Exhibit 10.3
Alexza Pharmaceuticals, Inc.
2005 Equity Incentive Plan
Option Agreement
(Incentive Stock Option or Nonstatutory Stock Option)
     Pursuant to your Notice of Grant of Stock Options (“Grant Notice”) and this
Option Agreement, Alexza Pharmaceuticals, Inc. (the “Company”) has granted you
an option under its 2005 Equity Incentive Plan (the “Plan”) to purchase the
number of shares of the Company’s Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
     The details of your option are as follows:
     1. Vesting.
          (a) Subject to the limitations contained herein, your option will vest
as follows: Thirty-three percent (33%) of the shares vest and become exercisable
February 22, 2012; the balance of the shares vest and become exercisable in a
series of twenty-four (24) successive equal monthly installments measured from
February 22, 2012, subject to your Continuous Service as of each such date. If
your Continuous Service terminates within three (3) months prior to, or twelve
(12) months following, the effective date of a Change in Control due to (i) an
involuntary termination (excluding death or Disability) without Cause, or (ii) a
voluntary termination for Good Reason, the vesting and exercisability of your
option shall be accelerated in full as of the later of the date of the Change in
Control or the date of such termination.
          (b) “Cause” means: (i) your arrest for violation of a state or federal
criminal law involving the commission of any felony against the Company;
(ii) your intentional, material violation of any material written contract or
agreement between you and the Company (which, if curable, is not cured within
twenty (20) days after written notice thereof by the Company to you); (iii) your
unauthorized use or disclosure of the Company’s confidential information or
trade secrets; or (iv) your continued gross misconduct (which, if curable, is
not cured within twenty (20) days after written notice thereof by the Company to
you). The determination that a termination is for Cause shall be made by the
Company in its sole discretion. Any determination by the Company that your
employment was terminated with or without Cause for the purposes of your option
shall have no effect upon any determination of the rights or obligations of the
Company or you for any other purpose.
          (c) “Good Reason” means that one or more of the following are
undertaken by the Company without your express written consent: (i) relocation
of your place of work greater than twenty-five (25) miles from your current work
location; (ii) a decrease in compensation; or (iii) the Company unilaterally
makes significant detrimental changes to your job responsibilities, including
without limitation any action resulting in a diminution in your position,
authority, duties or responsibilities as of the date of this Agreement.

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     2. Number of Shares and Exercise Price. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments.
     3. Exercise Restriction for Non-Exempt Employees. In the event that you are
an Employee eligible for overtime compensation under the Fair Labor Standards
Act of 1938, as amended (i.e., a “Non-Exempt Employee”), you may not exercise
your option until you have completed at least six (6) months of Continuous
Service measured from the Date of Grant specified in your Grant Notice,
notwithstanding any other provision of your option.
     4. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or by one or more of the following methods:
          (a) In the Company’s sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
          (b) In the Company’s sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery to the
Company (either by actual delivery or attestation) of already-owned shares of
Common Stock either that you have held for the period required to avoid a charge
to the Company’s reported earnings (generally six (6) months) or that you did
not acquire, directly or indirectly from the Company, that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. “Delivery” for these
purposes, in the sole discretion of the Company at the time you exercise your
option, shall include delivery to the Company of your attestation of ownership
of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the
Company of Common Stock to the extent such tender would violate the provisions
of any law, regulation or agreement restricting the redemption of the Company’s
stock.
     5. Whole Shares. You may exercise your option only for whole shares of
Common Stock.
     6. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

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     7. Term. You may not exercise your option before the commencement or after
the expiration of its term. The term of your option commences on the Date of
Grant and expires upon the earliest of the following:
          (a) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death or in connection with a
Change in Control; provided, however, that if during any part of such three
(3) month period your option is not exercisable solely because of the condition
set forth in Section 6, your option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
of three (3) months after the termination of your Continuous Service;
          (b) twelve (12) months after the termination of your Continuous
Service due to your Disability;
          (c) eighteen (18) months after your death if you die during your
Continuous Service;
          (d) twelve (12) months after the termination of your Continuous
Service if your Continuous Service terminates as of or within three (3) months
prior to or twelve (12) months following such Change in Control;
          (e) the Expiration Date indicated in your Grant Notice; or
          (f) the day before the tenth (10th) anniversary of the Date of Grant.
     Notwithstanding the foregoing, if you die during the period provided in
Section 7(a) or 7(b) above, the term of your option shall not expire until the
earlier of eighteen (18) months after your death, the Expiration Date indicated
in your Grant Notice, or the day before the tenth (10th) anniversary of the Date
of Grant.
     If your option is an Incentive Stock Option, note that to obtain the
federal income tax advantages associated with an Incentive Stock Option, the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option’s
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an Incentive
Stock Option if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
with the Company or an Affiliate terminates.
     8. Exercise.
          (a) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
on-line via E*Trade or by delivering a Notice of Exercise (in a form designated
by the Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate,

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during regular business hours, together with such additional documents as the
Company may then require.
          (b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (i) the exercise of
your option, (ii) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (iii) the
disposition of shares of Common Stock acquired upon such exercise.
          (c) If your option is an Incentive Stock Option, by exercising your
option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
     9. Transferability. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option. In addition, you may transfer your option to a trust if you are
considered to be the sole beneficial owner (determined under Section 671 of the
Code and applicable state law) while the option is held in the trust, provided
that you and the trustee enter into transfer and other agreements required by
the Company.
     10. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
     11. Withholding Obligations.
          (a) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a “cashless
exercise” pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with the exercise of your option.
          (b) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable legal conditions or
restrictions, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value,

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determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law (or such lower amount as
may be necessary to avoid classification of your option as a liability for
financial accounting purposes). If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.
          (c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.
     12. Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
     13. Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations,
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.

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