Exhibit 10.29
[ * ] = 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.
AMENDED AND RESTATED
RESEARCH AND DEVELOPMENT AGREEMENT
among
ALEXZA PHARMACEUTICALS, INC.,
SYMPHONY ALLEGRO HOLDINGS LLC
and
SYMPHONY ALLEGRO, INC.
 
Dated as of December 1, 2006
 

 

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Table of Contents

                              Page     1.    
ASSIGNMENT
    1          
 
          2.    
OVERVIEW OF DEVELOPMENT
    1          
 
          3.    
DEVELOPMENT COMMITTEE
    2          
 
          4.    
DEVELOPMENT PLAN AND DEVELOPMENT BUDGET
    2          
4.1 Generally
    2          
4.2 Amendments
    3          
4.3 Alexza’s Independent Staccato Technology Research
    4          
 
          5.    
REGULATORY MATTERS
    5          
5.1 FDA Sponsor
    5          
5.2 Correspondence
    6          
5.3 Inspections and Meetings
    6          
5.4 Transfer of FDA Sponsorship
    7          
 
          6.    
ALEXZA’S OBLIGATIONS
    8          
6.1 Generally
    8          
6.2 Subcontracting
    9          
6.3 Reports and Correspondence
    11          
6.4 Manufacturing
    11          
6.5 Staffing
    12          
6.6 QA Audit
    13          
6.7 Financial Audit
    13          
6.8 Insurance
    13          
 
          7.    
SYMPHONY ALLEGRO’S OBLIGATIONS
    14          
7.1 Generally
    14          
7.2 Subcontracting
    14          
7.3 Reports
    14          
7.4 Insurance
    14          
7.5 Staffing
    15  

 

[ * ]  =   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.

 

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Table of Contents

                              Page          
7.6 Audit
    15          
 
          8.    
FUNDING AND PAYMENTS
    15          
8.1 Use of Proceeds
    15          
8.2 Reimbursement
    16          
8.3 Budget Allocation and Deviations
    16          
8.4 Employee Benefits
    17          
 
          9.    
COVENANTS
    17          
9.1 Mutual Covenants
    17          
 
          10.    
CONFIDENTIALITY
    18          
 
          11.    
DISCONTINUATION OPTION
    18          
 
          12.    
REPRESENTATIONS AND WARRANTIES
    19          
12.1 Alexza Representations and Warranties
    19          
12.2 Symphony Allegro Representations and Warranties
    21          
 
          13.    
RELATIONSHIP BETWEEN ALEXZA AND SYMPHONY ALLEGRO
    22          
 
          14.    
CHANGE OF CONTROL
    22          
 
          15.    
NO RESTRICTIONS; INDEMNIFICATION
    22          
15.1 No Restrictions
    22          
15.2 Indemnification
    22          
 
          16.    
LIMITATION OF LIABILITIES
    25          
16.1 Between the Parties
    25          
16.2 Pursuant to the RRD Services Agreement
    26          
 
          17.    
TERM AND TERMINATION
    26          
17.1 Term
    26          
17.2 Termination for Alexza’s Breach
    26          
17.3 Termination for Symphony Allegro’s or Holdings’ Breach
    27          
17.4 Termination of License Agreement
    27          
17.5 Survival
    27          
 
          18.    
MISCELLANEOUS
    27          
18.1 No Petition
    27  

 

[ * ]  =   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.

 

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Table of Contents

                              Page          
18.2 Notices
    27          
18.3 Governing Law; Consent to Jurisdiction and Service of Process
    29          
18.4 WAIVER OF JURY TRIAL
    29          
18.5 Entire Agreement
    29          
18.6 Amendment; Successors; Assignment; Counterparts
    30          
18.7 Severability
    30          
18.8 Third Party Beneficiary
    30  

Annex A — Certain Definitions
Annex B — Development Committee Charter
Annex C — Initial Development Plan and Initial Development Budget
Annex D — {Intentionally Omitted.}
Annex E — Payment Terms
Schedule 6.2 — Subcontracting Agreements
Schedule 6.5 — Alexza Key Personnel
Schedule 12.1(f) — Material Disclosed Contracts
 

[ * ]  =   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.

 

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AMENDED AND RESTATED
RESEARCH AND DEVELOPMENT AGREEMENT
     This Amended And Restated Research And Development Agreement (this
“Agreement”) is entered into as of December 1, 2006 (the “Closing Date”) by and
among Alexza Pharmaceuticals, Inc., a Delaware corporation (“Alexza”), Symphony
Allegro, Inc., a Delaware corporation (“Symphony Allegro”) (each of Alexza and
Symphony Allegro being a “Party,” and collectively, the “Parties”), and Symphony
Allegro Holdings LLC, a Delaware limited liability company (“Holdings”).
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in Annex A attached hereto.
PRELIMINARY STATEMENT
     Alexza and Holdings have entered into that certain Research and Development
Agreement, dated as of December 1, 2006 (the “Research and Development
Agreement”). Pursuant to this Agreement, Holdings desires to assign all of its
rights and delegate its obligations under the Research and Development Agreement
to Symphony Allegro, and Alexza and Symphony Allegro desire to amend and restate
the terms and conditions of the Research and Development Agreement.
     In the Novated and Restated Technology License Agreement, Alexza grants
Symphony Allegro an exclusive license to develop and commercialize the Products.
Symphony Allegro wishes for Alexza to continue to develop such Products.
Symphony Allegro and Alexza desire to establish, and agree on the
responsibilities of, a Development Committee to oversee such development. Alexza
and Symphony Allegro further desire to comply with and perform certain
agreements and obligations related thereto.
     The Parties hereto agree as follows:
     1. Assignment. The Parties agree that from and after the Closing Date, all
of the rights and obligations of Holdings under the Research and Development
Agreement will be assigned and transferred to, and assumed by, Symphony Allegro.
     2. Overview of Development.
               (a) The Parties shall develop the Programs in a collaborative and
efficient manner as set forth in this Article 2. Representatives of the Parties
shall engage in joint decision-making for the Programs as set forth in Articles
3 and 4 hereof. Symphony Allegro shall have overall responsibility for all
matters set forth in the Development Plan (pursuant to Article 7 hereof), and
shall engage Alexza (pursuant to Article 6 hereof), RRD (pursuant to the RRD
Services Agreement), and such independent contractors and agents as it may
retain with RRD’s assistance or as Alexza may retain on Symphony Allegro’s
behalf (which contractors include entities retained by Alexza prior to the
Closing Date pursuant to the Subcontracting Agreements set forth on Schedule
6.2), to act on behalf of Symphony Allegro and carry out the duties set forth
therein and herein, including management, supervisory and accounting functions,
 

[ * ]  =   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.

1.

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pre-clinical and clinical development, manufacturing, scientific and technical
services associated with such development, and patent work under the Programs.
               (b) Alexza hereby acknowledges and agrees to Symphony Allegro’s
engagement of RRD to act on its behalf and to carry out the duties assigned to
RRD herein and in the RRD Services Agreement, including, but not limited to
(i) providing personnel and support to the Development Committee and the
Symphony Allegro Board, (ii) the management and administration of Symphony
Allegro, (iii) supervising and monitoring Alexza’s implementation of the
Programs, and (iv) subject to Section 6.1(a) and without limiting Alexza’s role
thereunder, such other development-related work as Symphony Allegro may
reasonably delegate to RRD in accordance with the Development Plan.
               (c) With respect to the AZ-002 Program and the AZ-004 Program,
Alexza shall be responsible for the execution of all pre-clinical and clinical
development, all scientific and technical services associated with such
development, and all patent work, including all related matters set forth in the
Development Plan for such Programs.
               (d) Nothing in Section 2(c) shall in any way limit the authority
of the Development Committee (as defined below) or the Symphony Allegro Board
hereunder, and the engagements and delegations set forth therein shall be
subject to the terms and conditions of this Agreement and the RRD Services
Agreement, and the satisfactory performance by RRD and Alexza of their
obligations pursuant hereto and thereto. The allocations of responsibility
described in this Article 2 shall remain subject to further modification in
accordance with the terms and conditions of this Agreement and the RRD Services
Agreement.
     3. Development Committee. The Parties shall establish and maintain a
committee (the “Development Committee”) to oversee the development of the
Programs (including the continued development and refinement of the Development
Plan and the Development Budget). The Development Committee shall be
established, operated and governed in accordance with the policies and
procedures set forth in Annex B hereto (the “Development Committee Charter”).
The Development Committee Charter may be amended only with the unanimous
approval of the Development Committee Members and the consent of the Symphony
Allegro Board, Holdings and Alexza. In no event shall the Development Committee
have the power to amend the terms of any Operative Document.
     4. Development Plan and Development Budget.
          4.1 Generally. The Parties have agreed, as of the Closing Date, to an
Initial Development Plan and an Initial Development Budget, which are attached
hereto and incorporated herein as Annex C, and which shall be further developed
and refined from time to time in accordance herewith. The Initial Development
Plan consists (and the Development Plan shall consist) of detailed provisions
governing all research, pre-clinical, clinical, development, manufacturing,
scientific, technical, regulatory and patent work to be performed under the
Operative Documents. Following the Closing Date, the Development Committee
shall, on an ongoing basis, further develop the Development Plan to include,
without limitation, (i) an outline of the plan for the development of each
Program; (ii) outlines of non-clinical activities, key regulatory and quality
activities, and CMC activities for each Program; and (iii) a forecast for
 

[ * ]  =   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.

2.

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

 

amounts of Clinical Trial Materials required for each Program and a timeline for
manufacturing such Clinical Trial Materials. The Initial Development Budget
consists (and the Development Budget shall consist) of two (2) components: (x) a
budget for the Development Plan (the “Clinical Budget Component”), and (y) a
budget for the management and administrative functions of Symphony Allegro, as
set forth in Section 1(a) of the RRD Services Agreement. The Clinical Budget
Component shall be further divided into separate budgets for each Program, and,
following the Closing Date, the Development Committee shall further develop and
refine the Clinical Budget Component to include, without limitation, (1) budget
spreadsheets summarizing anticipated costs of engaging third party service
providers and the scope of work to be performed by such third parties; and
(2) the number of FTEs to be dedicated to the Programs (by function and work
responsibilities, on a Program-by-Program basis). All presently anticipated or
actual expenditures of Symphony Allegro, including, without limitation,
compensation of members of the Symphony Allegro Board and compensation to RRD,
are included in the Initial Development Budget attached hereto, and will
continue to be included in any amendments thereof. The Development Committee
shall, at the request of the Symphony Allegro Board, submit the Development Plan
and the Development Budget (as each shall have been developed and refined up to
such point) to the Symphony Allegro Board for its review at the first meeting of
the Symphony Allegro Board. Following the Symphony Allegro Board’s review, the
Development Committee shall work diligently to incorporate any comments
generated by the Symphony Allegro Board’s review and update the Development Plan
and the Development Budget as soon as practicable, and submit the updated
Development Plan and the updated Development Budget to the Symphony Allegro
Board for further review.
     4.2 Amendments.
               (a) All amendments of, and all material deviations from, the
Development Plan and Development Budget (including amendments or deviations made
at the request of Alexza or RRD, in accordance with Section 8.3 hereof or
Section 2(b) of the RRD Services Agreement, respectively) shall be made in
accordance with the procedures described in this Article 4 and in the
Development Committee Charter, including obtaining the approval of the Symphony
Allegro Board, as may be required by the Development Committee Charter. No
amendment of the Development Plan that alters the forecast for the amounts of
Clinical Trial Materials provided by Alexza and required for either Program
within six (6) months after the amendment effective date shall be made without
(i) amending the Development Budget to compensate Alexza for costs associated
with accommodating such alteration and (ii) receiving written confirmation from
Alexza that it can complete delivery of the revised forecasts within the
applicable time periods specified in such amendment to the Development Plan. Any
proposed amendment of the Development Budget which increases the Management Fee
or the Development Fee shall require the written consent of Alexza, not to be
unreasonably withheld. Any proposed amendment of the Development Budget which
has the effect of increasing, in aggregate, by $50,000 or more for a given
contract year, those aggregate Cross Program Expenses set forth in line items 7
through 12 of page 2 of the Development Budget attached hereto shall require
Alexza’s prior consent (such consent not to be unreasonably withheld). The
Development Committee shall approve all amendments to the Development Plan and
Development Budget that are proposed by Alexza to implement changes to the
Product configurations or specifications to make them consistent with other
Staccato Technology-
 

[ * ]  =   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.

3.

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

 

employing products being manufactured by or on behalf of Alexza unless such
amendments, individually or in the aggregate, have or could reasonably be
expected to have a materially adverse impact on timelines within the Development
Plan or on manufacturing or other costs set forth in the Development Budget.
          (b) The Development Committee shall review the Development Plan and
Development Budget in their entirety on a semi-annual basis to determine whether
any changes are required, and shall comply with all procedures required to amend
the Development Plan or Development Budget to implement such changes.
Furthermore, following the Closing Date, the Development Committee shall, on an
ongoing basis, continue to develop the Development Plan, including, without
limitation, as set forth in Section 4.1 and in response to requests, proposals
or reports from Alexza and RRD to the Development Committee.
          (c) A Program may only be discontinued in the event that either
(i) the Parties mutually agree to discontinue such Program based on (A) a
Medical Discontinuation Event, or (B) scientific evidence (regardless of whether
such evidence is generated by a Party or a third party) that the likelihood of
success for a particular Program is not enough to warrant further development (a
“Scientific Discontinuation Event”) that arises in the course of developing such
Program; or (ii) upon recommendation of the Development Committee, the Symphony
Allegro Board resolves to discontinue such Program by (A) if the Symphony
Allegro Board shall have less than five (5) members, the unanimous consent of
all the members of the Symphony Allegro Board, or (B) if the Symphony Allegro
Board shall have five (5) members, an affirmative vote of at least four-fifths
(4/5ths) of the members of the Symphony Allegro Board; provided, that
notwithstanding the foregoing, the Symphony Allegro Board may at any time, by
the applicable vote described in this clause (ii), discontinue a Program upon a
Medical Discontinuation Event without a prior recommendation of the Development
Committee. The Development Committee shall promptly thereafter amend the
Development Plan to reflect such discontinuation and amend the Development
Budget to reallocate to any or all of the remaining Programs some or all of the
funds previously allocated to the discontinued Program (with any funds not then
allocated to be held for reallocation by the Development Committee).
          (d) The Development Plan shall never be amended in any manner that
would require Alexza or Symphony Allegro (or any Person acting on behalf of
Alexza or Symphony Allegro (including RRD and its RRD Personnel)) to perform any
assignments or tasks in a manner that would violate any applicable law or
regulation. In the event of a change in any applicable law or regulation, the
Development Committee shall consider amending the Development Plan to enable
Alexza or Symphony Allegro (or any Person acting on behalf of Alexza or Symphony
Allegro (including RRD and its RRD Personnel)), as the case may be, to comply
fully with such law or regulation. If such amendment is not approved, the
affected Party shall be excused from performing any activity specified herein or
in the Development Plan that would violate or result in a violation of any
applicable law or regulation.
          4.3 Alexza’s Independent Staccato Technology Research.
          (a) Symphony Allegro and Holdings acknowledge that Alexza may perform
work on the Staccato Technology that is outside the scope of the Development
Plan and may use Alprazolam and Loxapine in the course of such work, including
performing tests
 

[ * ]  =   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.

4.

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designed to evaluate the technical and commercial feasibility and other
characteristics of potential new Product configurations that employ improvements
to the Staccato Technology; provided however, that Alexza cannot directly or
indirectly conduct any clinical trials with respect to Alprazolam or Loxapine in
the course of performing such independent work.
          (b) If the Development Committee is interested in pursuing any such
Staccato Technology improvement in one or both Programs, the Development
Committee shall give notice thereof to Alexza and Alexza shall provide such
Staccato Technology improvement to Symphony Allegro and the Development Plan
shall be amended to reflect the work to be performed on such alternate Product
configuration(s), and the Development Budget shall be amended (i) to reimburse
Alexza for a reasonable proportion of the costs previously incurred by Alexza
but not otherwise reimbursed by Symphony Allegro with respect to the development
and testing of such Staccato Technology improvement, with such proportion (the
“Past Staccato Technology Proportion”) to be negotiated in good faith by
Symphony Allegro and Alexza and determined based upon commercially reasonable
terms no less favorable than those terms offered by Alexza to third parties;
provided that if the parties are unable to agree on such proportion within [ *
], it shall be determined in accordance with clause (c) below, and (ii) to cover
a proportion of future costs associated with such alternate Product
configurations and the manufacture and quality assurance thereof, including any
capital improvements made to facilitate such manufacture and quality assurance,
such proportion (the “Future Staccato Technology Proportion”) negotiated in good
faith by Symphony Allegro and Alexza and determined based upon commercially
reasonable terms no less favorable than those terms offered by Alexza to third
parties; provided that if the parties are unable to agree on such proportion
within [ * ], it shall be determined in accordance with clause (c) below.
          (c) If Alexza and Symphony Allegro cannot agree on the Past Staccato
Technology Proportion or the Future Staccato Technology Proportion (each such
non-agreed proportion, the “Disputed Staccato Technology Proportion”), then such
parties shall jointly select an independent nationally recognized expert to
resolve any disagreements regarding the Disputed Staccato Technology
Proportion(s). The Parties shall use commercially reasonable efforts to cause
such expert to make its determination of the Disputed Staccato Technology
Proportion(s) within [ * ] of accepting its selection. The expert’s
determination of the Disputed Staccato Technology Proportion(s) shall, absent
manifest error, be final, binding and conclusive and Alexza shall provide to
Symphony Allegro such Staccato Technology improvement in accordance with the
terms thereof. All costs and expenses of the expert shall be shared equally
between Alexza and Symphony Allegro. Notwithstanding the foregoing, in any case,
each Party shall be responsible for the payment of its respective costs and
expenses, including any attorneys’ fees.
     5. Regulatory Matters.
          5.1 FDA Sponsor. Notwithstanding any governance provision contained
herein or in any Operative Document, the Parties agree that, until the
termination or unexercised expiration of the Purchase Option, Alexza shall be
the FDA sponsor, and shall serve the equivalent role with respect to any
corresponding recognized regulatory authority outside of the United States, for
the Programs, except any Programs which were the subject of a Discontinuation
Option that was not exercised by Alexza (the “FDA Sponsor”). As the FDA
 

[ * ]  =   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.

5.

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

 

Sponsor, Alexza shall have the responsibility and the authority to act as the
sponsor and make those decisions and take all actions necessary to assure
compliance with all regulatory requirements. Alexza agrees to be bound by, and
perform all obligations set forth in, 21 C.F.R. § 312 and any and all similar
obligations imposed by a recognized foreign regulatory authority related to
Alexza’s role as the FDA Sponsor. Notwithstanding anything to the contrary in
Article 4 or the Development Committee Charter, Alexza, in its capacity as FDA
Sponsor, may discontinue or modify any Program without the approval of the
Development Committee or the Symphony Allegro Board in the event such actions
are: (a) attributable to an event that is reportable to the FDA or corresponding
recognized regulatory authority outside of the United States; and (b) reasonably
necessary to avoid the imposition of criminal or civil liability; provided,
however, that to the extent commercially reasonable, Alexza shall (i) pursuant
to Section 5.2, advise and consult with the Development Committee prior to
taking such action and (ii) forward a copy of all regulatory correspondence
relevant to such discontinuation or modification to the members of the Symphony
Allegro Board.
          5.2 Correspondence. Each Party hereto acknowledges that Alexza, in its
capacity as FDA Sponsor, shall be the Party responding to any regulatory
correspondence or inquiry regarding one or both Programs. Alexza shall:
(a) notify at least one (1) Development Committee Member designated by Holdings
within twenty-four (24) hours of any FDA or other governmental or regulatory
inspection or inquiry concerning any study or project under the Programs,
including, but not limited to, inspections of investigational sites or
laboratories; and (b) forward to the Development Committee copies of any
correspondence from any regulatory or governmental agency relating to such a
study or project, including, but not limited to, Form FD-483 notices and FDA
refusal to file, action or warning letters, even if they do not specifically
mention Symphony Allegro. Subject to the following sentence, Symphony Allegro
shall not have any right to initiate any regulatory correspondence with respect
to the Programs. In the event that Symphony Allegro receives a request or
notification from a Governmental Authority with respect to the Programs,
Symphony Allegro shall: (i) notify Alexza within twenty-four (24) hours of
receipt of such request or communication and (ii) to the extent practicable,
submit any proposed response to Alexza for review and approval; provided, that
such approval shall not be unreasonably withheld and shall not prevent Symphony
Allegro from complying with any legal requirements. Furthermore, Alexza shall be
the Party responsible for responding to or handling any FDA or regulatory
inspection with respect to one or both Programs; provided, that Alexza shall
notify at least one (1) of the Development Committee Members designated by
Holdings (i) within twenty-four (24) hours of receiving notice of the
commencement of a clinical hold for any Protocol, and (ii) concurrently with its
submission to the FDA of any IND safety reports for the Programs.
          5.3 Inspections and Meetings. Each Party agrees that, during an
inspection by the FDA or other Regulatory Authority concerning any study or
project under the Programs, it will not disclose to such agency any information
and materials (including but not limited to (x) financial data and pricing data
including, but not limited to, budget and payment schedules, (y) sales data
(other than shipment data), and (z) personnel data (other than data as to
qualification of technical and professional persons performing functions subject
to regulatory requirements)) that are not required to be disclosed to such
agency without first obtaining the consent of the other Party, which consent
shall not be unreasonably withheld or delayed, except to the extent
 

[ * ]  =   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.

6.

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

 

that such Party may be required by law to disclose such information and
materials. Alexza shall be the Party responsible for arranging and participating
in any meetings with any Regulatory Authority concerning one or both Programs.
To the extent practicable, Alexza shall provide prompt and reasonable prior
notice of any such meetings to at least one (1) of the Development Committee
Members designated by Holdings, and shall, upon a request from Symphony Allegro,
and to the extent reasonably possible, facilitate the attendance of at least one
(1) of the Development Committee Members designated by Holdings at any such
meeting reasonably anticipated to pertain in a material way to a Program.
Following any meeting that pertains to a Program, but that was not attended for
any reason by at least one (1) of the Development Committee Members designated
by Holdings, Alexza shall provide at least one (1) of the Development Committee
Members designated by Holdings with an oral summary of that portion of the
meeting relevant to such Program within twenty-four (24) hours of such meeting
and a written summary of that portion within five (5) Business Days of such
meeting.
          5.4 Transfer of FDA Sponsorship.
               (a) On or prior to the thirtieth (30th) day after the unexercised
expiration or termination of the Purchase Option, Alexza shall cease to act as
the FDA Sponsor for the Programs for which Alexza has not exercised the
Discontinuation Option, and Alexza and Symphony Allegro shall, at Symphony
Allegro’s expense, take all actions necessary to effect the transfer of (x) the
Regulatory Files (excluding Drug Master Files, but subject to Symphony Allegro’s
rights under Section 2.7 of the Novated and Restated Technology License
Agreement) related to such Programs to Symphony Allegro or its designee in
accordance with Section 2.7 of the Novated and Restated Technology License
Agreement, and (y) any and all materials necessary for Symphony Allegro to
practice or exploit the license granted to it under the Novated and Restated
Technology License Agreement, by such date. In conjunction with such transfer,
Alexza shall assign to Symphony Allegro or its designee, at Symphony Allegro’s
expense and as of the date specified in the first sentence of this Section
5.4(a), all of the material Development Subcontracting Agreements to which
Alexza is a party and that: (i) are solely related to such Programs or are
directly but not solely related to such Programs to the extent the rights
related to or used in connection with such Programs are severable or otherwise
separately assignable; (ii) provide Alexza with preclinical or clinical services
from third party suppliers and subcontractors; (iii) are not related to the
manufacture of a Product or the improvement of the Staccato Technology; and
(iv) are assignable to Symphony Allegro or its designee without consent from the
other party to the agreement. The Parties shall negotiate in good faith
regarding the assignment, or other mechanism, of providing Symphony Allegro with
the rights, benefits and obligations of other Development Subcontracting
Agreements to the extent related to or used in connection with the Programs and
that meet the criteria set forth in (i), (ii), (iii) and (iv) above; provided
that Alexza shall use commercially reasonable efforts to cause the assignment of
any non-assignable material Development Subcontracting Agreement or portion
thereof that meet the criteria set forth in (i), (ii) and (iii) above. If it is
not successful in causing such assignment, Alexza shall act as Symphony
Allegro’s agent, at Symphony Allegro’s reasonable request and expense, in
procuring all goods and services under such agreements until such time as
Symphony Allegro enters into alternative arrangements to procure such services,
provided that Symphony Allegro uses commercially reasonable efforts to enter
into such alternative arrangements as soon as possible. Alexza agrees to take
such commercially reasonable actions as Symphony Allegro
 

[ * ]  =   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.

7.

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may request in furtherance of the foregoing, at the expense of Symphony Allegro.
Such efforts shall not include any obligation for Alexza to incur any
out-of-pocket costs. Alexza shall provide copies of all such Development
Subcontracting Agreements to Symphony Allegro, at Symphony Allegro’s expense, in
connection with such transfer. For clarity, Alexza shall not have any obligation
pursuant to this Section 5.4(a) to: (A) transfer to Symphony Allegro or its
designee any Drug Master File or equivalent thereof for the manufacture of any
Product, (B) assign to Symphony Allegro or its designee any material agreement
that pertains to the manufacture of any Product or to any product that is not a
Product except in accordance with this Section 5.4(a), (C) deliver to Symphony
Allegro or its designee any units of finished Product that Symphony Allegro did
not pay for prior to the expiration or termination of the unexercised Purchase
Option, other than units of finished Product for which an order is outstanding
(and payment is made) as of the expiration or termination of the unexercised
Purchase Option, or (D) deliver to Symphony Allegro or its designee any
components (including bulk Alprazolam and Loxapine) of the Products or any
partially assembled or partially finished Products.
               (b) Except as provided in the Amended and Restated Technology
License Agreement, upon the discontinuation of any of the Programs pursuant to
Section 4.2(c), Alexza shall have no further obligations with respect to such
Programs under the Operative Documents. If such Program is transferred or
licensed to a third party in accordance with Section 11 (such third party, the
“Transferee”), then Alexza shall cooperate with Symphony Allegro and the
Transferee to effect the assignment to the Transferee of the sponsorship to the
Regulatory Files (excluding Drug Master Files, but subject to Symphony Allegro’s
rights under Section 2.7(a)(i) of the Novated and Restated Technology License
Agreement) that are solely related to such Program; provided, however, that
Alexza shall not be obligated to take any action pursuant to this Section 5.4(b)
for which it will not receive full reimbursement from Symphony Allegro or
another party. The assignment of such Regulatory Files to the Transferee does
not include an assignment of any Licensed Intellectual Property.
     6. Alexza’s Obligations.
          6.1 Generally.
               (a) Alexza shall have primary responsibility for and “prime
contractor” status with respect to the implementation of the Programs. Without
limiting the foregoing, Alexza shall specifically be responsible for
(i) performing all pre-clinical and clinical development for the AZ-002 Program
and the AZ-004 Program in accordance with the Development Plan,
(ii) manufacturing of Clinical Trial Materials for the Programs, and carrying
out the quality assurance therefor, in each case in accordance with the
Development Plan, (iii) making improvements to the Staccato Technology for
potential incorporation into the Products and testing such improvements with
Alprazolam and/or Loxapine, as applicable, and implementing changes to
manufacturing processes and facilities to enable manufacture of new Product
conformations incorporating such improvements, in each case in accordance with
the Development Plan, and (iv) executing all other matters set forth in the
Development Plan that are delegated to Alexza by Symphony Allegro pursuant to
the Development Plan (collectively, the “Alexza Obligations”).
 

[ * ]  =   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.

8.

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               (b) On account of Alexza’s prime contractor status, the
Development Committee shall first offer Alexza the opportunity to perform any
activity included in the Development Plan (other than those types and categories
of activities allocated to a party other than Alexza in the Initial Development
Plan) and shall only allocate such activity to RRD (other than activities set
forth in the RRD Services Agreement) or a third party if Alexza is not willing
or able to perform such activity or lacks the resources to perform such activity
in accordance with industry standards and on commercially reasonable terms as
determined by the Development Committee. Alexza agrees that it will work
diligently and use commercially reasonable efforts to discharge the Alexza
Obligations in a manner consistent with the standards customary in the
biopharmaceutical industry for comparable high quality services and in
accordance with the Development Plan, the Development Budget, and the terms of
this Agreement. In the event that either Party is concerned that Alexza may be
unable to execute any of the aforementioned development activities which
comprise the Alexza Obligations, such Party shall bring such concern to the
attention of the Development Committee. The Development Committee shall evaluate
the concern and consider in good faith commercially reasonable amendments to the
Development Plan and Development Budget that would facilitate Alexza’s ability
to perform such Alexza Obligations and shall explore the feasibility and expense
of Alexza engaging a new subcontractor to perform such Alexza Obligations in
lieu of Alexza or its current subcontractor. If the Development Committee
(A) decides by majority vote that the concern is valid and compelling but is
unable to agree upon a solution that addresses such concern, or (B) is unable to
decide by at least a majority as to whether such concern is valid and
compelling, then, in each case, the Parties will follow the dispute resolution
procedures set forth in Paragraph 11 of the Development Committee Charter. If
such procedures do not result in a solution that resolves such concern, then the
Symphony Allegro Board shall have the power to instruct the Development
Committee to re-assign such development activities in a manner to be determined
by the Development Committee, and Alexza shall, at the reasonable request of the
Development Committee and at the expense of Symphony Allegro, transfer and
deliver to Symphony Allegro (or RRD on behalf of Symphony Allegro) copies of any
and all consents, materials, documents, files and other information (excluding
Drug Master Files, but subject to Symphony Allegro’s rights under
Section 2.7(a)(i) of the Novated and Restated Technology License Agreement) that
relate to such development activities and that are necessary for another entity
to perform such development activities; provided, that Alexza shall be permitted
to retain the originals of such transferred materials, documents, files and
other information relating to such development activities as necessary in order
to comply with any requirements of a Governmental Authority or to use such items
for purposes other than the relevant Program.
          6.2 Subcontracting.
               (a) Alexza agrees that it will not enter into any non-written
Subcontracting Agreements. Each and every Subcontracting Agreement in effect as
of the Closing Date (other than certain stand-alone purchase orders to be
reviewed by the Development Committee after the Closing Date) is disclosed on
Schedule 6.2 hereto. Other than the Subcontracting Agreements set forth on
Schedule 6.2, there are no other written or oral agreements, contracts,
understandings, arrangements or other commitments in effect as of the Closing
Date that are related to the performance of the Alexza Obligations by third
parties (other than certain stand-alone purchase orders to be reviewed by the
Development Committee after the
 

[ * ]  =   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.

9.

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Closing Date). The Subcontracting Agreements set forth on Schedule 6.2 shall be
deemed to be acceptable to the Parties in all respects.
               (b) Following the Closing Date, if Alexza wishes to enter into a
work order, change order, purchase order or the like (collectively, a “Work
Order”) for the performance of Alexza Obligations (other than
manufacturing-related obligations) pursuant to a master services agreement
entered into prior to the Closing Date and set forth on Schedule 6.2, Alexza
shall provide the Development Committee with a copy of such draft Work Order,
shall consider in good faith all comments with respect to such draft Work Order
received from Development Committee Members within five (5) Business days and
shall obtain the Development Committee’s approval of the final Work Order before
entering into the Work Order. Such final Work Order shall be deemed a
“Development Subcontracting Agreement” at the time of entry but the
corresponding master services agreement shall not be subject to further review
as a Development Subcontracting Agreement.
               (c) Following the Closing Date, Alexza shall provide the
Development Committee, for its review and approval, a copy of Alexza’s template
agreements for clinical sites, principal investigators and other third parties
that routinely accept other companies’ forms and the template agreements of any
other third party contractors. When negotiating the terms of a Development
Subcontracting Agreement with such a third party, Alexza shall use commercially
reasonable efforts to obtain the terms set forth in the relevant Development
Committee-approved template agreement. Alexza may enter into a Development
Subcontracting Agreement based on a Development Committee-approved template
without obtaining the prior approval of the Development Committee provided that
the terms of such agreement are not materially different from or less favorable
to Alexza or Symphony Allegro than the terms of the applicable template.
               (d) Following the Closing Date, Alexza shall obtain the approval
of the Development Committee prior to: (i) entering into any Development
Subcontracting Agreement not addressed in Section 6.2(b) or (c) or (ii) amending
or terminating any Development Subcontracting Agreement, in each case such
approval is not to be unreasonably withheld and shall be deemed given if not
objected to by any Development Committee Member within five (5) Business Days of
the Development Committee’s receipt of a final copy of such agreement; provided
that during such five (5) Business Day period Alexza shall make appropriate
representatives available to the Development Committee to discuss such
Subcontracting Agreement in good faith and reasonable detail and shall provide
any information as may be reasonably requested by the Development Committee or
any member thereof.
               (e) At each meeting of the Development Committee, or at such
other time as may be agreed among the Parties, Alexza shall update the
Development Committee on the status of any negotiations or discussions with
respect to any material Subcontracting Agreements and, if requested, provide
draft copies of any such material Subcontracting Agreement.
               (f) Subject to the foregoing, Alexza shall have full discretion
to enter into Manufacturing Subcontracting Agreements after the Closing Date;
provided that Alexza
 

[ * ]  =   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.

10.

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shall give prior notice to the Development Committee of any such material
Manufacturing Subcontracting Agreements.
               (g) The terms of all Subcontracting Agreements shall be deemed
the Confidential Information of Alexza and be subject to the rights and
obligations set forth in the Confidentiality Agreement. Alexza shall monitor the
performance of its Alexza Subcontractors and shall promptly notify the
Development Committee with respect to any Alexza Subcontractor performance
issues that may have a material adverse effect on the Programs.
               (h) The Development Committee shall have the authority to direct
Alexza to terminate any Development Subcontracting Agreement (i) that Alexza has
the right to terminate, pursuant to the terms thereof, without cost or other
obligation, and (ii) any other Development Subcontracting Agreement, provided
that the Development Budget shall be amended to cover all costs or other
obligations associated with or arising from such termination.
          6.3 Reports and Correspondence. Alexza shall keep the Development
Committee informed of its activities under the Development Plan through regular
reports, as set forth in this Section 6.3. At each Scheduled Meeting of the
Development Committee, Alexza shall, to the extent reasonably required by the
Development Committee, provide the Development Committee with a summary of
Alexza’s activities and developments with respect to the Programs for the period
following the most recent preceding Scheduled Meeting. Such summary shall
include: (i) updates regarding (A) patient enrollment, any adverse events (to
the extent Alexza has been notified of such adverse events) or serious adverse
events, any added or terminated clinical trial sites, any significant Protocol
deviation, any interim analyses, statistical reports, updated Investigator
Brochures or final clinical study reports or any new Protocols, Protocol
amendments or studies synopses being drafted, all to the extent relating to
clinical trials under the Development Plan; and (B) CMC status, non-clinical
program status, regulatory and quality program status, communications with
regulatory agencies, results of meetings of Alexza’s standing or ad hoc clinical
advisors, safety monitoring boards or other similar oversight bodies (if and
when formed) for a particular Program, and results of meetings with consultants
for the Programs, all to the extent related to the Alexza Obligations; (ii) a
copy of each standard clinical study progress report for the Programs received
by Alexza during the preceding month from any of the clinical research
organizations engaged by Alexza pursuant to any Subcontracting Agreements and a
copy of any final preclinical study reports for such Programs; (iii) a financial
report, in a format agreed upon by the Development Committee, itemizing actual
spending under the Development Plan as well as any variation from planned
spending; (iv) if the portion of the Development Budget related to a particular
Program is altered to the extent that available funding for such Program no
longer appears to be adequate to complete the Program, an updated budget
forecast; and (v) such other information as the Development Committee may
reasonably request. Alexza shall notify at least one (1) of the Development
Committee Members designated by Holdings within twenty-four (24) hours of the
occurrence of any event that has, or could reasonably be expected to have, a
material adverse effect on the Development Plan or the Development Budget and
shall keep the Development Committee regularly updated and informed with respect
to any such event.
          6.4 Manufacturing.
 

[ * ]  =   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.

11.

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               (a) Subject to Section 6.4(d), if Clinical Trial Materials
manufactured by or on behalf of Alexza for a Program do not conform with the
applicable specifications, then Alexza shall use commercially reasonable efforts
to replace such Clinical Trial Materials at Alexza’s sole expense.
               (b) Subject to Section 6.4(d), if Alexza foresees or experiences
difficulty in supplying Clinical Trial Materials for the Programs, it shall
notify Symphony Allegro and confer with the Development Committee regarding the
source of the problem and Alexza’s plans to address such problem.
               (c) Subject to Section 6.4(d), if on two (2) separate occasions
during the Term Alexza materially breaches its Clinical Trial Materials supply
obligation hereunder by failing to supply at least [ * ] of the amount ordered
or failing to replace non-conforming Clinical Trial Material on time and fails
to cure such breach within [ * ] of Symphony Allegro’s written notice thereof,
then upon Symphony Allegro’s written notice that Alexza has materially breached
for a third (3rd) time, its Clinical Trial Materials supply obligation hereunder
by failing to supply at least [ * ] of the amount ordered or failing to replace
non-conforming Clinical Trial Material on time, the Parties shall negotiate in
good faith to agree upon a mechanism for Symphony Allegro to obtain an alternate
source of Clinical Trial Material supply (including seeking to validate an
alternate manufacturing source and granting such licenses as may be required).
In the event that, despite such good faith negotiations, Symphony Allegro and
Alexza fail to reach an agreement regarding an alternate source within [ * ]
after Symphony Allegro’s notice regarding such third (3rd) breach, then upon
Symphony Allegro’s request, the Parties shall amend the Novated and Restated
Technology License Agreement to expand the license granted to Symphony Allegro
pursuant to Section 2.2 thereof to include the non-exclusive right to
manufacture, or have manufactured, the Product(s) affected by such breach.
               (d) If a force majeure event causes Alexza to materially default
on or breach its obligations hereunder to manufacture Clinical Trial Materials
for the Program, Alexza shall promptly notify Symphony Allegro of such force
majeure event and shall keep Symphony Allegro apprised of the status of its
efforts to eliminate the effects of such force majeure event or otherwise regain
its ability to fulfill its Clinical Trial Material manufacturing obligation. If
such a force majeure event persists for six (6) months or more, then upon
Symphony Allegro’s request, the Parties shall amend the Novated and Restated
Technology License Agreement to expand the license granted to Symphony Allegro
pursuant to Section 2.2 thereof to include the non-exclusive right to
manufacture, or have manufactured, the Product(s) affected by such force
majeure.
               (e) In the event that the Parties amend the Novated and Restated
Technology License Agreement pursuant to Section 6.4(c) or 6.4(d), Alexza shall,
at the reasonable request of the Development Committee and at the expense of
Symphony Allegro, transfer and deliver to Symphony Allegro (or RRD on behalf of
Symphony Allegro) copies of any and all consents, materials, documents, files
and other information (excluding Drug Master Files, but subject to Symphony
Allegro’s rights under Section 2.7(a)(i) of the Novated and Restated Technology
License Agreement) that are necessary for another entity to manufacture such
Product(s); provided, that Alexza shall be permitted to retain the originals of
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 24b-2 of the Securities Exchange Act of
1934, as amended.

12.

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transferred materials, documents, files and other information relating to such
development activities and to use such originals for all purposes.
          6.5 Staffing. Alexza shall provide such sufficient and competent staff
and Personnel (including, without limitation, such employees or agents of, or
independent contractors retained by, Alexza) that have the skill and expertise
necessary to perform the Alexza Obligations. Alexza shall notify Symphony
Allegro in advance, if practicable, and in any event promptly thereafter, of any
change in Key Personnel involved in the Programs.
          6.6 QA Audit. During the Term, Alexza will permit Symphony Allegro’s
representatives (such representatives to be identified by Symphony Allegro in
advance and reasonably acceptable to Alexza and to enter into a confidentiality
agreement with Alexza) to examine and audit, during regular business hours, the
work performed by Alexza hereunder and the Alexza facilities at which such work
is conducted to determine that the project assignment is being conducted in
accordance with the agreed upon services (“QA Audits”). Symphony Allegro shall
give Alexza reasonable advance notice of such QA Audits specifying the scope of
the audit. Symphony Allegro shall reimburse Alexza for its time associated with
QA Audits; provided, however, that should a particular QA Audit reveal a
material deficiency in Alexza’s quality assurance procedures, then Alexza will
be responsible for all costs of such QA Audit, including Symphony Allegro’s
reasonable costs associated with such QA Audit, the work to be re-performed and
the costs or expenses associated with curing such material deficiencies.
Symphony Allegro and Alexza shall meet to discuss the results of the QA Audit
and, if required, jointly agree upon any actions that will be required as a
result of such QA Audit including defining material deficiencies to be
addressed. Alexza shall make commercially reasonable efforts to reconcile all
such deficiencies found by Symphony Allegro during such QA Audit.
          6.7 Financial Audit. During the Term, Alexza will permit Symphony
Allegro’s representatives (such representatives to be identified by Symphony
Allegro in advance and reasonably acceptable to Alexza and to enter into a
confidentiality agreement with Alexza), to verify Alexza’s invoices, other
receipts, and FTE records that are related to Alexza’s performance of the work
under the Programs (“Financial Audits”), which review shall be conducted during
regular business hours and will take place no more than once per year, unless
otherwise agreed to by the Parties. Symphony Allegro shall give Alexza
reasonable advance notice of such Financial Audits specifying the scope of the
audit, which shall not include work that has previously undergone Financial
Audits. Symphony Allegro shall reimburse Alexza for its time associated with
Financial Audits; provided, however, that should a particular Financial Audit
reveal an aggregate variance of more than [ * ] between such financial records
and the reports submitted by Alexza to Symphony Allegro for reimbursement
purposes during the period covered by such Financial Audit, then Alexza will be
responsible for all costs of such Financial Audit, including Symphony Allegro’s
reasonable costs associated therewith. Symphony Allegro and Alexza shall meet to
discuss the results of the Financial Audit and, if required, jointly agree upon
any actions that will be required as a result of such Financial Audit including
defining material discrepancies to be addressed. Alexza shall make commercially
reasonable efforts to reconcile all such discrepancies found by Symphony Allegro
during such Financial Audit. In addition, Alexza shall, during regular business
hours, cooperate with, and promptly respond to, inquiries from the Symphony
Allegro Auditors, if the Symphony Allegro Auditors shall
 

[ * ]  =   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.

13.

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reasonably conclude that they require additional information or clarification
regarding any invoices, other receipts or FTE records submitted by Alexza.
          6.8 Insurance. Alexza shall carry and maintain throughout the Term
clinical trial liability insurance (including errors and omissions coverage and
product coverage), at Alexza’s sole expense, with limits of at least $10,000,000
per occurrence, and property insurance covering Products, at Alexza’s sole
expense, with limits of at least $1,000,000. Upon Symphony Allegro’s request,
Alexza shall instruct its insurance carrier(s) to promptly furnish to Symphony
Allegro certificates reflecting such coverage and a representation indicating
that such coverage shall not be canceled or otherwise terminated during the Term
without thirty (30) days’ prior written notice to Symphony Allegro.
Notwithstanding anything to the contrary herein, this Section 6.8 shall survive
for a period of two (2) years following termination or expiration of this
Agreement.
     7. Symphony Allegro’s Obligations.
          7.1 Generally. Symphony Allegro shall have overall responsibility for
all matters set forth in the Development Plan, and shall be responsible for
(i) executing or delegating its management and administration responsibilities;
and (ii) executing or delegating the clinical development and manufacturing
activities set forth in the Development Plan. Symphony Allegro shall, and shall
instruct all Persons whom it engages pursuant to Article 2 hereof to, perform
its obligations hereunder and under the Development Plan in good faith and in
accordance with the applicable provisions of the Development Plan and the
Development Budget, and the terms of this Agreement.
          7.2 Subcontracting. Symphony Allegro is subcontracting, and will in
the future subcontract, certain of its responsibilities under the Development
Plan to Alexza (pursuant hereto), to RRD (pursuant to the RRD Services
Agreement) and to other vendors and service providers (pursuant to
subcontracting agreements to be approved by the Development Committee);
provided, that Symphony Allegro shall remain responsible for the performance of
its obligations hereunder notwithstanding any such arrangement. Each
subcontracting agreement entered into by Symphony Allegro (except for the RRD
Services Agreement) shall include a provision permitting assignment at any time
of the subcontracting agreement from Symphony Allegro to Alexza without the
subcontractor’s consent; provided that Symphony Allegro may not assign its
obligations under any such subcontracting agreement to Alexza without Alexza’s
prior written consent.
          7.3 Reports. Symphony Allegro shall keep the Development Committee
informed of its activities under the Development Plan that are subcontracted to
RRD or any Person other than Alexza, through regular reports as set forth in
this Section 7.3. At each Scheduled Meeting of the Development Committee,
Symphony Allegro shall, to the extent reasonably required by the Development
Committee, provide the Development Committee with a summary of such
subcontractors’ activities and developments with respect to the Programs for the
period following the most recent preceding Scheduled Meeting. Such summary shall
include such information as the Development Committee may reasonably request.
Symphony Allegro shall notify at least one (1) Development Committee Member
nominated by Alexza within twenty-four (24) hours of the occurrence of any event
that has, or could reasonably be expected
 

[ * ]  =   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.

14.

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to have, a material adverse effect on the Development Plan or the Development
Budget and shall keep the Development Committee regularly updated and informed
with respect to any such event.
          7.4 Insurance. Symphony Allegro shall maintain insurance with
creditworthy insurance companies against such risks and in such amounts as are
usually maintained or insured against by other companies of established repute
engaged in the same or a similar business.
          7.5 Staffing. Symphony Allegro shall use commercially reasonable
efforts to provide, or cause to be provided on its behalf (including Personnel
retained by RRD), sufficient and competent staff and Personnel that have the
skill and expertise necessary to perform Symphony Allegro’s obligations under
this Agreement, the RRD Services Agreement, the Development Plan and the
Development Budget, including, but not limited to, (i) carrying out its
management and administrative functions pursuant to the RRD Services Agreement,
and (ii) carrying out its clinical development duties in accordance with this
Agreement, the Development Plan and the Development Budget. Symphony Allegro
shall notify Alexza in advance, if practicable, and in any event promptly
thereafter, of any change in the key RRD Personnel involved in the Programs.
          7.6 Audit. Symphony Allegro shall permit each of Alexza, Holdings,
Investors and each Symphony Fund and their duly authorized representatives at
all reasonable business hours to inspect (1) Symphony Allegro’s books, records
and other reasonably requested materials and (2) any and all properties of
Symphony Allegro, and it shall provide to each of Alexza, Holdings, Investors
and each Symphony Fund all books, records and other materials related to any
meeting of the Symphony Allegro Board or Shareholders and to permit Holdings,
Investors and each Symphony Fund to make copies or extracts therefrom; provided,
that each aforementioned party may conduct one such inspection in each calendar
year without cost to such party, and that any party conducting additional
inspections shall reimburse the Manager for its reasonable costs and expenses in
facilitating such additional inspections unless such additional inspections were
performed to determine whether previously identified material deficiencies have
been addressed. Symphony Allegro and Alexza shall meet to discuss the results of
the audit and, if required, jointly agree upon any actions that will be required
as a result of such audit including defining material discrepancies to be
addressed. Symphony Allegro shall make commercially reasonable efforts to
reconcile all such discrepancies found by Alexza, Holdings, Investors or any
Symphony Fund during such audit.
     8. Funding and Payments.
          8.1 Use of Proceeds. Symphony Allegro shall use any and all
(x) proceeds received by Symphony Allegro as a result of the Financing,
(y) indemnity payments received by Symphony Allegro, and (z) payments received
by Symphony Allegro pursuant to first and third party covered insurance claims,
for the development of the Programs and general corporate purposes of Symphony
Allegro, including the payment of all fees and expenses in accordance with the
Development Plan and the Development Budget, as may be modified from time to
time pursuant to Section 4.2, and the payment of any indemnification obligations
of Symphony Allegro under the Operative Documents and agreements with third
party contractors.
 

[ * ]  =   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.

15.

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Notwithstanding the foregoing, Symphony Allegro agrees that any agreement under
which Symphony Allegro indemnifies any Person shall contain appropriate
provisions to cause such Person who receives payments from Symphony Allegro as a
result of Symphony Allegro’s indemnification obligations under the Operative
Documents, and who is subsequently reimbursed from insurance proceeds with
respect to such losses, costs, interest, awards, judgments, fees, liabilities,
damages and expenses for which such Person received the indemnity payments from
Symphony Allegro, to then reimburse Symphony Allegro the amounts paid to such
Person by Symphony Allegro to the extent of the insurance proceeds. Symphony
Allegro further agrees to use all commercially reasonable means to enforce such
provisions.
          8.2 Reimbursement.
               (a) Symphony Allegro shall compensate Alexza for its Development
Plan-associated activities and services, including, without limitation, its
research, clinical and manufacturing services and any other activities delegated
to and by Alexza in accordance with this Agreement. Such compensation shall be
made in accordance with the provisions of this Article 8 and the payment terms
attached hereto as Annex E (the “Payment Terms”), the terms of which are hereby
adopted and incorporated herein; provided that Alexza shall be directly
responsible for compensation and reimbursement of third parties with respect to
all development activities and services performed by third parties on Alexza’s
behalf in accordance with the Development Plan and all expenses incurred by
third parties in connection with such development activities and services, it
being understood that the cost shall be passed through to Symphony Allegro. With
respect to costs for travel, unless the Development Committee provides Alexza
with prior approval, all Alexza personnel shall adhere to Alexza’s travel
policy.
               (b) To the extent included in the Development Plan and
Development Budget as such Development Plan and Development Budget may be
modified upon approval of the Development Committee, reimbursement for Alexza’s
manufacturing services shall include compensation for Alexza’s fully burdened
costs for all materials and services supporting pre-clinical testing, clinical
trial requirements and regulatory submissions, including, without limitation,
costs associated with procurement of Alprazolam, Loxapine, and Product
components, Product manufacture, testing, packaging, storage, transportation and
insurance, allowed overage, percent retention, quality assurance, CMC
compliance, and stability programs.
          8.3 Budget Allocation and Deviations. Alexza shall have the discretion
to incur out-of-pocket fees, expenses and costs and allocate its resources in a
manner consistent with the Development Plan and the Development Budget. If
Alexza reasonably anticipates that the actual cost for any particular activity
will exceed that portion of the Development Budget allocated over any twelve
(12) month period for such activity by $50,000 or more (or such greater amount
as the Symphony Allegro Board may subsequently determine), then Alexza may
request that the Development Committee amend the Development Budget, either at
its next Scheduled Meeting or at an Ad Hoc Meeting, to reflect such cost
increase. Alexza shall be fully reimbursed, pursuant to Section 8.2, for all
out-of-pocket amounts incurred with respect to an activity performed pursuant to
the Development Plan, as such Development Plan may be modified upon approval of
the Development Committee, provided that such amounts (x) are set forth in the
Development Budget and do not exceed the amounts set forth in the Development
Budget by the criteria set forth in this Section 8.3, or (y) are otherwise
approved in advance by
 

[ * ]  =   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.

16.

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the Development Committee. Without the prior approval of the Development
Committee, Alexza shall not be reimbursed for expenditures that exceed the
amounts set forth in the Development Budget by the criteria set forth in the
second sentence of this Section 8.3. If the Development Committee denies a
request made by Alexza pursuant to this Section 8.3 to amend the Development
Budget, then Alexza shall no longer be obligated to perform such incremental
activity that is expected to give rise to such additional expenditures.
          8.4 Employee Benefits. Symphony Allegro shall not be responsible for
providing or paying any benefits (including, but not limited to, unemployment,
disability, insurance, or medical, and any pension or profit sharing plans) to
Alexza or to any employees of Alexza or any persons retained or used by Alexza
to perform activities pursuant to the Development Plan, including independent
contractors, Subcontractors and agents (collectively, “Alexza Personnel”). As to
Alexza or any Alexza Personnel, Symphony Allegro shall not be responsible for:
(a) any federal, state or local income tax withholding; (b) Federal Insurance
Contributions Act contributions; (c) contributions to state disability funds or
liability funds or similar withholdings; (d) payment of any overtime wages;
(e) workers’ compensation; or (f) compliance with any laws, rules or regulations
governing employees. Alexza agrees that, as between Symphony Allegro and Alexza,
Alexza is and will continue to be solely responsible for: (i) all matters
relating to the payment of compensation and provision of benefits to Alexza
Personnel; and (ii) compliance with all applicable laws, rules and regulations
governing Alexza’s employees. Alexza acknowledges that Alexza is not entitled
for reimbursement with respect to any amounts related to the services of Alexza
Personnel in excess of the fully burdened FTE rates in accordance with Annex E
attached hereto and Symphony Allegro acknowledges that the FTE rates used as the
basis for reimbursing Alexza for the services of Alexza Personnel include
Alexza’s costs associated with providing such benefits and fulfilling such
responsibilities.
     9. Covenants.
          9.1 Mutual Covenants. Each of Alexza and Symphony Allegro covenants
and agrees that, with respect to the Programs and any other rights and
obligations set forth in the Operative Documents, it shall:
               (a) perform all of its obligations pursuant to this Agreement in
material compliance with: (i) all applicable federal and state laws, statutes,
rules, regulations and orders (including all applicable approval and
qualification requirements thereunder), including, without limitation, the
Federal Food, Drug and Cosmetic Act and the regulations promulgated pursuant
thereto; (ii) all applicable good clinical practices and guidelines; (iii) all
applicable standard operating procedures; (iv) all applicable Protocols; and
(v) the provisions of this Agreement;
               (b) keep complete, proper and separate books of record and
account, including a record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with
the operation of its business, all in accordance with GAAP;
               (c) not employ (or, to the best of its Knowledge, shall not use
any contractor or consultant who is or that employs) any individual or entity
debarred by the FDA (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 24b-2 of the Securities Exchange Act of
1934, as amended.

17.

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subject to a similar sanction of any other Regulatory Authority), or, to the
best of its Knowledge, any individual who or entity which is the subject of an
FDA debarment investigation or proceeding (or similar proceeding of any other
Regulatory Authority), in the conduct of the Programs;
               (d) promptly deliver to the other, upon receipt thereof, notice
of all actions, suits, investigations, litigation and proceedings before any
Governmental Authority, which would reasonably be expected to affect such
Party’s ability to perform its obligations under this Agreement;
               (e) upon its acquiring Knowledge of any breach by it of any
representation, warranty, covenant or any other term or condition of this
Agreement or acquiring Knowledge of a material event or development that is, or
is reasonably expected to be, adverse to the other Party with respect to any
Program or the transactions contemplated hereby, such Party shall promptly
notify the other Party in writing within three (3) Business Days of acquiring
such Knowledge; provided, that the failure to provide such notice shall not
impair or otherwise be deemed a waiver of any rights any Party may have arising
from such breach, material event or development and that notice under this
Section 9.1(e) shall not in itself constitute notice of any breach of any of the
Operative Documents, unless explicitly stated in such notice; and
               (f) with reasonable promptness, deliver to the other Party such
data and information relating to the ability of such Party to perform its
obligations hereunder as from time to time may be reasonably requested by the
other Party (subject to the maintenance of the confidentiality of any such
information by the receiving Party). For the avoidance of doubt, this
Section 9.1(f) includes Alexza’s obligations to provide financial and other
necessary information in respect of such Programs to Symphony Allegro and RRD to
enable Symphony Allegro to fulfill its obligations to Alexza under Section 5(d)
of the Purchase Option Agreement, and to enable RRD to fulfill its obligations
to Symphony Allegro and Alexza under Sections 5(a) and 5(b) of the RRD Services
Agreement.
     10. Confidentiality. It is understood that during the course of this
Agreement each of the Parties shall be bound by the terms of the Confidentiality
Agreement.
     11. Discontinuation Option.
               (a) A Program may only be discontinued in accordance with
Section 4.2(c). In the event of such a Program discontinuation during the Term,
(i) Symphony Allegro shall so notify Alexza promptly and in writing of such
discontinuation, and (ii) Alexza shall have the right and option (a
“Discontinuation Option”), exercisable for [ * ] after receipt of such written
notice from Symphony Allegro of such discontinuation, to buy back the Licensed
Intellectual Property related to such discontinued Program for a price (payable
by wire transfer to Symphony Allegro) that is the sum of (x) the funds expended
on such discontinued Program and (y) a share of all non-Program-specific
expenditures that is in the same proportion to the total of all
non-Program-specific expenditures as the amount in clause (x) of this sentence
is to the aggregate of all Program-specific expenditures (such sum, the
“Discontinuation Price”), to be reasonably determined between the Parties, or,
if the Parties are unable to come to a resolution within [ * ] after receipt of
such written notice from Symphony Allegro of such discontinuation,
 

[ * ]  =   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.

18.

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to be determined in accordance with Section 11(b) hereof. If the Discontinuation
Price is determined in accordance with Section 11(b), then the [ * ] period for
Alexza’s exercise of the Discontinuation Option shall be extended by the time
needed for such determination so that Alexza has at least [ * ] after such
determination to decide whether it wishes to exercise the Discontinuation
Option. Following the unexercised expiration of the Discontinuation Option,
Symphony Allegro may transfer or license its rights to such Program to a third
party at any time prior to the expiration of the Term. Under no circumstances
may Symphony Allegro or Alexza (unless Alexza has exercised its Discontinuation
Option for such Program) reinitiate work on a discontinued Program prior to the
expiration or termination of the Purchase Option. Any Discontinuation Price paid
to Symphony Allegro by Alexza and subsequently divided or otherwise distributed
to Holdings shall reduce the Purchase Price in the amount of such dividends or
other distributions.
               (b) If Alexza and Symphony Allegro cannot agree on the
Discontinuation Price within [ * ] after receipt of such written notice from
Symphony Allegro of such discontinuation, then at Alexza’s request, the Chief
Executive Officer of Alexza and Chairman of the Symphony Allegro Board shall
make good faith efforts to resolve the disagreement(s) regarding the calculation
of the Discontinuation Price. If the Chief Executive Officer of Alexza and
Chairman of the Symphony Allegro Board do not agree on the Discontinuation Price
within [ * ] after Alexza’s request, then the Parties shall jointly select a
nationally recognized expert to resolve any remaining disagreements regarding
calculation of the Discontinuation Price. The Parties shall use their respective
commercially reasonable efforts to cause such expert to make its determination
of the Discontinuation Price within [ * ] of accepting its selection. The
expert’s determination of the Discontinuation Price shall, absent manifest
error, be (i) binding and conclusive and (ii) the Discontinuation Price at which
the Discontinuation Option shall be exercised by Alexza. All costs and expenses
of the expert shall be shared equally between Alexza and Symphony Allegro.
Notwithstanding the foregoing, in any case, each Party shall be responsible for
the payment of its respective costs and expenses, including any attorneys’ fees.
     12. Representations and Warranties.
          12.1 Alexza Representations and Warranties. Alexza hereby represents
and warrants to Symphony Allegro and Holdings that, as of the Closing Date:
               (a) Organization. Alexza is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
               (b) Authority and Validity. Alexza has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the Novated and Restated Technology License Agreement and to
consummate the transactions contemplated thereby. The execution, delivery and
performance by Alexza of this Agreement and the Novated and Restated Technology
License Agreement and the consummation of the transactions contemplated thereby
have been duly and validly authorized by all necessary action required on the
part of Alexza, and no other proceedings on the part of Alexza are necessary to
authorize this Agreement or the Novated and Restated Technology License
Agreement or for Alexza to perform its obligations under this Agreement or the
Novated and Restated Technology
 

[ * ]  =   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.

19.

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License Agreement. This Agreement and the Novated and Restated Technology
License Agreement constitute the lawful, valid and legally binding obligations
of Alexza, enforceable in accordance with their terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
               (c) No Violation or Conflict. The execution, delivery and
performance of this Agreement and the Novated and Restated Technology License
Agreement and the transactions contemplated thereby do not and will not
(i) violate, conflict with or result in the breach of any provision of the
Organizational Documents of Alexza, (ii) conflict with or violate any law or
Governmental Order applicable to Alexza or any of its assets, properties or
businesses, or (iii) conflict with, result in any breach of, constitute a
default (or event that with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Alexza, pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Alexza is a party except, in the case
of clauses (ii) and (iii), to the extent that such conflicts, breaches, defaults
or other matters would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Alexza or a material adverse
effect on the Programs.
               (d) Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the Novated and Restated Technology
License Agreement by Alexza do not, and the consummation of the transactions
contemplated thereby do not and will not, require any Governmental Approval
which has not already been obtained, effected or provided, except with respect
to which the failure to so obtain, effect or provide would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Alexza or a material adverse effect on the Programs.
               (e) Litigation. Except as disclosed on the Alexza S 1, there are
no actions by or against Alexza pending before any Governmental Authority or, to
the Knowledge of Alexza, threatened to be brought by or before any Governmental
Authority, that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Alexza. There are no pending or, to the
Knowledge of Alexza, threatened actions, to which Alexza is a party (or is
threatened to be named as a party) to set aside, restrain, enjoin or prevent the
execution, delivery or performance of this Agreement or the Operative Documents
or the consummation of the transactions contemplated hereby or thereby by any
party hereto or thereto. Alexza is not subject to any Governmental Order (nor,
to the Knowledge of Alexza, is there any such Governmental Order threatened to
be imposed by any Governmental Authority) that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Alexza or
a material adverse effect on the Programs.
               (f) No Contracts. Except as disclosed on Schedule 12.1(f) hereto,
there are no material contracts between Alexza and any third party other than
(i) licenses of intellectual property that are in turn licensed to Symphony
Allegro under the Novated and Restated Technology License Agreement and
(ii) contracts that relate solely to the Staccato
 

[ * ]  =   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.

20.

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Technology and are not related to the Programs or solely to products other than
the Products, used with or otherwise necessary for the Programs, and all such
contracts are assignable to Symphony Allegro. Except as disclosed on
Schedule 12.1(f) hereto, each such contract is assignable to Symphony Allegro
without the prior consent of the applicable third party, or the absence of such
contract (due to the inability or impracticability of assigning such contract to
Symphony Allegro following a termination of this Agreement without the exercise
of the Purchase Option) would not have a material adverse effect on any of the
Programs or on Symphony Allegro’s rights under the Novated and Restated
Technology License Agreement.
          12.2 Symphony Allegro Representations and Warranties. Symphony Allegro
hereby represents and warrants to Alexza that, as of the Closing Date:
               (a) Organization. Symphony Allegro is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
               (b) Authority and Validity. Symphony Allegro has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Novated and Restated Technology License Agreement
and to consummate the transactions contemplated thereby. The execution, delivery
and performance by Symphony Allegro of this Agreement and the Novated and
Restated Technology License Agreement and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all necessary
action required on the part of Symphony Allegro, and no other proceedings on the
part of Symphony Allegro are necessary to authorize this Agreement or the
Novated and Restated Technology License Agreement or for Symphony Allegro to
perform its obligations under this Agreement or the Novated and Restated
Technology License Agreement. This Agreement and the Novated and Restated
Technology License Agreement constitute the lawful, valid and legally binding
obligations of Symphony Allegro, enforceable in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
               (c) No Violation or Conflict. The execution, delivery and
performance of this Agreement and the Novated and Restated Technology License
Agreement and the transactions contemplated thereby do not and will not
(i) violate, conflict with or result in the breach of any provision of the
Organizational Documents of Symphony Allegro, (ii) conflict with or violate any
law or Governmental Order applicable to Symphony Allegro or any of its assets,
properties or businesses, or (iii) conflict with, result in any breach of,
constitute a default (or event that with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of Symphony Allegro, pursuant to any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which Symphony Allegro is a
party except, in the case of clauses (ii) and (iii), to the extent that such
conflicts, breaches, defaults or other matters would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Symphony
Allegro.
 

[ * ]  =   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.

21.

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               (d) Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement and the Novated and Restated Technology
License Agreement by Symphony Allegro do not, and the consummation of the
transactions contemplated thereby do not and will not, require any Governmental
Approval which has not already been obtained, effected or provided, except with
respect to which the failure to so obtain, effect or provide would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Symphony Allegro.
               (e) Litigation. There are no actions by or against Symphony
Allegro pending before any Governmental Authority or, to the Knowledge of
Symphony Allegro, threatened to be brought, by or before any Governmental
Authority that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Symphony Allegro. There are no pending or,
to the Knowledge of Symphony Allegro, threatened actions to which Symphony
Allegro is a party (or is threatened to be named as a party) to set aside,
restrain, enjoin or prevent the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by any
party hereto. Symphony Allegro is not subject to any Governmental Order (nor, to
the knowledge of Symphony Allegro, is there any such Governmental Order
threatened to be imposed by any Governmental Authority) that would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Symphony Allegro or a material adverse effect on the Programs.
     13. Relationship Between Alexza and Symphony Allegro. Nothing contained in
this Agreement or any acts or omissions hereunder shall constitute or be
construed so as to create any joint venture or partnership relationship between
Alexza and Symphony Allegro, and the Parties acknowledge and agree that Alexza
is acting as an independent contractor in the performance of its obligations
under this Agreement.
     14. Change of Control. Holdings has the Change of Control Put Option
described in Section 2A of the Purchase Option Agreement following a Change of
Control with respect to Alexza.
     15. No Restrictions; Indemnification.
          15.1 No Restrictions. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of Alexza or any
director, officer, or employee of any of its subsidiaries or its Affiliates to
engage in any other business or to devote his or her time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, nor limit or restrict the right of Alexza or any of its
affiliates to engage in any other business or to render services of any kind to
any other Person.
          15.2 Indemnification.
               (a) To the greatest extent permitted by applicable law, Alexza
shall indemnify and hold harmless Symphony Allegro, Holdings and RRD and each of
their respective Affiliates, officers, directors, employees, agents, members,
managers, successors and assigns (each, a “Symphony Indemnified Party”), and
Symphony Allegro shall indemnify and hold harmless Alexza, and its Affiliates
and each of their respective officers, directors, employees,
 

[ * ]  =   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.

22.

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agents (other than Alexza Subcontractors), members, managers, successors and
assigns (each, an “Alexza Indemnified Party”), from and against any and all
claims, losses, costs, interest, awards, judgments, fees (including reasonable
fees for attorneys and other professionals), court costs, liabilities, damages
and expenses incurred by any Symphony Indemnified Party or Alexza Indemnified
Party (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought) (hereinafter, a “Loss”) to
the extent resulting from, arising out of, or relating to any and all third
party suits, claims, actions, proceedings or demands based upon:
                    (i) in the case of Alexza being the Indemnifying Party,
(A) any breach of any representation or warranty made by Alexza herein or in any
other Operative Document, (B) any breach of any covenant, agreement or
obligation of Alexza contained herein or in any other Operative Document, except
to the extent such covenant, agreement or obligation relates to Alexza’s
performance under the Development Plan, (C) any gross negligence or willful
misconduct of Alexza (and not that of any Alexza Subcontractors) in connection
with Alexza’s performance of its obligations under this Agreement (including the
Development Plan), (D) any action undertaken or performed by or on behalf of
Alexza prior to, and including, the Closing Date that relates to the Programs or
the Products, or (E) in the event Alexza exercises a Discontinuation Option for
a Program, any action undertaken and/or performed by or on behalf of Alexza
after the Discontinuation Option Closing Date and relating to the Product that
was the subject of such Program (including the development, manufacture, use,
handling, storage, sale or other disposition of such Product); in each case,
except (1) with respect to Losses for which Alexza is entitled to
indemnification under this Article 15 or (2) to the extent such Loss arises from
the gross negligence or willful misconduct of a Symphony Indemnified Party; and
                    (ii) in the case of Symphony Allegro being the Indemnifying
Party, (A) any breach of any representation or warranty made by Symphony Allegro
herein or in any other Operative Document, (B) any breach of any covenant,
agreement or obligation of Symphony Allegro contained herein or in any other
Operative Document, (C) any gross negligence or willful misconduct of Symphony
Allegro (and not that of its direct subcontractors) in connection with Symphony
Allegro’s performance of its obligations under this Agreement, or (D) the
development, manufacture, use, handling, storage, sale or other disposition of
the Products (including in the course of conducting the Programs) during the
Term (except with respect to the development, manufacture, use, handling,
storage, sale or other disposition, after Alexza’s exercise of the
Discontinuation Option, of Products covered under Section 15.2(a)(i)(E)); in
each case, except (1) with respect to Losses for which Symphony Allegro is
entitled to indemnification under this Article 15, or (2) Losses deemed to have
arisen from the breach by Alexza of any covenant, agreement or obligation under
this Agreement that relates to Alexza’s performance under the Development Plan,
as determined by a court, arbitrator or pursuant to a settlement agreement, or
(3) to the extent such Loss arises from the gross negligence or willful
misconduct of an Alexza Indemnified Party.
     To the extent that the foregoing undertaking by Alexza or Symphony Allegro
may be unenforceable for any reason, such Party shall make the maximum
contribution to the payment and satisfaction of any Loss that is permissible
under applicable law.
 

[ * ]  =   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.

23.

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               (b) Notice of Claims. Any Indemnified Party that proposes to
assert a right to be indemnified under this Section 15.2 shall notify Alexza or
Symphony Allegro, as applicable (the “Indemnifying Party”), promptly after
receipt of notice of commencement of any action, suit or proceeding against such
Indemnified Party (an “Indemnified Proceeding”) in respect of which a claim is
to be made under this Section 15.2, or the incurrence or realization of any Loss
in respect of which a claim is to be made under this Section 15.2, of the
commencement of such Indemnified Proceeding or of such incurrence or
realization, enclosing a copy of all relevant documents, including all papers
served and claims made, but the omission so to notify the applicable
Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or
realization shall not relieve (x) such Indemnifying Party from any liability
that it may have to such Indemnified Party under this Section 15.2 or otherwise,
except, as to such Indemnifying Party’s liability under this Section 15.2, to
the extent, but only to the extent, that such Indemnifying Party shall have been
prejudiced by such omission, or (y) any other indemnitor from liability that it
may have to any Indemnified Party under the Operative Documents.
               (c) Defense of Proceedings. In case any Indemnified Proceeding
shall be brought against any Indemnified Party, it shall notify the applicable
Indemnifying Party of the commencement thereof as provided in Section 15.2(b),
and such Indemnifying Party shall be entitled to participate in, and provided
such Indemnified Proceeding involves a claim solely for money damages and does
not seek an injunction or other equitable relief against the Indemnified Party
and is not a criminal or regulatory action, to assume the defense of, such
Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified
Party. After notice from such Indemnifying Party to such Indemnified Party of
such Indemnifying Party’s election so to assume the defense thereof and the
failure by such Indemnified Party to object to such counsel within ten
(10) Business Days following its receipt of such notice, such Indemnifying Party
shall not be liable to such Indemnified Party for legal or other expenses
related to such Indemnified Proceedings incurred after such notice of election
to assume such defense except as provided below and except for the reasonable
costs of investigating, monitoring or cooperating in such defense subsequently
incurred by such Indemnified Party reasonably necessary in connection with the
defense thereof. Such Indemnified Party shall have the right to employ its
counsel in any such Indemnified Proceeding, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless:
                    (i) the employment of counsel by such Indemnified Party at
the expense of the applicable Indemnifying Party has been authorized in writing
by such Indemnifying Party;
                    (ii) such Indemnified Party shall have reasonably concluded
in its good faith (which conclusion shall be determinative unless a court
determines that such conclusion was not reached reasonably and in good faith)
that there is or may be a conflict of interest between the applicable
Indemnifying Party and such Indemnified Party in the conduct of the defense of
such Indemnified Proceeding or that there are or may be one or more different or
additional defenses, claims, counterclaims, or causes of action available to
such Indemnified Party (it being agreed that in any case referred to in this
clause (ii) such Indemnifying Party shall not have the right to direct the
defense of such Indemnified Proceeding on behalf of the Indemnified Party);
 

[ * ]  =   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.

24.

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                    (iii) the applicable Indemnifying Party shall not have
employed counsel reasonably acceptable to the Indemnified Party to assume the
defense of such Indemnified Proceeding within a reasonable time after notice of
the commencement thereof; provided, however, that (A) this clause (iii) shall
not be deemed to constitute a waiver of any conflict of interest that may arise
with respect to any such counsel, and (B) an Indemnified Party may not invoke
this clause (iii) if such Indemnified Party failed to timely object to such
counsel pursuant to the first paragraph of this Section 15.2(c) above (it being
agreed that in any case referred to in this clause (iii) such Indemnifying Party
shall not have the right to direct the defense of such Indemnified Proceeding on
behalf of the Indemnified Party); or
                    (iv) any counsel employed by the applicable Indemnifying
Party shall fail to timely commence or reasonably conduct the defense of such
Indemnified Proceeding and such failure has prejudiced (or is in immediate
danger of prejudicing) the outcome of such Indemnified Proceeding (it being
agreed that in any case referred to in this clause (iv) such Indemnifying Party
shall not have the right to direct the defense of such Indemnified Proceeding on
behalf of the Indemnified Party);
in each of which cases the fees and expenses of counsel for such Indemnified
Party shall be at the expense of such Indemnifying Party. Only one counsel shall
be retained by all Indemnified Parties with respect to any Indemnified
Proceeding, unless counsel for any Indemnified Party reasonably concludes in
good faith (which conclusion shall be determinative unless a court determines
that such conclusion was not reached reasonably and in good faith) that there is
or may be a conflict of interest between such Indemnified Party and one or more
other Indemnified Parties in the conduct of the defense of such Indemnified
Proceeding or that there are or may be one or more different or additional
defenses, claims, counterclaims, or causes or action available to such
Indemnified Party.
               (d) Settlement. Without the prior written consent of such
Indemnified Party, such Indemnifying Party shall not settle or compromise, or
consent to the entry of any judgment in, any pending or threatened Indemnified
Proceeding, unless such settlement, compromise, consent or related judgment
(i) includes an unconditional release of such Indemnified Party from all
liability for Losses arising out of such claim, action, investigation, suit or
other legal proceeding, (ii) provides for the payment of money damages as the
sole relief for the claimant (whether at law or in equity), (iii) involves no
admission of fact adverse to the Indemnified Party or finding or admission of
any violation of law or the rights of any Person by the Indemnified Party, and
(iv) is not in the nature of a criminal or regulatory action. No Indemnified
Party shall settle or compromise, or consent to the entry of any judgment in,
any pending or threatened Indemnified Proceeding (A) in respect of which any
payment would result hereunder or under any other Operative Document, (B) which
includes an injunction that will adversely affect any Indemnifying Party, (C)
which involves an admission of fact adverse to the Indemnifying Party or a
finding or admission of any violation of law or the rights of any Person by the
Indemnifying Party, or (D) which is in the nature of a criminal or regulatory
action, without the prior written consent of the Indemnifying Party, such
consent not to be unreasonably conditioned, withheld or delayed.
     16. Limitation of Liabilities.
 

[ * ]  =   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.

25.

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          16.1 Between the Parties. TO THE GREATEST EXTENT PERMITTED BY
APPLICABLE LAW, NEITHER PARTY NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
MEMBERS, MANAGERS, EMPLOYEES, INDEPENDENT CONTRACTORS OR AGENTS (INCLUDING RRD
AND ITS MEMBERS, MANAGERS, EMPLOYEES, INDEPENDENT CONTRACTORS AND AGENTS) SHALL
HAVE ANY LIABILITY OF ANY TYPE (INCLUDING, BUT NOT LIMITED TO, CLAIMS IN
CONTRACT, NEGLIGENCE AND TORT LIABILITY) FOR ANY SPECIAL, INCIDENTAL, INDIRECT,
PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, THE LOSS OF
OPPORTUNITY, LOSS OF USE OR LOSS OF REVENUE OR PROFIT IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR THE SERVICES PERFORMED HEREUNDER, EVEN IF SUCH
DAMAGES MAY HAVE BEEN FORESEEABLE. THE FOREGOING SHALL NOT LIMIT EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 15.2 AND SHALL NOT APPLY TO
BREACHES OF ITS CONFIDENTIALITY OBLIGATIONS PURSUANT TO ARTICLE 10.
          16.2 Pursuant to the RRD Services Agreement. Each Party hereby
acknowledges and agrees that, pursuant to Sections 9(f) and (g) of the RRD
Services Agreement, RRD has expressly disclaimed all liability for (a) any claim
arising out of, or allegedly arising out of the activities carried out by (or
within the authority of) Alexza (and such Alexza Subcontractors and vendors it
may retain) hereunder, or for any liability arising under the Novated and
Restated Technology License Agreement with respect to any license or sublicense
thereunder in relation to the activities carried out by (or within the authority
of) Alexza (and such Alexza Subcontractors and vendors it may retain) hereunder,
with RRD to receive credit for any such damages to the extent such damages are
disclaimed, and (b) supervising, compensating or discharging, or any other
liability to or with respect to, any vendor retained by Alexza (or, in the case
of a vendor engaged by both RRD and Alexza, to and for such vendor to the extent
that such vendor performs services for Alexza), except that RRD shall make
payments from Symphony Allegro’s funds to reimburse Alexza, in accordance with
Article 8 and Annex E of this Agreement, for costs and expenses incurred by
Alexza in connection with the engagement of such vendors by Alexza for the
performance of services contemplated under the Development Plan.
     17. Term and Termination.
          17.1 Term. This Agreement shall be effective as of the Closing Date
and shall expire on the last day of the Term, unless the Agreement is earlier
terminated as specified in this Article 17.
          17.2 Termination for Alexza’s Breach.
               (a) Symphony Allegro may terminate this Agreement at any time
upon written notice to Alexza if Alexza is in material default or breach of this
Agreement, and such material default or breach continues unremedied for a period
of [ * ] after written notice thereof is delivered to Alexza. Such cure period
may be extended if (i) Alexza reasonably believes such breach can be cured
within [ * ] of Alexza’s receipt of Symphony Allegro’s written notice of such
breach (and notifies Symphony Allegro in writing of such belief and the basis
for 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 24b-2 of the Securities Exchange Act of
1934, as amended.

26.

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belief), and (ii) Symphony Allegro, acting reasonably, agrees. If Alexza fails
to remedy the default or breach within the applicable cure period, Symphony
Allegro may by final notice of termination to Alexza terminate this Agreement.
               (b) In the event that Symphony Allegro terminates this Agreement
pursuant to Section 17.2(a) above, Alexza may exercise its Purchase Option,
pursuant to Section 1(c)(v) of the Purchase Option Agreement, within [ * ] of
receiving such notice of termination from Symphony Allegro; provided, that if
such termination occurs after a Change of Control with respect to Alexza due to
the Surviving Entity’s material default or breach of this Agreement, and if the
Surviving Entity does not exercise such Purchase Option, then Holdings may
exercise its Put Option pursuant to Section 2A of the Purchase Option Agreement.
          17.3 Termination for Symphony Allegro’s or Holdings’ Breach. Alexza
may terminate this Agreement at any time upon written notice to Symphony Allegro
and Holdings if Symphony Allegro or Holdings is in material default or breach of
this Agreement, and such material default or breach continues unremedied for a
period of [ * ] after written notice thereof is delivered to Symphony Allegro
and Holdings. Such cure period may be extended if (i) Symphony Allegro or
Holdings reasonably believes such breach can be cured within [ * ] of Symphony
Allegro’s and Holdings’ receipt of Alexza’s written notice of such breach (and
notifies Alexza in writing of such belief and the basis for such belief), and
(ii) Alexza, acting reasonably, agrees. If Symphony Allegro or Holdings fails to
remedy the default or breach within the applicable cure period, Alexza may by
final notice of termination to Symphony Allegro and Holdings terminate this
Agreement.
          17.4 Termination of License Agreement. This Agreement shall
automatically terminate upon the termination of the Novated and Restated
Technology License Agreement.
          17.5 Survival.
               (a) The agreements and covenants of the Parties set forth in
Articles 10, 11, 15, 16 and 18, and Sections 6.8 and 17.5 shall survive the
expiration or termination of this Agreement. In addition, Section 8.2 shall, to
the extent that the costs and expenses reimbursable thereunder have been
incurred or become uncancellable prior to such termination, also survive such
expiration.
               (b) If Alexza does not exercise the Purchase Option, in addition
to the provisions specified in Section 17.5(a), Section 5.4 shall also survive
such unexercised expiration.
     18. Miscellaneous.
          18.1 No Petition. Alexza covenants and agrees that, prior to the date
which is one (1) year and one (1) day after the expiration of the Term, Alexza
will not institute or join in the institution of any bankruptcy, insolvency,
reorganization or similar proceeding against Symphony Allegro. The provisions of
this Section 18.1 shall survive the termination of this 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 24b-2 of the Securities Exchange Act of
1934, as amended.

27.

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          18.2 Notices. Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted to be given to any party
shall be in writing addressed to the party at its address set forth below and
shall be deemed given (i) when delivered to the party personally, (ii) if sent
to the party by facsimile transmission (promptly followed by a hard-copy
delivered in accordance with this Section 18.2), when the transmitting party
obtains written proof of transmission and receipt; provided, however, that
notwithstanding the foregoing, any communication sent by facsimile transmission
after 5:00 PM (receiving party’s time) or not on a Business Day shall not be
deemed received until the next Business Day, (iii) when delivered by next
Business Day delivery by a nationally recognized courier service, or (iv) if
sent by registered or certified mail when received, provided postage and
registration or certification fees are prepaid and delivery is confirmed by a
return receipt:
     Alexza:
Alexza Pharmaceuticals, Inc.
1020 East Meadow Circle
Palo Alto, CA 94303
Attn: August J. Moretti
Facsimile: (650) 687-3999
     With a copy to:
Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Barbara A. Kosacz, Esq.
Facsimile: (650) 849-7400
     Symphony Allegro:
Symphony Allegro, Inc.
7361 Calhoun Place, Suite 325
Rockville, MD 20855
Attn: Frank L. Hurley, Ph.D.
Facsimile: (301) 762-6154
     Holdings:
Symphony Allegro Holdings LLC
7361 Calhoun Place, Suite 325
Rockville, MD 20855
Attn: Robert L. Smith, Jr.
Facsimile: (301) 762-6154
     with copies 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 24b-2 of the Securities Exchange Act of
1934, as amended.

28.

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Symphony Capital Partners, L.P.
875 Third Avenue, 18th Floor
New York, NY 10022
Attn: Mark Kessel
Facsimile: (212) 632-5401
     and
Symphony Strategic Partners, LLC
875 Third Avenue, 18th Floor
New York, NY 10022
Attn: Mark Kessel
Facsimile: (212) 632-5401
     or to such other address as such party may from time to time specify by
notice given in the manner provided herein to each other party entitled to
receive notice hereunder.
          18.3 Governing Law; Consent to Jurisdiction and Service of Process.
               (a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
               (b) Each of the Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
The City of New York, Borough of Manhattan, and any appellate court from any
jurisdiction thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the Parties hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the fullest extent permitted by law, in such federal
court. Each of the Parties agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any Party may otherwise have to bring any
action or proceeding relating to this Agreement.
               (c) Each of the Parties irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
federal court. Each of the Parties irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
          18.4 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS 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 24b-2 of the Securities Exchange Act of
1934, as amended.

29.

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          18.5 Entire Agreement. This Agreement (including any Annexes,
Schedules, Exhibits or other attachments hereto) constitutes the entire
agreement between the Parties with respect to the matters covered hereby, and no
oral or written statement may be used to interpret or vary the meaning of the
terms and conditions hereof. This Agreement supersedes all prior and
contemporaneous agreements, correspondence, discussion and understanding with
respect to such matters between the Parties, including the Research and
Development Agreement, but excluding the Operative Documents.
          18.6 Amendment; Successors; Assignment; Counterparts.
               (a) The terms of this Agreement shall not be altered, modified,
amended, waived or supplemented in any manner whatsoever except by a written
instrument signed by each of the Parties and Holdings.
               (b) Nothing expressed or implied herein is intended or shall be
construed to confer upon or to give to any Person, other than the Parties (and,
to the extent of Section 18.8, RRD), any right, remedy or claim under or by
reason of this Agreement or of any term, covenant or condition hereof, and all
the terms, covenants, conditions, promises and agreements contained herein shall
be for the sole and exclusive benefit of the Parties (and, to the extent of
Section 18.8, RRD) and their successors and permitted assigns.
               (c) This Agreement may not be assigned by either Party hereto
without the prior written consent of the other Party; provided that, in the
event Alexza undergoes a Change of Control in compliance with Article 14 hereof,
Alexza may assign this Agreement to its Successor Entity.
               (d) This Agreement may be executed in one or more counterparts,
each of which, when executed, shall be deemed an original but all of which taken
together shall constitute one and the same Agreement.
          18.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in a manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
          18.8 Third Party Beneficiary. Each of the Parties agrees that RRD
shall be a third party beneficiary of Articles 2, 8 and 16, and Sections 4.1,
4.2(a), 4.2(b), 7.1, 7.4, 9.1(f), 15.2 and 18.6(b) of this Agreement.
{SIGNATURES FOLLOW ON NEXT 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 24b-2 of the Securities Exchange Act of
1934, as amended.

30.

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     In Witness Whereof, the parties hereto have caused this Agreement to be
executed as of the day and year above written.

                      SYMPHONY ALLEGRO HOLDINGS LLC    
 
                    By:   Symphony Capital Partners, L.P.,
its Manager    
 
                    By:   Symphony Capital GP, L.P.,
its member    
 
                    By:   Symphony GP, LLC,
its member    
 
                    By:   /s/ Mark Kessel                  
 
      Name:   Mark Kessel    
 
      Title:   Managing Member    
 
                    SYMPHONY ALLEGRO, INC.    
 
                    By:   /s/ Neil J. Sandler                  
 
      Name:   Neil J. Sandler    
 
      Title:   Chairman of the Board    
 
                    ALEXZA PHARMACEUTICALS, INC.    
 
                    By:   /s/ August J. Moretti                  
 
      Name:   August J. Moretti    
 
      Title:   Senior Vice President and    
 
          Chief Financial Officer    

 

[ * ]  =   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.

 

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

 

ANNEX A
CERTAIN DEFINITIONS
{See attached.}
 

[ * ]  =   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.

Annex A-1

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

 

CERTAIN DEFINITIONS
     “$” means United States dollars.
     “Accredited Investor” has the meaning set forth in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended.
     “Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101
et seq.
     “Ad Hoc Meeting” has the meaning set forth in Paragraph 6 of Annex B of the
Amended and Restated Research and Development Agreement.
     “Additional Party” has the meaning set forth in Section 14 of the
Confidentiality Agreement.
     “Additional Regulatory Filings” means such Governmental Approvals as
required to be made under any law applicable to the purchase of the Symphony
Allegro Equity Securities under the Purchase Option Agreement.
     “Adjusted Capital Account Deficit” has the meaning set forth in
Section 1.01 of the Holdings LLC Agreement.
     “Affected Member” has the meaning set forth in Section 27 of the Investors
LLC Agreement.
     “Affiliate” means, with respect to any Person (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any officer, director, general partner, member or trustee of such Person,
or (iii) any Person who is an officer, director, general partner, member or
trustee of any Person described in clauses (i) or (ii) of this sentence. For
purposes of this definition, the terms “controlling,” “controlled by” or “under
common control with” shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person or
entity, whether through the ownership of voting securities, by contract or
otherwise, or the power to elect at least 50% of the directors, managers,
general partners, or persons exercising similar authority with respect to such
Person or entities.
     “Alexza” means Alexza Pharmaceuticals, Inc., a Delaware corporation.
     “Alexza Accounting Advisor” means Ernst & Young LLP.
     “Alexza Common Stock” means the common stock, par value $0.0001 per share,
of Alexza.
     “Alexza Common Stock Valuation” has the meaning set forth in Section 2(e)
of the Purchase Option 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 24b-2 of the Securities Exchange Act of
1934, as amended.

Annex A-1

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

 

     “Alexza Obligations” has the meaning set forth in Section 6.1(a) of the
Amended and Restated Research and Development Agreement.
     “Alexza Personnel” has the meaning set forth in Section 8.4 of the Amended
and Restated Research and Development Agreement.
     “Alexza Public Filings” means all publicly available filings made by Alexza
with the SEC.
     “Alexza Subcontractor” means a third party that has entered into a
Subcontracting Agreement with Alexza.
     “Allegro Relevant Infringement” means an infringement, misappropriation,
illegal use or misuse of the Licensed Patent Rights or other Licensed
Intellectual Property due to the manufacture, use, sale or importation of a
pharmaceutical product or device that delivers Alprazolam (provided that Alexza
has not exercised a Discontinuation Option for the AZ-002 Program) or Loxapine
(provided that Alexza has not exercised a Discontinuation Option for the AZ-004
Program), as applicable.
     “Alprazolam” means: (a) alprazolam and (b) all salts, metabolites, prodrug
and other physical forms thereof.
     “Amended and Restated Research and Development Agreement” means the Amended
and Restated Research and Development Agreement dated as of the Closing Date,
among Alexza, Holdings and Symphony Allegro.
     “Asset Value” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.
     “Auditors” means an independent certified public accounting firm of
recognized national standing.
     “AZ-002 Product” means a pharmaceutical product in which Alprazolam is the
sole active ingredient and it is delivered using Staccato Technology.
     “AZ-002 Program” means the development, manufacture and/or use of any
AZ-002 Product in accordance with the Development Plan.
     “AZ-004 Product” means a pharmaceutical product in which Loxapine is the
sole active ingredient and it is delivered using Staccato Technology.
     “AZ-004 Program” means the development, manufacture and/or use of any
AZ-004 Product in accordance with the Development Plan.
     “Balance Sheet Deficiency” has the meaning set forth in Section 1(c)(iii)
of the Purchase Option Agreement.
     “Balance Sheet Deficiency Date” has the meaning set forth in
Section 1(c)(iii) of the Purchase Option 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 24b-2 of the Securities Exchange Act of
1934, as amended.

2.

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     “Balance Sheet Deficiency Threshold” shall have the meaning set forth in
Section 2(b) of the Research Cost Sharing and Extension Agreement.
     “Bankruptcy Code” means the United States Bankruptcy Code.
     “Business Day” means any day other than Saturday, Sunday or any other day
on which commercial banks in the City of New York or the City of San Francisco
are authorized or required by law to remain closed.
     “Capital Contributions” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Capitalized Leases” means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
     “Cash Available for Distribution” has the meaning set forth in Section 1.01
of the Holdings LLC Agreement.
     “Chair” has the meaning set forth in Paragraph 4 of Annex B to the Amended
and Restated Research and Development Agreement.
     “Change of Control” means and includes the occurrence of any of the
following events, but specifically excludes (i) acquisitions of capital stock
directly from Alexza for cash, whether in a public or private offering,
(ii) sales of capital stock by stockholders of Alexza, and (iii) acquisitions of
capital stock by or from any employee benefit plan or related trust:
     (a) the merger, reorganization or consolidation of Alexza into or with
another corporation or legal entity in which Alexza’s stockholders holding the
right to vote with respect to matters generally immediately preceding such
merger, reorganization or consolidation, own less than fifty percent (50%) of
the voting securities of the surviving entity; or
     (b) the sale of all or substantially all of Alexza’s assets or business.
     “Change of Control Put Option” has the meaning set forth in Section 2A of
the Purchase Option Agreement.
     “Change of Control Put Option Exercise Notice” has the meaning set forth in
Section 2A of the Purchase Option Agreement.
     “Class A Member” means a holder of a Class A Membership Interest.
     “Class A Membership Interest” means a Class A Membership Interest in
Holdings.
     “Class B Member” means a holder of a Class B Membership Interest.
     “Class B Membership Interest” means a Class B Membership Interest in
Holdings.
     “Class C Member” means a holder of a Class C Membership Interest.
 

[ * ]  =   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.

3.

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     “Class C Membership Interest” means a Class C Membership Interest in
Holdings.
     “Class D Member” means a holder of a Class D Membership Interest.
     “Class D Membership Interest” means a Class D Membership Interest in
Holdings.
     “Client Schedules” has the meaning set forth in Section 5(b) of the RRD
Services Agreement.
     “Clinical Budget Component” has the meaning set forth in Section 4.1 of the
Amended and Restated Research and Development Agreement.
     “Clinical Trial Material” means Product and placebo for administration to
animals for pre-clinical testing or to humans for clinical testing.
     “Closing Date” means any time after the close of business in New York on
December 1, 2006.
     “CMC” means the chemistry, manufacturing and controls documentation as
required for filings with a Regulatory Authority relating to the manufacturing,
production and testing of drug products.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Committed Capital” means $50,000,000.00.
     “Common Stock” means the common stock, par value $0.01 per share, of
Symphony Allegro.
     “Company Expenses” has the meaning set forth in Section 5.09 of the
Holdings LLC Agreement.
     “Company Property” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Confidential Information” has the meaning set forth in Section 2 of the
Confidentiality Agreement.
     “Confidentiality Agreement” means the Confidentiality Agreement, dated as
of the Closing Date, among Symphony Allegro, Holdings, Alexza, SCP, SSP,
Investors, Symphony Capital and RRD, as such agreement may be amended or amended
and restated from time to time.
     “Conflict Transaction” has the meaning set forth in Article X of the
Symphony Allegro Charter.
     “Control” means, with respect to any material, information or intellectual
property right, that a Party owns or has a license to such item or right, and
has the ability to grant the other Party
 

[ * ]  =   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.

4.

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access, a license or a sublicense (as applicable) in or to such item or right as
provided in the Operative Documents without violating the terms of any agreement
or other arrangement with any third party.
     “Cross Program Expenses” are: (i) the Management Fee plus the Development
Fee pursuant to Section 6(a) of the RRD Services Agreement; (ii) actual expenses
associated with RRD carrying out its duties related to creating and maintaining
the books of account, records, financial statements and audit and tax
preparation for Symphony Allegro pursuant to Section 5 of the RRD Services
Agreement; and (iii) actual expenses for insurance procured for Symphony Allegro
pursuant to Section 1(a)(xi) of the RRD Services Agreement, reasonable legal
expenses incurred on behalf of Symphony Allegro, and travel and miscellaneous
out of pocket expenses of the Symphony Allegro Board, all as and to the extent
reimbursable to RRD pursuant to Section 6(b) of the RRD Services Agreement.
     “Current Products” has the meaning set forth in Section 5.1(g) of thef
Novated and Restated Technology License Agreement.
     “Debt” of any Person means, without duplication:
(a) all indebtedness of such Person for borrowed money,
     (b) all obligations of such Person for the deferred purchase price of
property or services (other than any portion of any trade payable obligation
that shall not have remained unpaid for 91 days or more from the later of
(A) the original due date of such portion and (B) the customary payment date in
the industry and relevant market for such portion),
     (c) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments,
     (d) all obligations of such Person created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (whether or not the rights and remedies of the seller or lender
under such agreement in an event of default are limited to repossession or sale
of such property),
(e) all Capitalized Leases to which such Person is a party,
     (f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities,
     (g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any Equity Securities of such Person,
(h) the net amount of all financial obligations of such Person in respect of
Hedge Agreements,
     (i) the net amount of all other financial obligations of such Person under
any contract or other agreement to which such Person is a party,
 

[ * ]  =   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.

5.

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     (j) all Debt of other Persons of the type described in clauses (a) through
(i) above guaranteed, directly or indirectly, in any manner by such Person, or
in effect guaranteed, directly or indirectly, by such Person through an
agreement (A) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (C) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(D) otherwise to assure a creditor against loss, and
     (k) all Debt of the type described in clauses (a) through (i) above secured
by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property (including accounts and
contract rights) owned or held or used under lease or license by such Person,
even though such Person has not assumed or become liable for payment of such
Debt.
     “Development Budget” means the budget (comprised of the Management Budget
Component and the Clinical Budget Component) for the implementation of the
Development Plan (the initial form of which was agreed upon by Alexza and
Symphony Allegro as of the Closing Date and attached to the Amended and Restated
Research and Development Agreement as Annex C thereto), as may be further
developed and revised from time to time in accordance with the Development
Committee Charter and the Amended and Restated Research and Development
Agreement.
     “Development Committee” has the meaning set forth in Article 3 of the
Amended and Restated Research and Development Agreement.
     “Development Committee Charter” has the meaning set forth in Article 3 of
the Amended and Restated Research and Development Agreement.
     “Development Committee Member” has the meaning set forth in Paragraph 1 of
Annex B to the Amended and Restated Research and Development Agreement.
     “Development Plan” means the development plan covering all the Programs
(the initial form of which was agreed upon by Alexza and Symphony Allegro as of
the Closing Date and attached to the Amended and Restated Research and
Development Agreement as Annex C thereto), as may be further developed and
revised from time to time in accordance with the Development Committee Charter
and the Amended and Restated Research and Development Agreement.
     “Development Product” means an AZ-002 Product or an AZ-004 Product that is
administered in a clinical trial performed pursuant to the Development Plan.
     “Development Services” has the meaning set forth in Section 1(b) of the RRD
Services 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 24b-2 of the Securities Exchange Act of
1934, as amended.

6.

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     “Development Subcontracting Agreement” means a Subcontracting Agreement
that is directly related to one or both of the Programs and is not a
Manufacturing Subcontracting Agreement.
     “Director(s)” means the Persons identified as such in the Preliminary
Statement of the Indemnification Agreement (including such Persons as may become
parties thereto after the date hereof).
     “Disclosing Party” has the meaning set forth in Section 4 of the
Confidentiality Agreement.
     “Discontinuation Option” has the meaning set forth in Section 11(a) of the
Amended and Restated Research and Development Agreement.
     “Discontinuation Option Closing Date” means the date of expiration of the
Discontinuation Option pursuant to Section 11(a) of the Amended and Restated
Research and Development Agreement.
     “Discontinuation Price” has the meaning set forth in Section 11(a) of the
Amended and Restated Research and Development Agreement.
     “Discontinued Program” has the meaning set forth in Section 2.10 of the
Novated and Restated Technology License Agreement.
     “Disinterested Directors” has the meaning set forth in Article IX of the
Symphony Allegro Charter.
     “Distribution” has the meaning set forth in Section 1.01 of the Holdings
LLC Agreement.
     “Drug Master Files” means all Regulatory Files with respect to the
manufacture or design of a Product, including without limitation drug master
files, design history files and similar files.
     “Early Purchase Option Exercise” has the meaning set forth in
Section 1(c)(v) of the Purchase Option Agreement.
     “Effective Registration Date” has the meaning set forth in Section 1(b) of
the Registration Rights Agreement.
     “Encumbrance” means (i) any security interest, pledge, mortgage, lien
(statutory or other), charge or option to purchase, lease or otherwise acquire
any interest, (ii) any adverse claim, restriction, covenant, title defect,
hypothecation, assignment, deposit arrangement, license or other encumbrance of
any kind, preference or priority, or (iii) any other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement).
     “Equity Securities” means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such Person
of shares of capital stock of (or other ownership or profit
 

[ * ]  =   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.

7.

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interests in) such Person, securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or other acquisition from
such Person of such shares (or such other interests), and other ownership or
profit interests in such Person (including, without limitation, partnership,
member or trust interests therein), whether voting or nonvoting, and whether or
not such shares, warrants, options, rights or other interests are authorized or
otherwise existing on any date of determination.
     “ERISA” means the United States Employee Retirement Income Security Act of
1974, as amended.
     “Excepted Debt” has the meaning set forth in Section 5(c)(iii) of the
Purchase Option Agreement.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
     “Existing Confidentiality Agreement” has the meaning set forth in
Section 2(a) of the Confidentiality Agreement.
     “Exiting Product” means, with respect to a particular Program, any
Development Product that was administered in a clinical trial pursuant to the
Development Plan at any time prior to (a) the termination of the Discontinuation
Option with respect to such Program without exercise by Licensor or (b) the
expiration or termination of the Purchase Option without exercise by Licensor,
whichever comes first.
     “Extension Funding” has the meaning set forth in Section 2 of the Research
Cost Sharing and Extension Agreement.
     “External Directors” means, at any time, up to two (2) Persons elected to
the Symphony Allegro Board after the Closing Date (who shall be neither
employees of Symphony Capital nor of Alexza) in accordance with the Symphony
Allegro Charter, the Symphony Allegro By-laws and Section 4(b)(iv) of the
Purchase Option Agreement.
     “FDA” means the United States Food and Drug Administration or its successor
agency in the United States.
     “FDA Sponsor” has the meaning set forth in Section 5.1 of the Amended and
Restated Research and Development Agreement.
     “Final Termination Date” has the meaning set forth in Section 1(c)(iii) of
the Purchase Option Agreement.
     “Financial Audits” has the meaning set forth in Section 6.7 of the Amended
and Restated Research and Development Agreement.
     “Financing” has the meaning set forth in the Preliminary Statement of the
Purchase Option 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 24b-2 of the Securities Exchange Act of
1934, as amended.

8.

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     “Fiscal Year” has the meaning set forth in each Operative Document in which
it appears.
     “Form S-3” means the Registration Statement on Form S-3 as defined under
the Securities Act.
     “FTE” means the time and effort of one or more qualified scientists working
on the AZ-002 Program or the AZ-004 Program that is equivalent to 1850 hours per
year devoted exclusively to the Programs by one (1) full-time employee. The
portion of an FTE year devoted by any one scientist to the Programs shall be
determined by dividing the number of hours during any twelve (12) month period
devoted by such scientist to one or both Programs by 1850 hours, not to exceed
1.0 in any case.
     “Funds Termination Date” has the meaning set forth in Section 1(c)(iii) of
the Purchase Option Agreement.
     “Funds Termination Notice” has the meaning set forth in Section 1(c)(iii)
of the Purchase Option Agreement.
     “GAAP” means generally accepted accounting principles in effect in the
United States of America from time to time.
     “Governmental Approvals” means authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by any Governmental Authority.
     “Governmental Authority” means any United States or non-United States
federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
     “Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
     “Hedge Agreement” means any interest rate swap, cap or collar agreement,
interest rate future or option contract, currency swap agreement, currency
future or option contract or other similar hedging agreement.
     “Holdings” means Symphony Allegro Holdings LLC, a Delaware limited
liability company.
     “Holdings Claims” has the meaning set forth in Section 5.01 of the Warrant
Purchase Agreement.
     “Holdings LLC Agreement” means the Amended and Restated Limited Liability
Company Agreement of Holdings dated as of the Closing Date.
     “HSR Filings” means the pre-merger notification and report forms required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
 

[ * ]  =   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.

9.

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     “IND” means an Investigational New Drug Application, as described in 21
U.S.C. § 355(i)(1) and 21 C.F.R. § 312 in the regulations promulgated by the
United States Food and Drug Administration, or any foreign equivalent thereof.
     “Indemnification Agreement” means the Indemnification Agreement among
Symphony Allegro and the Directors named therein, dated as of the Closing Date,
as such agreement may be amended or amended and restated from time to time.
     “Indemnified Party” has the meaning set forth in each Operative Document in
which it appears.
     “Indemnified Proceeding” has the meaning set forth in each Operative
Document in which it appears.
     “Indemnifying Party” has the meaning set forth in each Operative Document
in which it appears.
     “IND-Enabling GLP Inhalation Toxicology Studies” means the pharmacokinetic
and toxicology studies required for filing an IND.
     “Initial Development Budget” means the initial development budget prepared
by representatives of Symphony Allegro and Alexza prior to the Closing Date, and
attached to the Amended and Restated Research and Development Agreement as Annex
C thereto.
     “Initial Development Plan” means the initial development plan prepared by
representatives of Symphony Allegro and Alexza prior to the Closing Date, and
attached to the Amended and Restated Research and Development Agreement as Annex
C thereto.
     “Initial Holdings LLC Agreement” means the Agreement of Limited Liability
Company of Holdings, dated October 24, 2006.
     “Initial Investors LLC Agreement” means the Agreement of Limited Liability
Company of Investors, dated October 24, 2006.
     “Initial LLC Member” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Interest Certificate” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Investment Company Act” means the Investment Company Act of 1940, as
amended.
     “Investment Overview” means the investment overview describing the
transactions entered into pursuant to the Operative Documents.
     “Investment Policy” has the meaning set forth in Section 1(a)(vi) of the
RRD Services 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 24b-2 of the Securities Exchange Act of
1934, as amended.

10.

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     “Investors” means Symphony Allegro Investors LLC.
     “Investors LLC Agreement” means the Amended and Restated Agreement of
Limited Liability Company of Investors dated as of the Closing Date.
     “IRS” means the U.S. Internal Revenue Service.
     “Key Personnel” means those Alexza Personnel listed on Schedule 6.5 to the
Amended and Restated Research and Development Agreement, as such schedule may be
updated from time to time by mutual agreement of the parties to the Amended and
Restated Research and Development Agreement.
     “Know-How” means findings, discoveries, inventions, know-how, information,
results and data of any type whatsoever, including without limitation, technical
information, techniques, results of experimentation and testing, diagnostic and
prognostic assays, specifications, databases, manufacturing processes or
protocols, any and all laboratory, research, pharmacological, toxicological,
analytical, quality control, pre-clinical and clinical data.
     “Knowledge” of Alexza, Symphony Allegro or Holdings, as the case may be,
means the actual (and not imputed) knowledge of the executive officers or
managing member of such Person without the duty of inquiry or investigation.
     “Law” means any law, statute, treaty, constitution, regulation, rule,
ordinance, order or Governmental Approval, or other governmental restriction,
requirement or determination, of or by any Governmental Authority.
     “License” has the meaning set forth in the Preliminary Statement of the
Purchase Option Agreement.
     “Licensed Intellectual Property” means the Licensed Patent Rights and the
Licensed Know-How.
     “Licensed Know-How” means any and all Know-How that is Controlled by
Licensor on or after the Closing Date and prior to the unexercised expiration or
termination of the Purchase Option that:
     (a) is necessary or useful to practice the inventions claimed in the
Licensed Patent Rights; or
     (b) is a Symphony Allegro Enhancement;
     provided, however, that Licensed Know-How shall not include any Licensed
Patent Rights or any Know-How for the manufacture of a Product, including
Know-How associated with Product quality control or stability testing.
     “Licensed Patent Rights” means any and all patents and patent applications
Controlled by Licensor that:
 

[ * ]  =   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.

11.

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     (a) are listed on Annex D of the Novated and Restated Technology License
Agreement;
     (b) are reissues, continuations, divisionals, continuations-in-part,
reexaminations, renewals, substitutes, extensions or foreign counterparts of the
patents and patent applications described in (a) and (i) are filed prior to the
unexercised expiration or termination of the Purchase Option or (ii) are filed
after such expiration or termination, but solely to the extent claiming Know-How
conceived and reduced to practice prior to such expiration or termination;
     (c) contain a claim that covers an invention disclosed in an invention
disclosure listed on Annex D of the Novated and Restated Technology License
Agreement and (i) are filed prior to the unexercised expiration or termination
of the Purchase Option or (ii) are filed after such expiration or termination,
but solely to the extent claiming such invention;
     (d) contain a claim that covers a Symphony Allegro Enhancement and (i) are
filed prior to the unexercised expiration or termination of the Purchase Option
or (ii) are filed after such expiration or termination, but solely to the extent
claiming such Symphony Allegro Enhancement; or
     (e) contain a claim that covers a Development Product or the manufacture or
use thereof and (i) are filed prior to the unexercised expiration or termination
of the Purchase Option or (ii) are filed after such expiration or termination,
but solely to the extent claiming Development Product-related Know-How conceived
and reduced to practice prior to such expiration or termination.
     “Licensor” means Alexza.
     “Lien” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.
     “Liquidating Event” has the meaning set forth in Section 8.01 of the
Holdings LLC Agreement.
     “LLC Agreements” means the Initial Holdings LLC Agreement, the Holdings LLC
Agreement, the Initial Investors LLC Agreement and the Investors LLC Agreement.
     “Loss” has the meaning set forth in each Operative Document in which it
appears.
     “Loxapine” means: (a) loxapine and (b) all salts, metabolites, prodrug and
other physical forms thereof.
     “Management Fee” has the meaning set forth in Section 6(a) of the RRD
Services Agreement.
     “Management Services” has the meaning set forth in Section 1(a) of the RRD
Services 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 24b-2 of the Securities Exchange Act of
1934, as amended.

12.

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     “Manager” means (i) for each LLC Agreement in which it appears, the meaning
set forth in such LLC Agreement, and (ii) for each other Operative Document in
which it appears, RRD in its capacity as manager of Symphony Allegro.
     “Manager Event” has the meaning set forth in Section 3.01(g) of the
Holdings LLC Agreement.
     “Manufacturing Subcontracting Agreement” means a Subcontracting Agreement
that is directly related to the manufacture of Product (including procurement of
components and development of improved manufacturing methods) or the improvement
of the Staccato Technology.
     “Material Adverse Effect” means, with respect to any Person, a material
adverse effect on (i) the business, assets, property or condition (financial or
otherwise) of such Person or, (ii) its ability to comply with and satisfy its
respective agreements and obligations under the Operative Documents or,
(iii) the enforceability of the obligations of such Person of any of the
Operative Documents to which it is a party.
     “Material Subsidiary” means, at any time, a Subsidiary of Alexza having
assets in an amount equal to at least 5% of the amount of total consolidated
assets of Alexza and its Subsidiaries (determined as of the last day of the most
recent reported fiscal quarter of Alexza) or revenues or net income in an amount
equal to at least 5% of the amount of total consolidated revenues or net income
of Alexza and its Subsidiaries for the 12-month period ending on the last day of
the most recent reported fiscal quarter of Alexza.
     “Medical Discontinuation Event” means a series of adverse events, side
effects or other undesirable outcomes that, when collected in a Program, would
cause a reasonable FDA Sponsor to discontinue such Program.
     “Membership Interest” means (i) for each LLC Agreement in which it appears,
the meaning set forth in such LLC Agreement, and (ii) for each other Operative
Document in which it appears, the meaning set forth in the Holdings LLC
Agreement.
     “NASDAQ” means the Nasdaq Stock Market, Inc.
     “NDA” means a New Drug Application, as defined in the regulations
promulgated by the United States Food and Drug Administration, or any foreign
equivalent thereof.
     “Non-Alexza Capital Transaction” means any (i) sale or other disposition of
all or part of the Symphony Allegro Shares or all or substantially all of the
operating assets of Symphony Allegro, to a Person other than Alexza or an
Affiliate of Alexza or (ii) distribution in kind of the Symphony Allegro Shares
following the unexercised expiration or termination of the Purchase Option.
     “Novated and Restated Technology License Agreement” means the Novated and
Restated Technology License Agreement, dated as of the Closing Date, among
Alexza, Symphony Allegro and Holdings.
 

[ * ]  =   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.

13.

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     “Operative Documents” means, collectively, the Indemnification Agreement,
the Holdings LLC Agreement, the Purchase Option Agreement, the Warrant Purchase
Agreement, the Registration Rights Agreement, the Subscription Agreement, the
Technology License Agreement, the Novated and Restated Technology License
Agreement, the RRD Services Agreement, the Research and Development Agreement,
the Research Cost Sharing and Extension Agreement, the Amended and Restated
Research and Development Agreement, the Confidentiality Agreement, and each
other certificate and agreement executed in connection with any of the foregoing
documents.
     “Organizational Documents” means any certificates or articles of
incorporation or formation, partnership agreements, trust instruments, bylaws or
other governing documents.
     “Partial Stock Payment” has the meaning set forth in Section 3(a)(iii) of
the Purchase Option Agreement.
     “Party(ies)” means, for each Operative Document or other agreement in which
it appears, the parties to such Operative Document or other agreement, as set
forth therein. With respect to any agreement in which a provision is included
therein by reference to a provision in another agreement, the term “Party” shall
be read to refer to the parties to the document at hand, not the agreement that
is referenced.
     “Payment Terms” has the meaning set forth in Section 8.2 of the Amended and
Restated Research and Development Agreement.
     “Percentage” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.
     “Permitted Investments” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Permitted Lien” has the meaning set forth in Section 1.01 of the Holdings
LLC Agreement.
     “Person” means any individual, partnership (whether general or limited),
limited liability company, corporation, trust, estate, association, nominee or
other entity.
     “Personnel” of a Party means such Party, its employees, subcontractors,
consultants, representatives and agents.
     “Prime Rate” means the quoted “Prime Rate” at JPMorgan Chase Bank or, if
such bank ceases to exist or is not quoting a base rate, prime rate reference
rate or similar rate for United States dollar loans, such other major money
center commercial bank in New York City selected by the Manager.
     “Products” means an AZ-002 Product and/or an AZ-004 Product.
     “Profit” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.
     “Programs” means the AZ-002 Program and/or the AZ-004 Program.
 

[ * ]  =   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.

14.

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     “Program-Specific Claim” means any claim in a patent or patent application
in the Licensed Patent Rights that is directed exclusively to AZ-002 Products
and/or AZ-004 Products.
     “Program-Specific Patents” means any and all Licensed Patent Rights that
contain at least one Program-Specific Claim.
     “Protocol” means a written protocol that meets the substantive requirements
of Section 6 of the ICH Guideline for Good Clinical Practice as adopted by the
FDA, effective May 9, 1997, and is included within the Development Plan or later
modified or added to the Development Plan pursuant to the Amended and Restated
Research and Development Agreement.
     “Public Companies” has the meaning set forth in Section 5(e) of the
Purchase Option Agreement.
     “Purchase Option” has the meaning set forth in Section 1(a) of the Purchase
Option Agreement.
     “Purchase Option Agreement” means the Purchase Option Agreement dated as of
the Closing Date, among Alexza, Holdings and Symphony Allegro.
     “Purchase Option Closing” has the meaning set forth in Section 2(a) of the
Purchase Option Agreement.
     “Purchase Option Closing Date” has the meaning set forth in Section 2(a) of
the Purchase Option Agreement.
     “Purchase Option Commencement Date” has the meaning set forth in Section
1(c)(iii) of the Purchase Option Agreement.
     “Purchase Option Exercise Date” has the meaning set forth in Section 2(a)
of the Purchase Option Agreement.
     “Purchase Option Exercise Notice” has the meaning set forth in Section 2(a)
of the Purchase Option Agreement.
     “Purchase Option Offset Amount” shall mean, following the termination of
the Amended and Restated Research and Development Agreement by Alexza pursuant
to Section 17.3 thereof, those unpaid amounts actually owed to Alexza as a
result of the material breach or default of any payment obligation of Symphony
Allegro to Alexza pursuant to the Amended and Restated Research and Development
Agreement by Symphony Allegro or Holdings that was the basis for such
termination of the Amended and Restated Research and Development Agreement by
Alexza.
     “Purchase Option Period” has the meaning set forth in Section 1(c)(iii) of
the Purchase Option Agreement.
     “Purchase Price” has the meaning set forth in Section 2(b) of the Purchase
Option 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 24b-2 of the Securities Exchange Act of
1934, as amended.

15.

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     “QA Audits” has the meaning set forth in Section 6.6 of the Amended and
Restated Research and Development Agreement.
     “Quarterly Price” has the meaning set forth in Section 2(b)(i) of the
Purchase Option Agreement.
     “Registration Rights Agreement” means the Registration Rights Agreement
dated as of the Closing Date, between Alexza and Holdings.
     “Registration Statement” has the meaning set forth in Section 1(b) of the
Registration Rights Agreement.
     “Regulatory Allocation” has the meaning set forth in Section 3.06 of the
Holdings LLC Agreement.
     “Regulatory Authority” means the United States Food and Drug
Administration, or any successor agency in the United States, or any health
regulatory authority(ies) in any other country that is a counterpart to the FDA
and has responsibility for granting registrations or other regulatory approval
for the marketing, manufacture, storage, sale or use of drugs in such other
country.
     “Regulatory Files” means any IND, NDA or any other filings filed with any
Regulatory Authority with respect to the Programs.
     “Representative” of any Person means such Person’s shareholders,
principals, directors, officers, employees, members, managers and/or partners.
     “Research Cost Sharing and Extension Agreement” means the Research Cost
Sharing and Extension Agreement dated as of the Closing Date, among Alexza,
Holdings and Symphony Allegro.
     “Research and Development Agreement” means the Research and Development
Agreement dated as of the Closing Date, between Alexza and Holdings.
     “RRD” means RRD International, LLC, a Delaware limited liability company.
     “RRD Indemnified Party” has the meaning set forth in Section 10(a) of the
RRD Services Agreement.
     “RRD Loss” has the meaning set forth in Section 10(a) of the RRD Services
Agreement.
     “RRD Personnel” has the meaning set forth in Section 1(a)(ii) of the RRD
Services Agreement.
     “RRD Services Agreement” means the RRD Services Agreement between Symphony
Allegro and RRD, dated as of the Closing 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 24b-2 of the Securities Exchange Act of
1934, as amended.

16.

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     “Schedule K-1” has the meaning set forth in Section 9.02(a) of the Holdings
LLC Agreement.
     “Scheduled Meeting” has the meaning set forth in Paragraph 6 of Annex B of
the Amended and Restated Research and Development Agreement.
     “Scientific Discontinuation Event” has the meaning set forth in
Section 4.2(c) of the Amended and Restated Research and Development Agreement.
     “SCP” means Symphony Capital Partners, L.P., a Delaware limited
partnership.
     “SEC” means the United States Securities and Exchange Commission.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Selling Stockholder Questionnaire” has the meaning set forth in
Section 4(a) of the Registration Rights Agreement.
     “Shareholder” means any Person who owns any Symphony Allegro Shares.
     “Solvent” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.
     “SSP” means Symphony Strategic Partners, LLC, a Delaware limited liability
company.
     “Staccato Technology” means Alexza’s proprietary technology for the
vaporization of a pharmaceutical composition via rapid-heating to form a
condensation aerosol that allows rapid systemic drug delivery to humans through
lung inhalation.
     “Stock Payment Date” has the meaning set forth in Section 2 of the
Subscription Agreement.
     “Stock Purchase Price” has the meaning set forth in Section 2 of the
Subscription Agreement.
     “Subcontracting Agreement” means (a) any written agreement between Alexza
and a third party pursuant to which the third party performs any Alexza
Obligations or (b) any work order, change order, purchase order or the like
entered into pursuant to Section 6.2(b) of the Amended and Restated Research and
Development Agreement.
     “Sublicense Obligations” has the meaning set forth in Section 3.2 of the
Novated and Restated Technology License Agreement.
     “Sublicensed Intellectual Property” has the meaning set forth in
Section 3.2 of the Novated and Restated Technology License Agreement.
     “Subscription Agreement” means the Subscription Agreement between Symphony
Allegro and Holdings, dated as the Closing 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 24b-2 of the Securities Exchange Act of
1934, as amended.

17.

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     “Subsidiary” of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency); (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company; or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person’s other Subsidiaries.
     “Surviving Entity” means the surviving legal entity which is surviving
entity to Alexza after giving effect to a Change of Control.
     “Symphony Allegro” means Symphony Allegro, Inc., a Delaware corporation.
     “Symphony Allegro Auditors” has the meaning set forth in Section 5(b) of
the RRD Services Agreement.
     “Symphony Allegro Board” means the board of directors of Symphony Allegro.
     “Symphony Allegro By-laws” means the By-laws of Symphony Allegro, as
adopted by resolution of the Symphony Allegro Board on the Closing Date.
     “Symphony Allegro Charter” means the Amended and Restated Certificate of
Incorporation of Symphony Allegro, dated as of the Closing Date.
     “Symphony Allegro Director Event” has the meaning set forth in Section
3.01(h)(i) of the Holdings LLC Agreement.
     “Symphony Allegro Enhancements” means any and all Know-How, whether or not
patentable, that is made by or on behalf of Symphony Allegro during the Term,
including Know-How generated or derived by RRD and assigned to Symphony Allegro
pursuant to Section 12 of the RRD Services Agreement.
     “Symphony Allegro Equity Securities” means the Common Stock and any other
stock or shares issued by Symphony Allegro.
     “Symphony Allegro Loss” has the meaning set forth in Section 10(b) of the
RRD Services Agreement.
     “Symphony Allegro Shares” has the meaning set forth in Section 2.02 of the
Holdings LLC Agreement.
     “Symphony Capital” means Symphony Capital LLC, a Delaware limited liability
company.
     “Symphony Fund(s)” means Symphony Capital Partners, L.P., a Delaware
limited partnership, and Symphony Strategic Partners, LLC, a Delaware limited
liability company.
 

[ * ]  =   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.

18.

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

 

     “Tangible Materials” means any tangible technical, medical, regulatory or
marketing documentation, whether written or electronic, existing as of the
Closing Date or made by or on behalf of Symphony Allegro during the Term, that
(a) is Controlled by the Licensor and (b) embodies or relates solely to the
Regulatory Files (other than Drug Master Files), Exiting Products or the
Programs; provided, however, that Tangible Materials shall not include any
manufacturing-related documentation or any documentation related to Licensed
Intellectual Property.
     “Tax Amount” has the meaning set forth in Section 4.02 of the Holdings LLC
Agreement.
     “Technology License Agreement” means the Technology License Agreement,
dated as of the Closing Date, between Alexza and Holdings.
     “Term” has the meaning set forth in Section 4(b)(iii) of the Purchase
Option Agreement, unless otherwise stated in any Operative Document.
     “Territory” means the world.
     “Third Party IP” has the meaning set forth in Section 2.9 of the Novated
and Restated Technology License Agreement.
     “Third Party Licensor” means a third party from which Alexza has received a
license or sublicense to Licensed Intellectual Property.
     “Transaction Event” has the meaning set forth in Section 6.05 of the
Warrant Purchase Agreement.
     “Transfer” has for each Operative Document in which it appears the meaning
set forth in such Operative Document.
     “Transferee” has, for each Operative Document in which it appears, the
meaning set forth in such Operative Document.
     “Voluntary Bankruptcy” has the meaning set forth in Section 1.01 of the
Holdings LLC Agreement.
     “Warrant Closing” has the meaning set forth in Section 2.03 of the Warrant
Purchase Agreement.
     “Warrant Date” has the meaning set forth in Section 2.02 of the Warrant
Purchase Agreement.
     “Warrant Purchase Agreement” means the Warrant Purchase Agreement, dated as
of the Closing Date, between Alexza and Holdings.
     “Warrant Shares” has the meaning set forth in Section 2.01 of the Warrant
Purchase 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 24b-2 of the Securities Exchange Act of
1934, as amended.

19.

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

 

     “Warrant Surrender Price” has the meaning set forth in Section 7.08 of the
Warrant Purchase Agreement.
     “Warrants” has the meaning set forth in Section 2.01 of the Warrant
Purchase 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 24b-2 of the Securities Exchange Act of
1934, as amended.

20.

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

 

ANNEX B
SYMPHONY ALLEGRO, INC.
DEVELOPMENT COMMITTEE CHARTER
     Purpose
     The Development Committee (the “Development Committee”) is established by
Symphony Allegro, Inc. (“Symphony Allegro”) to oversee a clinical development
plan (the “Development Plan”) and a development budget (the “Development
Budget”) for the Programs (each as defined in that certain Novated and Restated
Technology License Agreement (“TLA”), dated as of December 1, 2006, among
Symphony Allegro, Alexza Pharmaceuticals, Inc. (“Alexza”) and Symphony Allegro
Holdings LLC (“Holdings”, and together with Alexza, the “Parties” and each a
“Party”), and to develop and commercialize the AZ-002 Product and the AZ-004
Product (each as defined in the TLA). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in Annex A to the
Amended and Restated Research and Development Agreement, dated as of December 1,
2006, among Symphony Allegro, Holdings and Alexza.
     Composition
     1. The Development Committee shall initially have six (6) members, and
shall at all times have an even number of members and consist of an equal number
of members designated by each Party (the “Development Committee Members”). Each
Party may bring additional employees or representatives to each meeting as
non-voting observers, but only if such employees or representatives are bound by
confidentiality obligations at least as stringent as those described in the
Confidentiality Agreement. The size and composition of the Development Committee
provided herein may not be changed without the consent of both Holdings and
Alexza.
     2. One-half (1/2) of the Development Committee Members shall be designated
by Alexza and one-half (1/2) shall be designated by Holdings.
     3. Each Development Committee Member shall have the requisite background,
experience and training to carry out the duties and obligations of the
Development Committee. Development Committee Members need not be directors of
Symphony Allegro, Holdings or Alexza.
     4. The chair of the Development Committee shall be, initially, James V.
Cassella, Ph.D., the Senior Vice President, Research and Development, of Alexza,
and any succeeding chair shall be such person as may be appointed to the
position of Senior Vice President, Research and Development, of Alexza (or an
equivalent successor position) (the “Chair”). If Alexza wishes to appoint a
Chair other than the then-current Senior Vice President, Research and
Development, of Alexza (or the holder of an equivalent successor position), then
such appointment shall require the consent of the Symphony Allegro Board;
provided, that (x) if the
 

[ * ]  =   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.

Annex B-1

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

 

Symphony Allegro Board shall have less than five (5) members, the unanimous
consent of all the members of the Symphony Allegro Board shall be required, or
(y) if the Symphony Allegro Board shall have five (5) members, an affirmative
vote of at least three-fifths (3/5ths) of the members of the Symphony Allegro
Board shall be required.
     5. By written notice to Alexza, Holdings may remove or replace one or more
Development Committee Members designated by Holdings. By written notice to
Holdings, Alexza may remove or replace one or more Development Committee Members
designated by Alexza.
     Operations
     6. The Development Committee shall meet once per month during the Term,
unless and until the Development Committee determines that such meetings should
occur once per quarter (in either case, each a “Scheduled Meeting”). Scheduled
Meetings may be held in person or by teleconference when appropriate. Each of
Holdings and Alexza shall be solely responsible for the costs associated with
its employees and/or representatives attending and participating in such
Scheduled Meetings. In addition, any two (2) Development Committee Members may
jointly call for an ad hoc meeting of the Development Committee to be held by
teleconference at any time during regular business hours, by giving the other
members of the Development Committee advance written notice of at least [ * ]
(each, an “Ad Hoc Meeting”). An Ad Hoc Meeting may be called to address any
time-sensitive matter, including additional expenditure requests pursuant to
Section 8.3 of the Amended and Restated Research and Development Agreement or
Section 2 of the RRD Services Agreement.
     7. The Chair shall, in consultation with other Development Committee
Members and the management of Symphony Allegro, develop and set the Development
Committee’s agenda for each Scheduled Meeting. The Chair shall include on such
agenda each item requested by a Development Committee member at least [ * ]
before the applicable Scheduled Meeting. The agenda and information concerning
the business to be conducted at each Scheduled Meeting shall be communicated in
writing to the Development Committee Members at least [ * ] in advance of such
Scheduled Meeting to permit meaningful review. Such an agenda shall not be
required for an Ad Hoc Meeting.
     8. Each Party’s Development Committee Members shall collectively have three
(3) votes, regardless of the number of its Development Committee Members
participating in any Scheduled Meeting or Ad Hoc Meeting. No votes shall be
taken unless there is at least one (1) Development Committee Member representing
each of Alexza and Holdings participating in such Scheduled Meeting or Ad Hoc
Meeting, as the case may be. Each Party may allocate its three (3) votes among
its attending Development Committee Members in any manner, at such Party’s
discretion. If only one (1) Development Committee Member is attending on behalf
of a given Party, such Development Committee Member may cast all the votes
allocated to such Party. Unless otherwise specified herein, all actions taken by
the Development Committee as a committee shall be by majority vote. If the
Development Committee Members reach a deadlock
 

[ * ]  =   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.

Annex B-2

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

 

on any vote, then such deadlock shall be resolved in accordance with
Paragraph 11 of this Development Committee Charter.
     9. Notwithstanding anything herein to the contrary, during the Term, this
Development Committee Charter may be amended only with the unanimous approval of
the Development Committee Members and the consent of the Symphony Allegro Board,
Holdings and Alexza.
     10. The Chair, or such person as the Chair may designate, shall prepare,
and distribute to all Development Committee Members, draft committee minutes
within a reasonable period of time following each Scheduled Meeting or Ad Hoc
Meeting. As part of the agenda of the first Scheduled Meeting, the Development
Committee Members shall agree upon a standard procedure for review and approval
of such draft committee minutes by the Development Committee Members.
     11. If the Development Committee is unable to decide by a majority vote on
any issue within the scope of its authority and duties, then the Development
Committee shall promptly raise such issue to the chief executive officer (or
equivalent officer) of Alexza and the chairman of the Symphony Allegro Board.
The chief executive officer and chairman shall have [ * ] to mutually agree on
how to resolve such issue. If such parties are unable to resolve such issue
within the [ * ] period, then such issue shall be brought to the Symphony
Allegro Board, and the Symphony Allegro Board shall promptly resolve such issue,
which resolution shall be binding on Holdings and Alexza.
     Authority and Duties
     12. The Development Committee shall, using the Initial Development Plan and
the Initial Development Budget as a basis, continue to develop and refine the
Development Plan and Development Budget, and shall, at the request of the
Symphony Allegro Board, submit each to the Symphony Allegro Board at the first
meeting of the Symphony Allegro Board, as provided in Section 4.1 of the Amended
and Restated Research and Development Agreement. Following the Symphony Allegro
Board’s review, the Development Committee shall work diligently to incorporate
the comments generated by such review in order to update the Development Plan
and Development Budget as soon as practicable and shall then submit the updated
Development Plan and Development Budget to the Symphony Allegro Board for
review. The Development Committee shall thereafter continue to develop and
refine the Development Plan and the Development Budget as needed, and shall
conduct a comprehensive review of each on a semi-annual basis. In addition, the
Development Committee shall decide on any other matters relating to the
Development Plan and the Development Budget that may arise, including (i)
responding to requests from RRD or Alexza for amendments to the Development Plan
and/or the Development Budget, and (ii) addressing all other matters that are
identified in the Operative Documents or the Symphony Allegro Charter as
requiring the approval of the Development Committee (including, but not limited
to, the approval of any new, or the amendment or termination of any existing,
Development Subcontracting Agreement). Unless otherwise approved pursuant to
Paragraph 11 hereof, or discontinued or modified pursuant to Sections 4.2(c) or
5.1 of the Amended and
 

[ * ]  =   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.

Annex B-3

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

 

Restated Research and Development Agreement, no material change to the
Development Plan or Development Budget will be adopted by Symphony Allegro
unless and until the Development Committee approves such change.
     13. The Development Committee shall report at least quarterly to the
Symphony Allegro Board regarding progress relative to the Development Plan and
the Development Budget, and any changes in the Development Plan and/or
Development Budget, and shall respond promptly to any reasonable requests for
additional information made by the Symphony Allegro Board. The Development
Committee shall also submit its material decisions regarding the Development
Plan and Development Budget to the Symphony Allegro Board, including regulatory
strategies and discontinuation or modification of the Programs.
     14. The Development Committee shall continuously evaluate the funding
requirements of the Programs, and may, in the event of a shortfall in the funds
allocated to one or more Programs, and subject to the approval of the Symphony
Allegro Board, reallocate funds within the Development Budget to compensate for
such shortfall.
     The foregoing list of duties is not exhaustive, and the Development
Committee may, in addition, perform such other functions as may be necessary or
appropriate for the performance of its duties and the furtherance of the
development of Programs, including as may be required under any Operative
Document. In no event shall the Development Committee have the power to amend
any of the Operative Documents. The Development Committee shall have the power
to delegate its authority and duties to sub-committees as it deems appropriate;
provided, however, that each such sub-committee shall have at least one
(1) Development Committee Member who is designated by Holdings and at least one
(1) Development Committee Member who is designated by Alexza.
 

[ * ]  =   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.

Annex B-4

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

 

ANNEX C
INITIAL DEVELOPMENT PLAN AND INITIAL DEVELOPMENT BUDGET
{See attached.}
[ * ]
 

[ * ]  =   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.

Annex C-1

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

 

ANNEX D
{Intentionally Omitted}
 

[ * ]  =   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.

Annex D-1

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

 

ANNEX E
PAYMENT TERMS
     1. With respect to the development activities and services provided by
Alexza pursuant to this Agreement, and in accordance with the terms of this
Agreement, the Development Plan and the Development Budget, Alexza will invoice
Symphony Allegro, and Symphony Allegro will pay Alexza, as follows:
          (a) fees for any development activities or services for which billings
and/or payment provisions are specified within other sections of this Agreement
shall be billed and paid in accordance with such sections of this Agreement,
          (b) an annual fee of [ * ], paid in equal monthly installments, for
activities and services to be provided by Alexza Key Personnel in connection
with preparation for, and attendance at, Development Committee meetings, and
other activities associated with the oversight and management of the development
activities by Alexza pursuant to this Agreement; provided however, that there
shall be no FTE allocation or reimbursement with respect to activities and
services provided by such Alexza Key Personnel, and
          (c) fees for any other development activities and services by
non-senior management Alexza personnel and out-of-pocket fees, associated
personnel costs, expenses and pass-through costs actually incurred by Alexza or
Alexza personnel in performing the development activities and services pursuant
to this Agreement, which fees, personnel costs, expenses and pass-through costs
have been estimated in the Development Budget, as such Development Budget may be
modified upon approval of the Development Committee, shall be invoiced by Alexza
to Symphony Allegro following the end of the month in which such development
activities and services were performed or such out-of-pocket fees, personnel
costs, expenses or pass-through costs incurred, and shall be paid by Symphony
Allegro within [ * ] of receipt of a valid invoice from Alexza, and
          (d) fees for any manufacturing-related activities shall be:
               (i) for Clinical Trial Material and devices produced in Design
Verification Testing (DVT), [ * ]; and
               (ii) for all other devices (including DVT and DCT production
runs), direct cost of all components plus FTE costs associated with such
manufacture, quality testing, etc.
     2. Alexza’s monthly invoices must include receipts, third party invoices or
other reasonable documentation for all fees, personnel costs, expenses and
pass-through costs of Alexza and Alexza personnel. Personnel costs in item 1(c)
shall be reimbursed at an annual fully burdened FTE rate of [ * ]. Alexza’s
invoices not in accordance with the requirements of this section may incur
delays in payment. Alexza shall not charge any administrative fees 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 24b-2 of the Securities Exchange Act of
1934, as amended.

Annex E-1

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

 

Symphony Allegro in connection with any fees, personnel costs (other than as set
forth in item 1(b) of this Annex E), expenses or pass-through costs.
     3. All fees, personnel costs, expenses and pass-through costs will be
payable in US Dollars. If Symphony Allegro disputes in good faith any portion of
an invoice, then Symphony Allegro shall pay the undisputed amounts as set forth
in the preceding sentence and the parties shall use good faith efforts to
reconcile the disputed amount as soon as practicable.
     4. Alexza will transmit invoices to Symphony Allegro at the following
address:
Symphony Allegro, Inc.
7361 Calhoun Place, Suite 325
Rockville, MD 20855
Attn: Accounts Payable
     5. All payments to Alexza shall be sent to Alexza, as follows:

     
If mailed:
  Alexza Pharmaceuticals, Inc.
 
  1020 East Meadow Circle
 
  Palo Alto, CA 94303
 
  Attn: Accounts Receivable

         
If wired:
  Name of bank:   [ * ]
 
  Bank number:   [ * ]
 
  Routing number:   [ * ]
 
  Alexza account number:   [ * ]
 
  Bank address:   [ * ]
 
      [ * ]
 
      [ * ]
 
      [ * ]

 

[ * ]  =   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.

Annex E-2

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

 

SCHEDULE 6.2
SUBCONTRACTING AGREEMENTS
1.                [ * ]
Development Agreement between Alexza and Autoliv ASP, Inc. dated October 3,
2005.
 

[ * ]  =   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.

 

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

 

SCHEDULE 6.5
ALEXZA KEY PERSONNEL
[ * ]
 

[ * ]  =   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.

 

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

 

SCHEDULE 12.1(f)
MATERIAL DISCLOSED CONTRACTS
Development Agreement between Alexza and Autoliv ASP, Inc. dated October 3,
2005.
 

[ * ]  =   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.