations and
         warranties contained herein.

                  (c)      LIMITATION OF LIABILITY. Under no circumstances shall
         either Party be liable to the other Party for any special, indirect,
         consequential or incidental damages, including, but not limited to,
         loss of profits or revenues or damage to or loss of other products,
         property and/or equipment incurred by such Party or AeroGen's Marketing
         Partner or Qualified Supplier, or any other party seeking
         indemnification hereunder. In addition, BD shall not be liable for any
         damages arising or resulting from any failure of BD or AeroGen to warn,
         or to adequately warn, against [*].

                  (d)      APPORTIONMENT. Consistent with the foregoing, in the
         event any and all such claims, demands, actions, suits, causes of
         action, damages and expenses (including, but not limited to expenses of
         investigation, settlement, litigation and reasonable attorneys' fees
         incurred in connection therewith) relate to the Interface, each Party
         hereby agrees to indemnify, defend and hold harmless the other Party
         and its officers, directors, agents and employees with respect to that
         portion of any such claims, demands, actions, suits, causes of action,
         damages and expenses (including, but not limited to expenses of
         investigation, settlement, litigation and reasonable attorneys' fees
         apportioned between the Parties based upon each Party's percentage of
         all Royalties received from each Marketing Partner.

                  (e)      PROCEDURES. SHOULD A PARTY (THE "INDEMNIFIED PARTY")
         INTEND TO CLAIM INDEMNIFICATION HEREUNDER, IT SHALL PROMPTLY NOTIFY
         THE OTHER PARTY ("INDEMNIFYING PARTY") IN WRITING OF ANY LOSS, CLAIM,
         DAMAGE, LIABILITY OR ACTION IN RESPECT OF WHICH SUCH INDEMNIFIED PARTY
         INTENDS TO CLAIM SUCH INDEMNIFICATION, AND THE INDEMNIFYING PARTY SHALL
         BE ENTITLED, BUT NOT OBLIGATED, TO ASSUME THE DEFENSE THEREOF WITH
         COUNSEL SELECTED BY THE INDEMNIFYING PARTY, AND THE INDEMNIFIED PARTY,
         INCLUDING ITS EMPLOYEES AND AGENTS, SHALL COOPERATE FULLY WITH
         INDEMNIFYING PARTY AND ITS LEGAL REPRESENTATIVES IN THE INVESTIGATION
         AND DEFENSE OF ANY ACTION, CLAIM OR LIABILITY COVERED BY THIS SECTION.

                  (f)      EXCEPT AS PROVIDED HEREIN, BD MAKES NO OTHER
         WARRANTIES AND ASSUMES NO OTHER OBLIGATIONS, EXPRESS OR IMPLIED, WITH
         RESPECT TO THE BD CARTRIDGE OR THE PRODUCT. ALL OTHERS ARE HEREBY
         DISCLAIMED BY BD.

18.      TERM. The term of the Supply Agreement would be for an initial period
         of five (5) years. The Supply Agreement would be automatically renewed
         for additional two (2) year periods unless either Party provides the
         other Party with written notice of its desire not to renew the Supply
         Agreement at least eighteen (18) months before the expiration of the
         term of such Supply Agreement or any renewal thereof.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      42.
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                                    EXHIBIT 4

                               POTENTIAL INVENTORS

                                      [*]





[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


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                                    EXHIBIT 5

                      FORM OF STANDARD EMPLOYMENT AGREEMENT

                               EMPLOYEE AGREEMENT

                                      [*]








[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      44.
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                                    EXHIBIT 6

                                      [*]

                                      [*]







[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                      45.
