AMENDMENT TO DISTRIBUTION, MANUFACTURING AND SUPPLY AGREEMENT

Distribution Agreement

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AEROGEN INC | MEDICAL INDUSTRIES AMERICA, INC

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Title: AMENDMENT TO DISTRIBUTION, MANUFACTURING AND SUPPLY AGREEMENT
Date: 5/13/2005
Industry: HTHEQP Sector: HEALTH

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EXHIBIT 10.17.1

[ * ] = 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 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

AMENDMENT TO

DISTRIBUTION, MANUFACTURING AND SUPPLY AGREEMENT

THIS AMENDMENT TO DISTRIBUTION, MANUFACTURING AND SUPPLY AGREEMENT (the “ Amendment ”) is made and entered into as of March 18, 2005 (the “ Amendment Date ”) by and between AEROGEN, INC. , a Delaware corporation, with offices at 2071 Stierlin Court, Mountain View, CA 94043 (“ Aerogen ”), and MEDICAL INDUSTRIES AMERICA, INC. , an Iowa corporation, with offices at 2636 289 ^th Place, Adel, IA 50003 (“ MIA ”). Aerogen and MIA may be referred to herein individually as a “ Party ” or collectively as the “ Parties ”.

WHEREAS , Aerogen and MIA are parties to the Distribution, Manufacturing and Supply Agreement dated September 30, 2003 (the “ Agreement ”); and

WHEREAS , the Parties now desire to amend certain terms and conditions of the Agreement as provided herein.

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

1. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Agreement.

2. In consideration of the full and final settlement of Aerogen’s portion of all recall-related liability incurred by MIA as of the Amendment Date in connection with the recall carried out in response to the FDA Warning Letter dated August 23, 2004 (the “Recall”), (a) Aerogen will supply to MIA a quantity of ten thousand (10,000) OnQ Aerosol Generators at [ * ] pursuant to Section 5.4(b) of the Agreement (as amended) and (b) Aerogen will forgive the [ * ] in outstanding invoice amounts owed to Aerogen by MIA as of the Amendment Date in connection with OnQ Aerosol Generator purchases prior to the Amendment Date. With respect to any expenses to be incurred in connection with additional corrective actions relating to the Recall that may be required by the FDA after the Amendment Date, the parties will mutually agree on the nature of such expenses prior to incurring them. Regardless of any allocation of such expenses that would be determined by the application of Section 7.4 of the Agreement, each party will bear such expenses equally. MIA will be solely responsible for any other business expenses arising from the Recall in connection with activities that are not directed or required by the FDA, but arise from MIA’s business decision to enhance or ameliorate its relationship with its customers, including, but not limited to incentives, credits of any kind and free product provided by MIA to its dealers and customers. The foregoing is not intended to affect Aerogen’s indemnification responsibility under Section 11.1 of the Agreement with respect to any third party claim based on events occurring prior to the Amendment Date.

3. MIA acknowledges that a Financing Event has occurred and therefore Aerogen is entitled pursuant to Section 3.8(f) of the Agreement to exercise its Repurchase Option and repurchase the

Equipment from MIA, and to simultaneously revoke and terminate the rights granted to MIA under Section 3.8(a) and 3.8(c) of the Agreement permitting MIA to assume full authority over the manufacturing of the OnQ Aerosol Generator at the OnQ Aerosol Generator Manufacturing Facility, which rights were exercised by MIA’s letter to Aerogen dated January 13, 2004. On the Amendment Date, Aerogen shall pay to MIA one dollar ($1.00), upon receipt of which MIA hereby sells and assigns to Aerogen the entire right, title and interest in the Equipment, free and clear of any and all encumbrances. MIA shall take such action as reasonably requested by Aerogen to document and perfect such sale and assignment. MIA represents and warrants to Aerogen that MIA has not sold, leased, mortgaged or otherwise encumbered in any manner its interest in the Equipment prior to the Amendment Date. The Parties acknowledge and agree that as a result of the exercise of the Repurchase Option the OnQ Manufacturing Period has ended. The Parties further acknowledge and agree that all obligations pursuant to the side letter between the Parties dated February 3, 2004 and all subsequent oral and written agreements related to the subject matter thereof, have been satisfied in full, and the side letter and all rights and obligations of the Parties under it are hereby terminated as of the Amendment Date.

4. Article 1 of the Agreement is amended to delete the following sections in their entirety: (a) Section 1.5; (b) Section 1.10; (c) Section 1.15; and (d) Section 1.20.

5. Section 1.21 of the Agreement is deleted in its entirety and replaced with the following:

1.21 “ Sales Quarter ” means a period of three (3) successive calendar months commencing on January 1, 2005, and each three (3) successive calendar month period thereafter during the Term.

6. Section 1.22 of the Agreement is deleted in its entirety and replaced with the following:

1.22 “ Sales Year ” means the period of twelve (12) successive calendar months commencing on January 1, 2005, and each successive twelve (12) month period thereafter during the Term.

7. Section 1.24 of the Agreement is deleted in its entirety and replaced with the following:

1.24 “ Supply Quarter ” means a period of three (3) successive calendar months commencing on January 1, 2005, and each three (3) successive calendar month period thereafter during the Term.

8. Section 2.2 of the Agreement is deleted in its entirety and replaced with the following:

2.2 Sub-Distributors. MIA will provide Aerogen with written notice regarding any direct or indirect financial affiliation that arises between MIA (or any of its Affiliates) and any of its existing or proposed sub-distributors during the Term, with such notice to be given promptly upon the commencement of negotiations with a sub-distributor involving any financial interest (including, but not limited to, equity ownership, credit facilities, rebates, profit or revenue interest, etc.), with full details of the final relationship to be provided to Aerogen upon final deal closure. MIA shall require that any Related Sub-Distributors make complete and accurate reports to MIA in writing on a quarterly basis of all Gross Selling Prices for Products sold or

otherwise transferred by such Related Sub-Distributor, and Aerogen shall have the right to inspect and audit all such reports pursuant to Section 5.7 .

9. Section 2.4 of the Agreement is deleted in its entirety and replaced with the following:

2.4 Right of First Negotiation to Expand the Territory. During the Term, MIA shall have a right of first negotiation to obtain rights to distribute the Product in a country that is not listed on Exhibit C ; provided that Aerogen has not previously granted to a Third Party distribution rights in such country or is not itself distributing in such country. MIA shall notify Aerogen of its intent in writing, and, MIA shall complete and present to Aerogen a definitive business plan, including a distribution strategy with either intent to contract or hire sales representatives, or a letter of intent and a draft definitive agreement with a sub-distributor. If the marketing rights for the Product in such country are available for licensing to MIA, then the Parties shall negotiate in good faith to reach an agreement regarding the expansion of the Territory to include such country. If the Parties reach agreement on the expansion of the Territory, Exhibit C shall be amended to reflect the additional country(ies) in which MIA may distribute the Product pursuant to this Agreement.

10. Section 3.5 of the Agreement is deleted in its entirety.

11. The first sentence of Section 3.7 of the Agreement is deleted in its entirety and replaced with the following:

Unless otherwise agreed by the Parties or as provided by this Agreement, Aerogen will be solely responsible during the Term for the manufacture and supply to MIA of its requirements of the OnQ Aerosol Generator for incorporation into the Product, pursuant to the terms of Article 4 .

12. Sections 3.8, 3.9 and 3.10 of the Agreement are deleted in their entirety.

13. The last sentence of Section 4.1 is deleted in its entirety.

14. Section 5.3 of the Agreement is deleted in its entirety and replaced with the following:

5.3 Sales-Based Payments. In consideration of the rights granted by Aerogen to MIA under this Agreement, MIA will make payments to Aerogen equal to a percentage of the G