Related Party Transactions and Outside Related Director Information

CoTherix, Inc. (CTRX)

4/13/2006 Proxy Information

Investor Rights Agreement

We have entered into an investor rights agreement with certain of our stockholders. Pursuant to the investor rights agreement, if we propose to register any of our securities under the Securities Act either for our own account or for the account of other securityholders after this offering, subject to certain conditions and limitations, the holders of registration rights will be entitled to include their shares of common stock. In addition, holders of registration rights may require us on not more than two occasions, to file a registration statement under the Securities Act with respect to their shares of common stock. Further, the holders of registration rights may require us to register their shares on Form S-3 when this form is available to us. These rights shall terminate altogether five years after the effective date of the closing of our initial public offering, and, with respect to each holder of such rights, on the date when such holder holds less than 1% of our outstanding shares of common stock and is able to sell within a three-month period all of its shares pursuant to Rule 144 under the Securities Act. These registration rights are subject to certain conditions and limitations, including the right of underwriters to limit the number of shares included in any such registration under certain circumstances.

Agreements with Executive Officers and Directors

Other Agreements. We have entered into employment agreements and change of control agreements with our executive officers and a separation agreement with a former executive officer. For more information regarding these agreements, see “Employment Agreements” and “Severance and Change of Control Agreements.”

Stock Options Granted to Executive Officers

In March 2005, the Compensation Committee of our Board of Directors granted stock options to each of the following executive officers to acquire the following number of shares of the Company’s common stock: (a) Mr. Santel: 200,000 shares; (b) Mr. Feldman: 150,000 shares; (c) Dr. Pennington: 100,000 shares; (d) Ms. Gray-Smith: 100,000 shares; (e) Mr. Mahaffey: 40,000 shares; (f) Ms. Dickinson: 35,000 shares and (g) Mr. Michitarian: 75,000 shares.

Each option has an exercise price of $8.30 per share, which is equal to the closing price per share on March 10, 2005, as reported in the Wall Street Journal, representing pursuant to the 2004 Equity Incentive Plan the fair market value of the grants. Each executive officer’s options in the aggregate will become exercisable with respect to 25% of the shares subject to the options upon the optionee’s completion of 12 months of service after the date of grant and with respect to an additional 2.08333% of the shares subject to the options upon the optionee’s completion of each of the next 36 months of service thereafter.

The option agreements for each of the options granted to the executive officers described above provides for the following acceleration of vesting in the event of and following a change in control of the Company. An option will become exercisable with respect to 50% of the then unvested option shares upon the occurrence of a change in control before the optionee’s service terminates. If an optionee is involuntarily terminated within 12 months after the change in control, then the option will become exercisable in full with respect to all of the option shares. An involuntary termination includes a termination without cause or a resignation following a material reduction in responsibilities, a reduction in base salary of more than 10% or a relocation of the optionee’s principal workplace by more than 30 miles.

Executive Officer 2005 Bonuses

In March 2006, the Compensation Committee of the Board of Directors approved 2005 bonuses for our executive officers. See “Executive Compensation—Summary Compensation Table.”

Director Stock Options

Certain of our non-employee directors were granted options to purchase shares of our common stock in January 2006. See “Proposal 1: Election of Directors—Director Compensation.”

Indemnification Agreements

As permitted by Delaware law, the Company has adopted provisions in our amended and restated certificate of incorporation and bylaws that limit or eliminate the personal liability of the Company’s directors and officers to the fullest extent permitted by Delaware law, as it now exists or may in the future be amended, and against all expenses and liabilities reasonably incurred in connection with their service for or on behalf of CoTherix. In addition, the amended and restated certificate of incorporation provides that the Company’s directors will not be personally liable for monetary damages to the Company for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to the Company or the Company’s stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper personal benefit from their action as directors. The Company maintains liability insurance which insures the Company’s directors and officers against certain losses and insures the Company with respect to its obligations to indemnify the Company’s directors and officers.

In addition, the Company has entered into separate indemnification agreements with each director and officer. These agreements, among other things, require the Company to indemnify each director and officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or officer in any action or proceeding, including any action or proceeding by or in right of the Company, arising out of the person’s services as a director or officer. At present, the Company is not aware of any pending or threatened litigation or proceeding involving any of the Company’s directors, officer, employees or agents in which indemnification would be required or permitted. The Company believes provisions in our amended and restated certificate of incorporation and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.