**Exhibit 10.26**[*] **=****Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.** **PURCHASE OPTION AGREEMENT****by and among****ALEXZA PHARMACEUTICALS, INC.,****SYMPHONY ALLEGRO HOLDINGS LLC****and****SYMPHONY ALLEGRO, INC.** **Dated as of December 1, 2006**  
 

 
**TABLE OF CONTENTS**           **Page**Section 1. Grant of Purchase Option  2        Section 2. Exercise of Purchase Option  3        Section 2A. Change of Control Put Option; Obligations  7        Section 2B. Related Product Payments  8        Section 3. Alexza Representations, Warranties and Covenants  9        Section 4. Holdings Representations, Warranties and Covenants  12        Section 5. Symphony Allegro Representations, Warranties and Covenants  15        Section 6. Notice of Material Event  24        Section 7. Assignment; Transfers; Legend  24        Section 8. Costs and Expenses; Payments  25        Section 9. Expiration; Termination of Agreement  25        Section 10. Survival; Indemnification  26        Section 11. No Petition  29        Section 12. Third-Party Beneficiary  29        Section 13. Notices  29        Section 14. Governing Law; Consent to Jurisdiction and Service of Process  30        Section 15. WAIVER OF JURY TRIAL  31        Section 16. Entire Agreement  31        Section 17. Amendment; Successors; Counterparts  31        Section 18. Specific Performance  32        Section 19. Severability  32        Section 20. Tax Reporting  32  [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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       Annex A Certain Definitions           Exhibit 1 Purchase Exercise Notice    Exhibit 2 Form of Opinion of Cooley Godward Kronish LLP     [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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**PURCHASE OPTION AGREEMENT**     This PURCHASE OPTION AGREEMENT (this “Agreement”) is entered into as of December 1,2006 (the “Closing Date”), by and among ALEXZA PHARMACEUTICALS, INC., a Delawarecorporation (“Alexza”), SYMPHONY ALLEGRO HOLDINGS LLC, a Delaware limited liability company(“Holdings”), and SYMPHONY ALLEGRO, INC., a Delaware corporation (“SymphonyAllegro”). Capitalized terms used herein and not defined herein shall have the meaningsassigned to such terms in Annex A attached hereto.**PRELIMINARY STATEMENT**     WHEREAS, Alexza and Holdings have entered into a Technology License Agreement pursuant towhich Alexza has granted Holdings an exclusive license (the “License”) to the use ofcertain intellectual property related to the Programs owned or controlled by Alexza;     WHEREAS, contemporaneously with the execution of this Agreement, Alexza, Holdings and SymphonyAllegro are entering into a Novated and Restated Technology License Agreement, pursuant to which,among other things, Holdings will assign by way of novation the License to Symphony Allegro;     WHEREAS, Alexza and Holdings have entered into a Research and Development Agreement pursuantto which Alexza has agreed, among other things, to perform, on behalf of Holdings, research anddevelopment of the Programs;     WHEREAS, contemporaneously with the execution of this Agreement, Alexza, Holdings and SymphonyAllegro are entering into an Amended and Restated Research and Development Agreement, pursuant towhich, among other things, Holdings will assign its rights and obligations under the Research andDevelopment Agreement to Symphony Allegro;     WHEREAS, contemporaneously with the execution of this Agreement, in order to fund suchresearch and development, institutional investors are committing to invest $50,000,000 in Holdings(the “Financing”) in exchange for membership interests in Holdings and for warrants (the“Warrants”) to purchase up to a total of 2 million shares of Alexza Common Stock, to beinitially issued to Holdings, and Holdings will agree to contribute the proceeds of the Financingto Symphony Allegro;     WHEREAS, Holdings desires, in consideration for the Warrants, to grant Alexza an option topurchase all of the Common Stock of Symphony Allegro and any other Equity Securities issued bySymphony Allegro (together, the “Symphony Allegro Equity Securities”) owned, or hereinafteracquired, by Holdings on the terms described in this Agreement; and     WHEREAS, Symphony Allegro and Holdings have determined that it is in each of its best interestto perform and comply with certain agreements and covenants relating to each of its ongoingoperations contained in 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
 

 
     NOW, THEREFORE, in consideration of the foregoing and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto(the “Parties”) agree as follows:          Section 1. Grant of Purchase Option               (a) Holdings hereby grants to Alexza an exclusive option (the “Purchase Option”) topurchase all, but not less than all, of the outstanding Symphony Allegro Equity Securities owned orhereinafter acquired by Holdings, in accordance with the terms of this Agreement.               (b) Symphony Allegro hereby covenants and agrees that all Symphony Allegro Equity Securitiesissued by Symphony Allegro at any time prior to the expiration of the Term (including to Holdingson, prior to, or after the date hereof or to any other Person at any time whatsoever, in all casesprior to the expiration of the Term) shall be subject to a purchase option on the same terms as thePurchase Option (except as provided by the immediately following sentence) and all of the otherterms and conditions of this Agreement without any additional action on the part of Alexza orHoldings. Further, to the extent Symphony Allegro shall issue any Symphony Allegro EquitySecurities (including any issuance in respect of a transfer of Symphony Allegro Equity Securitiesby any holder thereof, including Holdings) after the date hereof to any Person (including Holdings)(any issuance of such Symphony Allegro Equity Securities being subject to the prior written consentof Alexza as set forth in Sections 5(c) and 7(b) hereof, as applicable), SymphonyAllegro hereby covenants and agrees that it shall cause such Symphony Allegro Equity Securities tobe subject to the Purchase Option without the payment of, or any obligation to pay, any additionalconsideration in respect of such Symphony Allegro Equity Securities by Alexza, Symphony Allegro orany Symphony Allegro Subsidiary to the Person(s) acquiring such subsequently issued SymphonyAllegro Equity Securities, the Parties acknowledging and agreeing that the sole considerationpayable by Alexza pursuant to this Agreement for all of the outstanding Symphony Allegro EquitySecurities now or hereinafter owned by any Person shall be the Purchase Price (as defined inSection 2(b) hereof).               (c) Alexza’s right to exercise the Purchase Option granted hereby is subject to the followingconditions:                    (i) The Purchase Option may only be exercised for the purchase of all, and not less than all,of the Symphony Allegro Equity Securities;                    (ii) The Purchase Option may only be exercised a single time;                    (iii) Except as expressly provided in Sections 1(c)(iv) and (v), the PurchaseOption may be exercised only during the period (the “Purchase Option Period”) commencing onand including December 1, 2007 (the “Purchase Option Commencement Date”) and ending on and including the earlier of (x) December 1, 2010(the “Final Termination Date”), and (y) the [ * ] calendar day (such **[ * ]**calendar day,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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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“Funds Termination Date”) immediately following the first date (each, a “BalanceSheet Deficiency Date”) on which a notice of an impending Funds Termination Date (a “FundsTermination Notice”) is delivered to Alexza by Holdings or Symphony Allegro in accordance withSection 13 hereof, accompanied by an internally prepared, unaudited, balance sheet ofSymphony Allegro (prepared in accordance with GAAP) stating that the working capital of SymphonyAllegro is less than the Balance Sheet Deficiency Threshold at such time (any such event, a“Balance Sheet Deficiency”);                    (iv) In the event that Alexza has agreed to share the costs of additional research pursuant tothe Research Cost Sharing and Extension Agreement, the Purchase Option Period shall be determinedin accordance with the Research Cost Sharing and Extension Agreement (for the avoidance of doubt,amounts transferred by Alexza pursuant to the Research Cost Sharing and Extension Agreement shallnot be included in any calculation of the Purchase Price hereunder); and                    (v) In the event that Symphony Allegro terminates the Amended and Restated Research andDevelopment Agreement pursuant to Section 17.2 thereof, Alexza shall have **[ * ]**to notifyHoldings of its exercise of the Purchase Option under the terms of this Agreement. Such exerciseof the Purchase Option by Alexza may occur prior to the Purchase Option Commencement Date (an“Early Purchase Option Exercise”).          Section 2. Exercise of Purchase Option               (a) Exercise Notice. Alexza may exercise the Purchase Option only by delivery of anotice in the form attached hereto as Exhibit 1 (the “Purchase Option ExerciseNotice”) during the Purchase Option Period. The Purchase Option Exercise Notice shall bedelivered on a Business Day to Holdings and Symphony Allegro and shall be irrevocable oncedelivered. The date on which the Purchase Option Exercise Notice is first delivered to Holdingsand Symphony Allegro is referred to as the “Purchase Option Exercise Date.” The PurchaseOption Exercise Notice shall contain (1) an estimated date for the settlement of the PurchaseOption (the “Purchase Option Closing”), which date shall be estimated in accordance withthis Section 2(a), (2) the Purchase Price, determined in accordance with Section2(b) hereof, and (3) if Alexza intends to pay part of the Purchase Price in Alexza CommonStock, notice of such intent, the number of shares to be transferred at such purchase price, thevaluation thereof and the percentage such portion bears to (A) the Purchase Price, and (B) thetotal amount of Alexza Common Stock then issued and outstanding (which shall be no greaterpercentages than are permitted under Section 2(c)). Such notice and election shall beirrevocable once delivered. If, during the period following the delivery of the Purchase OptionExercise Notice, the working capital held by Symphony Allegro is less than or equal to the BalanceSheet Deficiency Threshold, then Symphony Allegro shall cease payment of any amounts owed to Alexzain respect of its activities pursuant to theAmended and Restated Research and Development Agreement, but shall continue to pay amountsowed to all other Persons. All cash and cash equivalents on Symphony Allegro’s balance sheet onthe date of the Purchase Option Closing (the “Purchase Option [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Closing Date”) are to remainwith Symphony Allegro. The Purchase Option Closing Date shall be determined as follows:                    (i) If Alexza elects to pay the entire Purchase Price in cash, the Purchase Option ClosingDate shall be the date that is the later of: (A) **[ * ]**following the Purchase Option ExerciseDate; and (B) **[ * ]**following the date that Alexza receives all necessary Government Approvalsrelated to its HSR Filings; provided, however that unless Holdings receives fromAlexza an opinion from nationally recognized anti-trust counsel (which opinion is acceptable inform and substance to Holdings) to the effect that no HSR Filings are required, Alexza and Holdingsshall make all necessary HSR Filings within **[ * ]**following the Purchase Option Exercise Date andshall promptly and diligently pursue the related regulatory process, including without limitation,responding to any second request from the Federal Trade Commission or the Department of Justice, asapplicable; and provided, further that (1) if there is no second request from theFederal Trade Commission or the Department of Justice, as applicable, with respect to Alexza’s orHoldings’ HSR Filings, then in no event shall the Purchase Option Closing Date be more than **[ * ]**following the Purchase Option Exercise Date, and (2) if there is a second request from the FederalTrade Commission or the Department of Justice, as applicable, with respect to Alexza’s or Holdings’HSR Filings, then in no event shall the Purchase Option Closing Date be more than **[ * ]**followingthe date upon which the later of Alexza or Holdings delivers documents pursuant to such secondrequest. If Alexza shall fail to make such cash payment on the Purchase Option Closing Date withinthe applicable time period set forth above, then in addition to any other rights that Holdingsshall have hereunder, this Agreement shall terminate and Alexza shall relinquish all rightshereunder to purchase the Symphony Allegro Equity Securities; or                    (ii) If Alexza elects to pay a portion of the Purchase Price in Alexza Common Stock (subjectto the limitations set forth herein and in the Registration Rights Agreement), the Purchase OptionClosing Date shall be the date that is the later of:               (A) **[ * ]**following the Purchase Option Exercise Date;               (B) **[ * ]**following the Effective Registration Date of such Alexza Common Stock;provided, that Alexza shall file the Registration Statement contemplated bySection 3(b)(i) within (x) **[ * ]**after the Purchase Option Exercise Date if Alexzais eligible to use Form S-3 under the Securities Act (or any successor form), or (y) **[ * ]**after the Purchase Option Exercise Date if Alexza is not eligible to use Form S-3 under theSecurities Act (or any successor form); and               (C) **[ * ]**following the date that Alexza receives the necessary Government Approvalsrelated to its HSR Filings (if any) related tothe exercise of the Purchase Option; provided, however, that Alexzaand Holdings shall make all necessary HSR Filings within **[ * ]**following the PurchaseOption [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Exercise Date and shall promptly and diligently pursue the related regulatoryprocess consistent with the provisos in clause (i) above;provided, further, that Alexza shall use commercially reasonable efforts to havesuch Registration Statement declared effective by the SEC as promptly as possible following thefiling of the Registration Statement. Alexza shall use commercially reasonable efforts to maintainthe effectiveness of any such Registration Statement for a period of two (2) years following theSEC’s declaration. In the event that such Registration Statement is not declared effective within**[ * ]**of the Purchase Option Exercise Date, Alexza shall immediately pay the full Purchase Price incash with such Purchase Price determination based on the Purchase Price effective in the applicablequarter in which such immediate cash payment is required to be made by Alexza (in which event thePurchase Option Closing Date shall be the date upon which such cash payment is made by Alexza). IfAlexza shall fail to make such immediate cash payment, then in addition to any other rights orremedies that Holdings shall have arising from such breach, this Agreement shall terminate andAlexza shall relinquish all rights hereunder to purchase the Symphony Allegro Equity Securities.               (b) Purchase Price Upon Option Exercise. Upon exercise of the Purchase Option and ascomplete and full consideration for the sale to Alexza by Holdings of its Symphony Allegro EquitySecurities (and for the Symphony Allegro Equity Securities of any other Person), Alexza shall paythe “Quarterly Price” set forth on Schedule I hereto for the applicable quarterfollowing the Closing Date in which the Purchase Option Closing Date actually occurs, **[ * ]**, (ii)any amount paid by Alexza for the Symphony Allegro Equity Securities of any other Person and (iii)**[ * ]**. In the event of the Early Purchase Option Exercise, pursuant to Section 1(c)(v)hereof, the “Purchase Price” shall be an amount equal to the amount set forth on Schedule Iapplicable to the Quarterly Price for the 5th Quarter, **[ * ]**; (B) any amount paid by Alexza for theSymphony Allegro Equity Securities of any other Person; **[ * ]**.               (c) Form of Payment. Subject to Sections 2(a) and 2(e), the PurchasePrice may be paid in cash or in a combination of cash and Alexza Common Stock, at the solediscretion of Alexza; provided, that in no event may the value of Alexza Common Stock(determined in accordance with Section 2(e) hereof) delivered in connection with theexercise of the Purchase Option constitute more than either (x) **[ * ]**of the total consideration tobe tendered for payment of the Purchase Option Exercise Price, calculated using the Alexza CommonStock Valuation (as defined herein) procedure, or (y) **[ * ]**of all the Alexza Common Stock issuedand outstanding immediately preceding the Purchase Option Closing Date.               (d) Surrender of Symphony Allegro Equity Securities; Symphony Allegro Board. Subjectto the terms and conditions of this Agreement, on the Purchase Option Closing Date, Holdings shallsurrender to Alexza its certificates representing its Symphony Allegro Equity Securities, and shallconvey good title to such Symphony Allegro Equity Securities, free from any Encumbrances and fromany and allrestrictions that any sale, assignment or other transfer of such Symphony Allegro EquitySecurities be consented to or approved by any Person. On or prior to the Purchase [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Option ClosingDate, Holdings shall remove all directors serving on the Symphony Allegro Board, other than theAlexza Director (as defined in Section 4(b)(iv) hereof), as of the Purchase Option ClosingDate. Furthermore, Holdings shall use commercially reasonable efforts to deliver to Alexza,promptly after the Purchase Option Closing Date, any certificates representing Symphony AllegroEquity Securities which were not surrendered to Alexza on the Purchase Option Closing Date.               (e) Valuation of Alexza Stock. In the event that Alexza elects to pay part of thePurchase Price through the delivery to Holdings of Alexza Common Stock, the value per share thereof(the “Alexza Common Stock Valuation”) shall equal the average closing price of AlexzaCommon Stock, as reported by the NASDAQ Global Market, or other national exchange that is theprimary exchange on which Alexza Common Stock is listed, for the **[ * ]**immediately preceding (butnot including) the second trading day prior to the Purchase Option Exercise Date. If Alexza CommonStock is not traded on a national exchange or the NASDAQ Global Market, then Alexza shall beobligated to pay the Purchase Price solely in cash on the Purchase Option Closing Date. Alexzashall calculate the Alexza Common Stock Valuation in accordance with this Section 2(e),subject to review and confirmation by Holdings.               (f) Government Approvals. On or prior to the Purchase Option Closing Date, each ofAlexza, Symphony Allegro and Holdings shall have taken all necessary action to cause allGovernmental Approvals with respect to such Party (including, without limitation, the preparing andfiling of any pre-merger notification and report forms required under the HSR Filings required tobe in effect in connection with the transactions contemplated by this Agreement to be in effect;provided, however, that with respect to Government Approvals required by aGovernmental Authority other than the United States federal government and its various branches andagencies, the Parties’ obligations under this Section 2(f) shall be limited to causing tobe in effect only those Government Approvals, the failure of which to be in effect would, eitherindividually or in the aggregate, reasonably be expected to have a Material Adverse Effect on anyof the Parties. Each of Symphony Allegro and Alexza shall pay its own costs associated with takingsuch action. Symphony Allegro shall pay any costs of Holdings associated with obtaining GovernmentApprovals required in connection with the exercise of the Purchase Option. All other costs andexpenses of Holdings shall be paid by Holdings pursuant to Section 8(b) hereof, includingany costs arising from any error in Holdings’ initial valuation of its investment in SymphonyAllegro.               (g) Transfer of Title. Transfer of title to Alexza of all of the Symphony AllegroEquity Securities shall be deemed to occur automatically on the Purchase Option Closing Date,subject to the payment by Alexza on such date of the Purchase Price and its performance of itsother obligations herein required to be performed under Sections 2(e) and (f), andunder the Registration Rights Agreement, as applicable, on or prior to the Purchase Option ClosingDate to the reasonable satisfaction of Holdings, and thereafter Symphony Allegro shall treat Alexzaas the sole holder of allSymphony Allegro Equity Securities, notwithstanding the failure of Holdings to tendercertificates representing such shares to Alexza in accordance with Section 2(d) hereof. [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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After the Purchase Option Closing Date, Holdings shall have no rights in connection with suchSymphony Allegro Equity Securities other than the right to receive the Purchase Price;provided, however, that nothing in this Section 2(g) shall affect thesurvivability of any indemnification provision in this Agreement upon termination of thisAgreement.               (h) Consents and Authorizations. On or prior to the Purchase Option Closing Date,Alexza shall have obtained all consents and authorizations necessary from stockholders and/or itsboard of directors for the consummation of the exercise and closing of the Purchase Option, as maybe required under the organizational documents of Alexza, any prior stockholders or boardresolution, any stock exchange or similar rules or any applicable law; provided,however, that with respect to consents or authorizations required by a GovernmentalAuthority other than the United States federal government and its various branches and agencies,the Parties’ obligations under this Section 2(h) shall be limited to obtaining only thoseconsents and authorizations, the failure of which to be obtained would, either individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect on any of the Parties.          Section 2A. Change of Control Put Option; Obligations               (i) Holdings has an exclusive option (the “Change of Control Put Option”) to put 100%of the Symphony Allegro Equity Securities to Alexza, an acquiror or the Surviving Entity, asapplicable, which may be exercised if, following a Change of Control with respect to Alexza, theSurviving Entity breaches a material obligation of any Operative Document or any other documentdelivered by the Surviving Entity in connection with such Change of Control and such breachcontinues unremedied for a period of **[ * ]**after Holdings has delivered written notice thereof tosuch successor entity. Alexza shall, and if and as applicable, cause the Surviving Entity to, (i)subject to the terms of the Confidentiality Agreement and any confidentiality agreement enteredinto in connection with a Change of Control, provide notice to Holdings of a Change of Control noless than **[ * ]**prior to the execution of a definitive agreement committing Alexza to a Change ofControl, (ii) subject to the terms of the Confidentiality Agreement and any confidentialityagreement entered into in connection with a Change of Control, use commercially reasonable effortsto provide Holdings reasonable access to the senior executive officers, as available, who haveresponsibility for commercial or research and development activities of the acquiror or theSurviving Entity, as applicable, prior to the Change of Control to discuss in good faith andreasonable detail the Surviving Entity’s ongoing operations, (iii) execute and deliver to SymphonyAllegro and Holdings instruments, in form and substance reasonably acceptable to Symphony Allegroand Holdings, whereby the Surviving Entity expressly assumes all of the obligations of Alexzahereunder and under each other Operative Document to which Alexza is a party, (iv) provide toSymphony Allegro and Holdings an opinion of nationally recognized outside counsel (in customaryform and subject to customary assumptions andqualifications) to the effect that (A) the instruments referred to in clause (iii)above are valid and binding obligations of such Surviving Entity, enforceable in accordance withtheir terms, except as the same may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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generallyor general equitable principles regardless of whether such enforceability is considered in aproceeding at law or in equity, and (B) such Change of Control does not violate any material termof the Operative Documents, and (v) ensure that all material applications and filings have beenmade to, and all material consents have been received from, the FDA, and any applicable foreignequivalent thereof, necessary for the Surviving Entity to satisfy all of its material obligationsunder the Operative Documents, except to the extent that failure to make such applications orfilings or receive such consents would not reasonably be expected to have a material adverse effecton the Programs or Symphony Allegro’s rights under the Operative Documents.               (j) Holdings may exercise the Change of Control Put Option only by delivery of written notice(the “Change of Control Put Option Exercise Notice”) during the Purchase Option Period.The Change of Control Put Option Exercise Notice shall be delivered on a Business Day to thesuccessor entity to Alexza and Symphony Allegro, and shall thereafter be deemed for all purposesunder the terms of this Agreement to be a Purchase Option Exercise Notice by Alexza (in accordancewith the provisions of Section 2 hereof) as of the date such notice is delivered (such dateto be deemed for all purposes under the terms of this Agreement as the Purchase Option ExerciseDate). The Purchase Price with respect to such an exercise of the Change of Control Put Optionshall be the Purchase Price otherwise applicable (under Section 2(b) hereof) to thePurchase Option Closing Date selected by Alexza following Alexza’s receipt of the Change of ControlPut Option Exercise Notice. In the event Holdings exercises the Change of Control Put Option andsuch sale is consummated, Holdings shall have no further rights or claims against the successorentity in respect of such breach; provided, that notwithstanding the foregoing, Holdingsshall maintain and does not release any rights or claims against the Surviving Entity that areunrelated to such breach, including rights or claims whereby Holdings is otherwise entitled toreimbursement or indemnification under any of the Operative Documents or any other documentdelivered by the Surviving Entity in connection with such Change of Control.          Section 2B. Related Product Payments               (a) AZ-004 Related Products. If Alexza does not exercise the Purchase Option prior to its expiration or terminationunder the terms of this Agreement and (i) Alexza enters into any agreement or arrangement with anythird party with respect to the development and/or commercialization of an AZ-004 Related Product(defined below) (an “AZ-004 Related Product Agreement”), and (ii) if the AZ-004 Program hasnot been discontinued and (iii) if the AZ-004 Related Product has commenced IND-Enabling GLPInhalation Toxicology Studies for the same, or substantially the same, indication or indicationsthat are being pursued at such time for AZ-004: then, Alexza shall be obligated to make thefollowing payments to Symphony Allegro: (x) on the date of the expiration or termination of thePurchase Option (“Termination Date”), an amount equal to 50% of any upfront, milestone,royalty, profit sharing, or similar payments received 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Alexza under any such AZ-004 RelatedProduct Agreement prior to the Termination Date and (y) at any time and from time to timethereafter, an amount equal to 50% of any upfront, milestone, royalty, profit sharing or similarpayments received by Alexza under any such AZ-004 Related Product Agreement within ten (10)Business Days of receipt by Alexza of such payment. For the purposes of this Section 2B,“AZ-004 Related Product” means a therapeutic product comprised of an active ingredientwhich is an antipsychotic drug, other than prochlorperazine ,(typical or atypical) delivered bymeans of the Staccato Technology.               (b) AZ-002 Related Products. If Alexza does not exercise the Purchase Option prior to its expiration or terminationunder the terms of this Agreement and (i) Alexza enters into any agreement or arrangement with anythird party with respect to the development and/or commercialization of an AZ-002 Related Product(defined below) (an “AZ-002 Related Product Agreement”), and (ii) if the AZ-002 Program hasnot been discontinued and (iii) if the AZ-002 Related Product has commenced IND-Enabling GLPInhalation Toxicology Studies for the same, or substantially the same, indication or indicationsthat are being pursued at such time for AZ-002: then, Alexza shall be obligated to make thefollowing payments to Symphony Allegro: (x) on the Termination Date, an amount equal to 50% of anyupfront, milestone, royalty, profit sharing or similar payments received by Alexza under any suchAZ-002 Related Product Agreement prior to the Termination Date and (y) at any time and from time totime thereafter, an amount equal to 50% of any upfront, milestone, royalty, profit sharing orsimilar payments received by Alexza under any such AZ-002 Related Product Agreement within ten (10)Business Days of receipt by Alexza of such payment. For purposes of this Section 2B,“AZ-002 Related Product” means a therapeutic product comprised of an active ingredientwhich is a benzodiazepine delivered by means of the Staccato Technology.               (c) The aggregate of all payments pursuant to this Section 2B is not to exceed theQuarterly Price in effect during the 16th quarter following the Closing Date as set forth onSchedule 1.          Section 3. Alexza Representations, Warranties and Covenants               (a) As of the date hereof, Alexza hereby represents and warrants, and, except to the extentthat any of the following representations and warranties are limited to the date of this Agreementor otherwise limited, on the Purchase Option Closing Date, shall be deemed to have represented andwarranted, to Holdings and Symphony Allegro that:                    (i) Organization. Alexza is a corporation, duly organized, validly existing and ingood standing under the laws of the State of Delaware.                    (ii) Authority and Validity. Alexza has all requisite corporate power and authorityto execute, deliver and perform its obligations under this Agreement and to consummate thetransactions contemplated hereby. The execution, delivery and performance by Alexza of thisAgreement and the consummation of the transactions contemplated hereby have been duly and validlyauthorized by all necessary action required on the part of Alexza, and no other proceedings on thepart of Alexza are necessary to authorize this Agreement or for Alexza to perform its obligationsunder this [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Agreement. This Agreement constitutes the lawful, valid and legally binding obligationof Alexza, enforceable in accordance with its terms, except as the same may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting theenforcement of creditors’ rights generally and general equitable principles regardless of whethersuch enforceability is considered in a proceeding at law or in equity.                    (iii) No Violation or Conflict. The execution, delivery and performance of thisAgreement and the transactions contemplated hereby do not (A) violate, conflict with or result inthe breach of any provision of the Organizational Documents of Alexza, (B) as of the date of thisAgreement, and as of the Purchase Option Closing Date if Alexza elects to pay part of the PurchasePrice through the delivery of Alexza Common Stock (a “Partial Stock Payment”), conflictwith or violate any law or Governmental Order applicable to Alexza or any of its assets, propertiesor businesses, or (C) conflict with, result in any breach of, constitute a default (or event thatwith the giving of notice or lapse of time, or both, would become a default) under, require anyconsent 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 orproperties 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 aparty except, in the case of clauses (B) and (C), to the extent that suchconflicts, breaches, defaults or other matters would not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect on Alexza.                    (iv) Governmental Consents and Approvals. Other than any HSR Filings which, if thePurchase Option is exercised by Alexza and if such HSR Filings are required pursuant to Section2(a)(i) hereof, will be obtained on or prior to the Purchase Option Closing Date, theexecution, delivery and performance of this Agreement by Alexza do not, and the consummation of thetransactions contemplated hereby do not and will not, require any Governmental Approval which hasnot alreadybeen 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 aMaterial Adverse Effect on Alexza.                    (v) Litigation. As of (A) the date of this Agreement, except as disclosed in anyAlexza Public Filings available as of the date hereof, and (B) the Purchase Option Closing Date ifAlexza elects to make a Partial Stock Payment, there are no actions by or against Alexza pendingbefore any Governmental Authority or, to the knowledge of Alexza, threatened to be brought by orbefore any Governmental Authority, that would, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect on Alexza. There are no pending or, to the knowledge ofAlexza, threatened actions, to which Alexza is a party (or is threatened to be named as a party) toset aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement orthe Operative Documents or the consummation of the transactions contemplated hereby or thereby byany party hereto or thereto. As of the date of this [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Agreement, and as of the Purchase OptionClosing Date if Alexza elects to make a Partial Stock Payment, Alexza is not subject to anyGovernmental Order (nor, to the knowledge of Alexza, is there any such Governmental Orderthreatened to be imposed by any Governmental Authority) that would, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect on Alexza.               (b) Alexza hereby covenants and agrees with Holdings as follows:                    (i) Immediately prior to the Purchase Option Closing Date, Alexza shall have sufficientamounts of cash and, if applicable, sufficient authorized but unissued, freely transferable andnonassessable Alexza Common Stock available, to satisfy the portion of the Purchase Price to bepaid in cash or Alexza Common Stock pursuant to Sections 2(b) and 2(c);provided, that if the Purchase Option Closing Date does not occur within (A) **[ * ]**if noHSR Filings are required or (B) **[ * ]**if HSR Filings are required, in each case following thePurchase Option Exercise Date and pursuant to Section 2(a) hereof, Alexza shall provideHoldings with evidence of firm commitments from third parties with the wherewithal to pay, or otherguaranty of payment, which is reasonably acceptable to Holdings, for that portion of the PurchasePrice to be paid in cash. In the event that Alexza elects to satisfy any portion of the PurchasePrice in Alexza Common Stock (A) Alexza shall have, not later than the Purchase Option ClosingDate, a Registration Statement declared effective by the Securities and Exchange Commission for theresale of any such shares of Alexza Common Stock to be delivered in partial satisfaction of thePurchase Price, accompanied by evidence reasonably acceptable to Holdings that such Alexza CommonStock has been approved for listing on the NASDAQ Global Market or such other national market onwhich the Alexza Common Stock is then listed, and (B) Alexza shall deliver to Holdings on or beforethe Purchase Option Closing Date, a legal opinion from Cooley Godward Kronish LLP, counsel toAlexza, or such other counsel as Alexza and Holdings shall mutually agree, which opinion shall be,in form and substance, reasonably acceptable to Holdings and shall contain, with respect to theAlexza Common Stock to be used aspartial payment of the Purchase Price, substantially the same opinions rendered by counsel toAlexza in paragraphs 5, 7 and 8 of the opinion delivered to Holdings on the Closing Date, alongwith customary assumptions and limitations.                    (ii) If Alexza elects to satisfy any portion of the Purchase Price in Alexza Common Stock,Alexza, on the Purchase Option Closing Date, shall convey good and marketable title to such AlexzaCommon Stock, free from any Encumbrances and any and all other restrictions that any issuance,sale, assignment or other transfer of such Alexza Common Stock be consented to or approved by anyPerson.                    (iii) Upon the expiration of the Purchase Option or the termination of this Agreement pursuantto Section 9 hereof, or as soon thereafter as is practical, Alexza shall (A) in accordancewith and pursuant to Sections 2.7 and 2.8 of the Novated and Restated TechnologyLicense Agreement, deliver to Symphony Allegro all Regulatory Files and Tangible Materials, and (B)in accordance with and pursuant 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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Section 2.11 of the Novated and Restated TechnologyLicense Agreement, provide and supply, or cause to be provided and supplied, finished dosage formof Products.                    (iv) In the event that Alexza exercises the Purchase Option, then Alexza shall maintain theseparate corporate existence of Symphony Allegro for a minimum of one (1) year following suchexercise, unless such maintenance would have a Material Adverse Effect on Alexza or any of itsAffiliates.          Section 4. Holdings Representations, Warranties and Covenants               (a) As of the date hereof, Holdings hereby represents and warrants, and, except to the extentthat any of the following representations and warranties are limited to the date of this Agreementor otherwise limited, on the Purchase Option Closing Date, shall be deemed to have represented andwarranted, to Alexza and Symphony Allegro that:                    (i) Organization. Holdings is a limited liability company, duly formed, validlyexisting and in good standing under the laws of the State of Delaware.                    (ii) Authority and Validity. Holdings has all requisite limited liability companypower and authority to execute, deliver and perform its obligations under this Agreement and toconsummate the transactions contemplated hereby. The execution, delivery and performance byHoldings of this Agreement and the consummation of the transactions contemplated hereby have beenduly and validly authorized by all necessary action required on the part of Holdings, and no otherproceedings on the part of Holdings are necessary to authorize this Agreement or for Holdings toperform its obligations under this Agreement. This Agreement constitutes the lawful, valid andlegally binding obligation of Holdings, enforceable in accordance with its terms, except as thesame may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting the enforcement of creditors’ rightsgenerally and general equitable principles regardless of whether such enforceability is consideredin a proceeding at law or in equity.                    (iii) No Violation or Conflict. The execution, delivery and performance of thisAgreement and the transactions contemplated hereby do not (A) violate, conflict with or result inthe breach of any provision of the Organizational Documents of Holdings, (B) as of the date of thisAgreement, conflict with or violate any law or Governmental Order applicable to Holdings or any ofits assets, properties or businesses, or (C) as of the date of this Agreement, conflict with,result in any breach of, constitute a default (or event that with the giving of notice or lapse oftime, or both, would become a default) under, require any consent under, or give to others anyrights of termination, amendment, acceleration, suspension, revocation or cancellation of, orresult in the creation of any Encumbrance on any of the assets or properties of Holdings, pursuantto, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit,franchise or other instrument or arrangement to which Holdings is a party except, in the case ofclauses (B) and (C), to the extent that such conflicts, breaches, [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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defaults or othermatters would not, individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect on Holdings.                    (iv) Governmental Consents and Approvals. The execution, delivery and performance ofthis Agreement by Holdings do not, and the consummation of the transactions contemplated hereby donot and will not, require any Governmental Approval which has not already been obtained, effectedor 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 onHoldings.                    (v) Litigation. As of the date of this Agreement, there are no actions by or againstHoldings pending before any Governmental Authority or, to the knowledge of Holdings, threatened tobe brought by or before any Governmental Authority, that would, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect on Holdings. There are no pending or, tothe knowledge of Holdings, threatened actions to which Holdings is a party (or is threatened to benamed as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performanceof this Agreement or the Operative Documents or the consummation of the transactions contemplatedhereby or thereby by any party hereto or thereto. As of the date of this Agreement, Holdings isnot subject to any Governmental Order (nor, to the knowledge of Holdings, is there any suchGovernmental Order threatened to be imposed by any Governmental Authority) that would, individuallyor in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.                    (vi) Stock Ownership. All of Symphony Allegro’s issued and outstanding SymphonyAllegro Equity Securities are owned beneficially and of record by Holdings, free and clear of anyand all encumbrances.                    (vii) Interim Operations. Holdings was formed solely for the purpose of engaging inthe transactions contemplated by the Operative Documents, has engaged in no other businessactivities and has conducted its operations only as contemplated by the Operative Documents.                    (viii) Accredited Investor.                    (A) Holdings is and will remain at all relevant times an Accredited Investor.                    (B) Holdings has relied completely on the advice of, or has consulted with or has hadthe opportunity to consult with, its own personal tax, investment, legal or other advisorsand has not relied on Alexza or any of its Affiliates for advice related to any offer andsale of Alexza Common Stock in connection with the Purchase Option. Holdings has reviewedthe Investment Overview and is aware of the risks disclosed therein. Holdings acknowledgesthat it has had a reasonable opportunity to conduct its own due [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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diligence with respect tothe Products, the Programs, Symphony Allegro, Alexza and the transactions contemplated bythe Operative Documents.                    (C) Holdings is able to bear the economic risk of such investment for an indefiniteperiod and to afford a complete loss thereof.                    (D) Holdings agrees that the Alexza Common Stock may not be resold (A) withoutregistration thereof under the Securities Act (unless an exemption from such registrationis available), or (B) in violation of any law.                    (E) No person or entity acting on behalf of, or under the authority of, Holdings is orwill be entitled to any broker’s, finder’s, or similar fees or commission payable by Alexzaor any of its Affiliates.               (b) Holdings hereby covenants and agrees with Alexza as follows:                    (i) Contribution to Symphony Allegro. On or prior to the Stock Payment Date, Holdingsshall, pursuant to the Subscription Agreement, contribute proceeds from the Financing of$50,000,000 to Symphony Allegro, Inc.                    (ii) Encumbrance. Holdings will not, and will not permit any of its Subsidiaries to,create, assume or suffer to exist any Encumbrance on any of its Symphony Allegro Equity Securitiesexcept with the prior written consent of Alexza.                    (iii) Transfer and Amendment. Commencing upon the date hereof and ending upon theearlier to occur of (x) the Purchase Option Closing Date, (y) the unexercised expiration of thePurchase Option Period, and (z) the termination ofthis Agreement pursuant to Section 9 (such period, the “Term”), the manager ofHoldings shall not (A) transfer, or permit the transfer of, any Membership Interest without theprior written consent of Alexza or (B) amend, or permit the amendment of, any provisions relatingto the transfer of Membership Interests, as set forth in Section 7.02 of the Holdings LLCAgreement, to the extent such amendment would adversely affect Alexza’s right of consent set forthin Sections 7.02(b)(i) and 7.02(c) of the Holdings LLC Agreement.                    (iv) Symphony Allegro Directors. During the Term, Holdings agrees to vote all of itsSymphony Allegro Equity Securities (or to exercise its right with respect to such Symphony AllegroEquity Securities to consent to action in writing without a meeting) in favor of, as applicable,the election, removal and replacement of one director of the Symphony Allegro Board, and anysuccessor thereto, designated by Alexza (the “Alexza Director”) as directed by Alexza. Infurtherance and not in limitation of the foregoing, Holdings hereby grants to Alexza an irrevocableproxy, with respect to all Symphony Allegro Equity Securities now owned or hereafter acquired byHoldings, to vote such Symphony Allegro Equity Securities or to exercise the right 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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consent toaction in writing without a meeting with respect to such Symphony Allegro Equity Securities, suchirrevocable proxy to be exercised solely for the limited purpose of electing, removing andreplacing the Alexza Director in the event of the failure or refusal of Holdings to elect, removeor replace such Alexza Director, as directed by Alexza. Additionally, Holdings agrees, during theTerm, to elect two (2) independent directors (of the four (4) directors of Symphony Allegro notchosen by Holdings at the direction of Alexza), and any successors thereto, as shall be selected bymutual agreement of Alexza and Holdings.                    (v) Symphony Allegro Board. During the Term, Holdings shall not vote any of itsSymphony Allegro Equity Securities (or exercise its rights with respect to such Symphony AllegroEquity Securities by written consent without a meeting) to increase the size of the SymphonyAllegro Board to more than five (5) members without the prior written consent of Alexza.                    (vi) Symphony Allegro Charter. During the Term, Holdings shall not approve or permitany amendment to Article IV, Paragraphs (1) and (3); Article VI; ArticleVII; Article X; Article XI or Article XIII of the Symphony AllegroCharter without the prior written consent of Alexza.          Section 5. Symphony Allegro Representations, Warranties and Covenants               (a) As of the date hereof, Symphony Allegro hereby represents and warrants, and, except to theextent that any of the following representations and warranties are limited to the date of thisAgreement or otherwise limited, on the Purchase Option Closing Date, shall be deemed to haverepresented and warranted, to Alexza and Holdings that:                    (i) Organization. Symphony Allegro is a corporation, duly organized, validly existingand in good standing under the laws of the State of Delaware.                    (ii) Authority and Validity. Symphony Allegro has all requisite corporate power andauthority to execute, deliver and perform its obligations under this Agreement and to consummatethe transactions contemplated hereby. The execution, delivery and performance by Symphony Allegroof this Agreement and the consummation of the transactions contemplated hereby have been duly andvalidly authorized by all necessary action required on the part of Symphony Allegro, and no otherproceedings on the part of Symphony Allegro are necessary to authorize this Agreement or forSymphony Allegro to perform its obligations under this Agreement. This Agreement constitutes thelawful, valid and legally binding obligation of Symphony Allegro, enforceable in accordance withits 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 generalequitable principles regardless of whether such enforceability is considered in a proceeding at lawor in equity. [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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                    (iii) No Violation or Conflict. The execution, delivery and performance of thisAgreement and the transactions contemplated hereby do not (A) violate, conflict with or result inthe breach of any provision of the Organizational Documents of Symphony Allegro, (B) conflict withor violate any law or Governmental Order applicable to Symphony Allegro or any of its assets,properties or businesses, or (C) conflict with, result in any breach of, constitute a default (orevent 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 ofthe 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 arrangementto which Symphony Allegro is a party except, in the case of clauses (B) and (C), tothe extent that such conflicts, breaches, defaults or other matters would not, individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect on Symphony Allegro.                    (iv) Governmental Consents and Approvals. The execution, delivery and performance ofthis Agreement by Symphony Allegro do not, and the consummation of the transactions contemplatedhereby 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 providewould not, individually or in the aggregate, reasonably be expected to have a Material AdverseEffect on Symphony Allegro.                    (v) Litigation. There are no actions by or against Symphony Allegro pending beforeany Governmental Authority or, to the knowledge of Symphony Allegro, threatened to be brought by orbefore any Governmental Authority that would, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect on Symphony Allegro. There are no pending or, to theknowledge ofSymphony Allegro, threatened actions to which Symphony Allegro is a party (or is threatened tobe named as a party) to set aside, restrain, enjoin or prevent the execution, delivery orperformance of this Agreement or the Operative Documents or the consummation of the transactionscontemplated hereby or thereby by any party hereto or thereto. Symphony Allegro is not subject toany Governmental Order (nor, to the knowledge of Symphony Allegro, is there any such GovernmentalOrder threatened to be imposed by any Governmental Authority) that would, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect on Symphony Allegro.                    (vi) Capitalization. Holdings is the beneficial and record owner of all issued andoutstanding Symphony Allegro Equity Securities. No shares of Symphony Allegro capital stock areheld in treasury by Symphony Allegro or any Symphony Allegro Subsidiary. All of the issued andoutstanding Symphony Allegro Equity Securities (A) have been duly authorized and validly issued andare fully paid and nonassessable, (B) were issued in compliance with all applicable state andfederal securities laws, and (C) were not issued in violation of any preemptive rights or rights offirst refusal. No preemptive rights or rights of first refusal exist with respect to any [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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SymphonyAllegro Equity Securities and no such rights will arise by virtue of or in connection with thetransactions contemplated hereby (other than for the Purchase Option). Other than the PurchaseOption, there are no outstanding options, warrants, call rights, commitments or agreements of anycharacter to acquire any Symphony Allegro Equity Securities. There are no outstanding stockappreciation, phantom stock, profit participation or other similar rights with respect to SymphonyAllegro. Symphony Allegro is not obligated to redeem or otherwise acquire any of its outstandingSymphony Allegro Equity Securities.                    (vii) Interim Operations. Symphony Allegro was formed solely for the purpose ofengaging in the transactions contemplated by the Operative Documents, has engaged in no otherbusiness activities and has conducted its operations only as contemplated by the OperativeDocuments.                    (viii) Investment Company. Symphony Allegro is not, and after giving effect to thetransactions contemplated by the Operative Documents will not be, required to register as an“investment company” as such term is defined in the Investment Company Act of 1940, asamended.               (b) Symphony Allegro covenants and agrees that:                    (i) Symphony Allegro will comply with all laws, ordinances or governmental rules orregulations to which it is subject and will obtain and maintain in effect all licenses,certificates, permits, franchises and other Governmental Approvals necessary to the ownership ofits properties or to the conduct of its business, in each case to the extent necessary to ensurethat non-compliance with such laws, ordinances or governmental rules or regulations or failures toobtain or maintain in effect such licenses, certificates, permits, franchises and otherGovernmental Approvals would not, individually or in the aggregate, reasonably be expected to havea Material Adverse Effect on Symphony Allegro.                    (ii) Symphony Allegro will file (or cause to be filed) all material tax returns required to befiled by it and pay all taxes shown to be due and payable on such returns and all other taxesimposed on it or its assets to the extent such taxes have become due and payable and before theyhave become delinquent and shall pay all claims for which sums have become due and payable thathave or might become attached to the assets of Symphony Allegro; provided, that SymphonyAllegro need not file any such tax returns or pay any such tax or claims if (A) the amount,applicability or validity thereof is contested by Symphony Allegro on a timely basis in good faithand in appropriate proceedings, and Symphony Allegro has established adequate reserves therefor inaccordance with GAAP on the books of Symphony Allegro or (B) the failure to file such tax returnsor the nonpayment of such taxes and assessments, individually or in the aggregate, could notreasonably be expected to have a Material Adverse Effect on Symphony Allegro.                    (iii) Symphony Allegro will at all times preserve and keep in full force and effect itscorporate existence. [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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                    (iv) Symphony Allegro will 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 andreceived, and all income derived in connection with the operation of the business of SymphonyAllegro, all in accordance with GAAP (which GAAP shall be conformed to those used by Alexza to theextent practicable), in each case to the extent necessary to enable Symphony Allegro to comply withthe periodic reporting requirements of this Agreement, and will promptly notify Alexza if it adoptsor changes any accounting principle pursuant to a change in GAAP or applicable Law.                    (v) Symphony Allegro will perform and observe in all material respects all of the terms andprovisions of each Operative Document to be performed or observed by it, maintain each suchOperative Document to which it is a party, promptly enforce in all material respects each suchOperative Document in accordance with its terms, take all such action to such end as may be fromtime to time reasonably requested by Holdings or Alexza and make to each other party to each suchOperative Document such demands and requests for information and reports or for action as SymphonyAllegro is entitled to make under such Operative Document.                    (vi) Symphony Allegro shall permit the representatives of Holdings (including Holdings’members and their respective representatives), each Symphony Fund and Alexza, at each of their ownexpense and upon reasonable prior notice to Symphony Allegro, to visit the principal executiveoffice of Symphony Allegro, to discuss the affairs, finances and accounts of Symphony Allegro withSymphony Allegro’s officers and (with the consent of Symphony Allegro, which consent will not beunreasonably withheld) its Auditors, all at such reasonable times and as often as may be reasonablyrequested in writing.                    (vii) Symphony Allegro shall permit each Symphony Fund, at its own expense and upon reasonableprior notice to Symphony Allegro, toinspect and copy Symphony Allegro’s books and records and inspect Symphony Allegro’sproperties at reasonable times.                    (viii) Symphony Allegro shall allow Alexza or its designated representatives to havereasonable visitation and inspection rights with regard to the Programs and materials, documentsand other information relating thereto.                    (ix) Symphony Allegro shall permit each Symphony Fund to consult with and advise themanagement of Symphony Allegro on matters relating to the research and development of the Programsin order to develop the Product in accordance with the terms or provisions of the Amended andRestated Research and Development Agreement.                    (x) On the Purchase Option Closing Date, or as soon thereafter as is practical, SymphonyAllegro shall deliver to Alexza all materials, documents, files and other information relating tothe Programs (or, where necessary, copies thereof). [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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                    (xi) During the Term, Alexza shall have the right to consent to any increase in the size ofthe Symphony Allegro Board to more than five (5) directors.                    (xii) During the Term, Alexza shall have the right to designate, remove and replace one (1)director of the Symphony Allegro Board, including any successor thereto, as contemplated bySection 4(b)(iv).                    (xiii) Symphony Allegro shall indemnify the directors and officers of Symphony Allegro againstliability incurred by reason of the fact that such Person is or was a director or officer ofSymphony Allegro, as permitted by Article VII of the Symphony Allegro Charter andSection 9.01 of the Symphony Allegro By-laws, as set forth in, and on the terms of, theIndemnification Agreement and the RRD Services Agreement, respectively.                    (xiv) During the Term, Symphony Allegro shall comply with, and cause any Persons acting for itto comply with, the terms of the Investment Policy with respect to the investment of any funds heldby it.                    (xv) On or prior to the Purchase Option Closing Date, Symphony Allegro shall pay for anon-cancelable run-off insurance policy, for a period of six (6) years after the Purchase OptionClosing Date to provide insurance coverage for events, acts or omissions occurring on or prior tothe Purchase Option Closing Date for all persons who were directors or officers of Symphony Allegroon or prior to the Purchase Option Closing Date.               (c) Symphony Allegro covenants and agrees that, until the expiration of the Term, itshall not, and shall cause its Subsidiaries (if any) not to, withoutAlexza’s prior written consent (such consent, in the case of clause (x) below, not tobe unreasonably withheld):                    (i) issue any Symphony Allegro Equity Securities or any Equity Securities of any Subsidiarythereof (other than any issuances of Equity Securities by Symphony Allegro made in accordance withSection 1(b) hereof to Holdings so long as Symphony Allegro is a wholly owned subsidiary ofHoldings, or by a Subsidiary of Symphony Allegro to Symphony Allegro or to another wholly ownedSubsidiary of Symphony Allegro); provided, however, that in any event any suchSymphony Allegro Equity Securities shall be issued subject to the Purchase Option;                    (ii) redeem, repurchase or otherwise acquire, directly or indirectly, any Symphony AllegroEquity Securities or the Equity Securities of any Subsidiary of Symphony Allegro;                    (iii) create, incur, assume or permit to exist (A) any Encumbrance over or on any of itsassets, other than (x) statutory liens or (y) liens created in the ordinary course of SymphonyAllegro’s business securing obligations valued at less than **[ * ]**in the aggregate principal amountat any one time outstanding [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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(unless the Development Committee shall authorize the existence ofordinary course liens securing obligations valued at greater than **[ * ]**), or (B) Debt other thanany Debt incurred pursuant to the Operative Documents and the Development Budget (includingpayables incurred in the ordinary course of business) (“Excepted Debt”); provided,however, that the aggregate outstanding principal amount of all Excepted Debt for borrowedmoney (including the amount of Debt secured by any Encumbrances permitted pursuant to clause(A)) shall not exceed **[ * ]**at any time;                    (iv) declare or pay dividends or other distributions on any Symphony Allegro Equity Securitiesother than any dividend declared from the proceeds of (x) the exercise of a Discontinuation Option,or (y) a sale or license of a discontinued Program to a third party, in each case in respect ofwhich Symphony Allegro shall be entitled to pay (subject to the existence of lawfully availablefunds) a dividend equal to the net amount (such net amount calculated as the gross proceedsreceived less amounts required to be paid in respect of any and all corporate taxes owed bySymphony Allegro as a result of the receipt of such gross amounts) of such Discontinuation Price orthe amounts received from such third party, as the case may be;                    (v) enter into any transaction of merger or consolidation, or liquidate, wind up or dissolveitself, or convey, transfer, license, lease or otherwise dispose of all, or a material portion of,its properties, assets or business;                    (vi) other than in respect of the Programs, engage in the development of products for anyother company or engage or participate in the development of products or engage in any othermaterial line of business;                    (vii) other than entering into, and performing its obligations under, the Operative Documentsand participating in the Programs, engage in any action that negates or is inconsistent with anyrights of Alexza set forth herein;                    (viii) (A) other than as contemplated by the RRD Services Agreement and Section 6.2 ofthe Amended and Restated Research and Development Agreement, hire, retain or contract for theservices of, any employees until the termination of such agreements, or (B) appoint, dismiss orchange any RRD Investment Personnel;                    (ix) incur any financial commitments in respect of the development of the Programs other thanthose set forth in the Development Plan and the Development Budget, or those approved by theDevelopment Committee and, if so required by the terms of Paragraph 11 of the Development CommitteeCharter, the Symphony Allegro Board in accordance with the Operative Documents;                    (x) other than any transaction contemplated by the Operative Documents, enter into or engagein any Conflict Transactions without the prior approval of a majority of the DisinterestedDirectors of the Symphony Allegro Board; 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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                    (xi) waive, alter, modify, amend or supplement in any manner whatsoever any material terms andconditions of the RRD Services Agreement, the Subscription Agreement, the Research Cost Sharing andExtension Agreement, or Articles 4 and 6 of the Amended and Restated Research andDevelopment Agreement, except in compliance with the terms of the Operative Documents.               (d) Symphony Allegro covenants and agrees to deliver, cause to be delivered, and provideaccess thereto, to each other Party, each Symphony Fund, and such Auditors as Alexza may designate,so long as such Auditors shall (x) be subject to confidentiality requirements at least as stringentas the Confidentiality Agreement or (y) be an Alexza Accounting Advisor retained pursuant to anagreement which incorporates confidentiality provisions substantially the same as the onesincorporated in the agreements in effect between Alexza and such Accounting Advisors as of theClosing Date:                    (i) upon request, copies of the then current Development Plan for each quarter, on or beforeMarch 31, June 30, September 30, and December 31 of each year;                    (ii) upon request, copies of the then current Development Budget for each quarter, including areport setting forth in reasonable detail the projected expenditures by Symphony Allegro pursuantto the Development Budget, on or before March 31, June 30, September 30, and December 31 of eachyear;                    (iii) prior to the close of each fiscal year, Symphony Allegro shall cause the Manager to seekto obtain from the Symphony Allegro Auditors schedules of certain financial information to beprovided to Alexza’s Auditors inconnection with the Symphony Allegro Auditors’ audit of Symphony Allegro. Within **[ * ]**afterthe close of each fiscal year, Symphony Allegro (or the Manager acting on its behalf) will provideAlexza’s Auditors with the Client Schedules. If the Symphony Allegro Auditors deliver the ClientSchedules after the end of the fiscal year, Symphony Allegro (or the Manager acting on its behalf)will provide the completed Client Schedules to Alexza’s Auditors within **[ * ]**of such receipt.Following Alexza’s Auditors’ review of the Client Schedules, Symphony Allegro, or RRD on behalf ofSymphony Allegro, will promptly provide Alexza’s Auditors with any reasonably requested back-upinformation related to the Client Schedules.                    (iv) prior to the close of each fiscal year, Alexza’s Chief Financial Officer, the SymphonyAllegro Auditors, Alexza’s Auditors and Symphony Allegro (or the Manager acting on its behalf)shall agree to a completion schedule that will include (A) the provision by Symphony Allegro toAlexza of the financial information reasonably necessary for Alexza to consolidate the financialresults of Symphony Allegro and (B) the following financial statements, including the related notesthereto, audited and certified by the Symphony Allegro Auditors: (1) a balance sheet of SymphonyAllegro as of the close of such fiscal year, (2) a statement of net income for such fiscal year,and (3) a statement of cash flows for such fiscal year. Such audited annual financial statementsshall set forth in comparative form the figures for 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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previous fiscal year, all in reasonabledetail, prepared in accordance with GAAP, and Symphony Allegro (or the Manager acting on itsbehalf) shall, to the extent that Symphony Allegro (or the Manager acting on its behalf), usingcommercially reasonable means, can procure such an opinion, be accompanied by an opinion thereon ofthe Symphony Allegro Auditors to the effect that such financial statements present fairly, in allmaterial respects, the financial position of Symphony Allegro and its results of operations andcash flows and have been prepared in conformity with GAAP, and that the examination of suchaccountants in connection with such financial statements has been made in accordance with generallyaccepted auditing standards, and that such audit provides a reasonable basis for such opinion inthe circumstances;                    (v) within **[ * ]**following each calendar month and upon receipt from Alexza of its monthlyinvoice to Symphony Allegro, current accrued monthly vendor expenses and prepaid expenses, SymphonyAllegro (or the Manager acting on its behalf) will provide to Alexza: (A) the unaudited balancesheet of Symphony Allegro for the previous calendar month; (B) the unaudited statement of netincome for such previous calendar month; (C) the trial balance schedule for such previous calendarmonth; and (D) related account reconciliations for such previous calendar month (collectively,“Unaudited Financial Information”);                    (vi) within **[ * ]**following its filing, a copy of each income tax return so filed by SymphonyAllegro with any foreign, federal, state or local taxing authority (including all supportingschedules thereto);                    (vii) any other documents, materials or other information pertaining to the Programs orSymphony Allegro as Alexza may reasonably request, including preliminary financial information;                    (viii) promptly, and in any event within **[ * ]**of receipt thereof, copies of any notice toSymphony Allegro from any federal or state Governmental Authority relating to any order, ruling,statute or other law or regulation that would reasonably be expected to have a Material AdverseEffect on Symphony Allegro;                    (ix) promptly upon receipt thereof, notice of all actions, suits, investigations, litigationand proceedings before any court or governmental department, commission, board, bureau, agency orinstrumentality, domestic or foreign, affecting Symphony Allegro;                    (x) promptly upon receipt thereof, copies of any other notices, requests, reports, financialstatements and other information and documents received by Symphony Allegro under or pursuant toany other Operative Document, including, without limitation, any notices of breach or terminationof any subcontracts or licenses entered into or permitted pursuant to the Operative Documents; and                    (xi) with reasonable promptness, such other data and information relating to the business,operations, affairs, financial condition, assets 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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properties of Symphony Allegro or relating tothe ability of Symphony Allegro to perform its obligations hereunder and under the OperativeDocuments as from time to time may be reasonably requested by Alexza and/or Holdings;provided, that neither Symphony Allegro, nor the Manager acting on behalf of SymphonyAllegro, shall have any liability to Alexza for the failure to deliver financial documents or othermaterials hereunder, if such failure was caused by a failure of Alexza to provide, in a timelymanner, data required to prepare such financial documents or other materials to Symphony Alexza ina timely manner.               (e) Symphony Allegro will use commercially reasonable efforts, at its own expense (as setforth in the Management Budget), to cooperate with Alexza in meeting Alexza’s governmentcompliance, disclosure, and financial reporting obligations, including without limitation under theSarbanes-Oxley Act of 2002, as amended, and any rules and regulations promulgated thereunder, andunder FASB Interpretation No. 46 (Revised). Without limiting the foregoing, Symphony Allegrofurther covenants, until the completion of all the reporting, accounting and other obligations setforth therein with respect to the fiscal year in which this Agreement shall terminate, expire andend, that (w) the principal executive officer and the principal financial officer of SymphonyAllegro, or persons performing similar functions, shall provide certifications to Alexzacorresponding to those required with respect to public companies for which a class of securities isregistered under the Securities Exchange Act (“Public Companies”) under Sections 302 and906 of the Sarbanes-Oxley Act of 2002, as amended; (x) Symphony Allegro shall maintain a system ofdisclosure controls and internal controls (as defined under the Exchange Act) and conduct quarterlyand annual evaluations of the effectiveness of such controls as required under the Exchange Act forPublic Companies; (y) Symphony Allegro shall provide to Alexza an attestation report of itsAuditors with respect to Symphony Allegro management’s assessment of SymphonyAllegro’s internal controls as required under the Exchange Act for Public Companies; and (z)Symphony Allegro will maintain, or cause to have maintained, such sufficient evidentiary supportfor management’s assessment of the effectiveness of Symphony Allegro’s internal controls asrequired under the Exchange Act for Public Companies. [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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          Section 6.Notice of Material Event. Each Party covenants and agrees that, upon its acquiring Knowledge of any breach by it ofany representation, warranty, covenant or any other term or condition of this Agreement oracquiring 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 ofacquiring such Knowledge; provided, that the failure to provide such notice shall notimpair 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 6 shall not in itselfconstitute notice of any breach of any of the Operative Documents, unless explicitly stated in suchnotice.          Section 7. Assignment; Transfers; Legend               (a) Assignment by Alexza and Symphony Allegro. Neither Alexza nor Symphony Allegromay assign, delegate, transfer, sell or otherwise dispose of (collectively, “Transfer”), inwhole or in part, any or all of their rights or obligations hereunder to any Person (a“Transferee”) without the prior written approval of each of the other Parties;provided, however, that Alexza, without the prior approval of each of the otherParties, acting in accordance with Section 2A of this Agreement, may make such Transfer toany Person which acquires all or substantially all of Alexza’s assets or business (or assets orbusiness related to the Programs) or which is the surviving or resulting Person in a merger,consolidation or other reorganization with Alexza. In no event shall such assignment alter thedefinition of “Alexza Common Stock” except as a result of the surviving or resulting “parent”entity in a merger being other than Alexza, in which case any reference to Alexza Common Stockshall be deemed to instead reference the common stock, if any, of the surviving or resultingentity.               (b) Assignment and Transfers by Holdings. Prior to the expiration of the Term,Holdings may not Transfer, in whole or in part, any or all of its Symphony Allegro EquitySecurities or any or all of its rights or obligations hereunder to any Person (other than Alexza)without the prior written consent of Alexza. In addition, any Transfer of Symphony Allegro EquitySecurities by Holdings or any other Person to any Person other than Alexza shall be conditionedupon, and no effect shall be given to any such Transfer unless such transferee shall agree inwriting in form and substance satisfactory to Alexza to be bound by all of the terms and conditionshereunder, including the Purchase Option, as if such transferee were originally designated as“Holdings” hereunder.               (c) Legend. Any certificates evidencing Symphony Allegro Equity Securities shall beara legend in substantially the following form:THE SECURITIES OF SYMPHONY ALLEGRO, INC., EVIDENCED HEREBY ARESUBJECT TO AN OPTION, HELD BY ALEXZA, AS DESCRIBED IN A PURCHASEOPTION AGREEMENT (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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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“PURCHASE OPTION AGREEMENT”) DATEDAS OF DECEMBER 1, 2006, BY AND AMONG ALEXZA PHARMACEUTICALS, INC.,AND THE OTHER PARTIES THERETO, TO PURCHASE SUCH SECURITIES AT APURCHASE PRICE DETERMINED PURSUANT TO SECTION 2 OF THEPURCHASE OPTION AGREEMENT, EXERCISABLE BY WRITTEN NOTICE AT ANYTIME DURING THE PERIOD SET FORTH THEREIN. COPIES OF THE PURCHASEOPTION AGREEMENT ARE AVAILABLE AT THE PRINCIPAL PLACE OF BUSINESSOF SYMPHONY ALLEGRO, INC. AT 7361 CALHOUN PLACE, SUITE 325,ROCKVILLE, MARYLAND 20855, AND WILL BE FURNISHED TO THE HOLDERHEREOF UPON WRITTEN REQUEST WITHOUT COST.          Section 8. Costs and Expenses; Payments.               (a)        Symphony Allegro Costs and Expenses. Symphony Allegro shall pay any of itsongoing legal expenses with respect to the transactions described in the Operative Documents fromthe funds allocated for such purpose in the Management Budget.               (b)        Costs and Expenses of the Purchase Option. Except as otherwise specified inSection 2(f) hereof, each Party shall pay its own costs and expenses incurred in connectionwith the exercise of the Purchase Option.               (c)        Payments to Holdings. Payment of the Purchase Price, plus any costs and expensespayable by Symphony Allegro under Section 2(f) hereof, shall be made to the account ofHoldings contemporaneously with or prior to the payout of the Purchase Price on the Purchase OptionClosing Date no later than 1:00 pm (New York time).          Section 9. Expiration; Termination of Agreement.               (a)     Termination.                    (i) This Agreement shall terminate upon the mutual written consent of all of the Parties.                    (ii)Subject to Sections 1(c)(v) and 2A hereof, which shall survive termination of thisAgreement under this Section 9(a)(ii), each of Holdings and Symphony Allegro may terminatethis Agreement in the event that Symphony Allegro terminates the Amended and Restated Researchand Development Agreement in accordance with its terms. [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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          Section 10. Survival; Indemnification.               (a) Survival of Representations and Warranties; Expiration of Certain Covenants.                    (i) The representations and warranties of the Parties contained in this Agreement shallsurvive for a period of one year from the making of such representations, except forrepresentations and warranties contained in Sections 3(a)(i) and (ii), 4(a)(i) and(ii) and 5(a)(i) and (ii) hereof which shall survive indefinitely. The liability ofthe Parties related to their respective representations and warranties hereunder shall not bereduced by any investigation made at any time by or on behalf of Holdings, Symphony Allegro orAlexza, as applicable.                    (ii) For the avoidance of doubt, the covenants and agreements set forth in Sections4(b), 5(b)(i), 5(b)(v), 5(b)(vii)-(ix), 5(b)(xi)-(xiv),5(c), 5(d)(i), 5(d)(ii) and 5(d)(viii)-(xi) shall, upon theexpiration of the Term, expire and end without any further obligation by Symphony Allegro orHoldings thereunder.                    (iii) For the avoidance of doubt, the covenants and agreements set forth in Sections5(b)(ii)-(iv), 5(b)(vi), 5(b)(x), 5(d)(iii)-(vii) and 5(e)shall, upon the completion of all the reporting, accounting and other obligations set forth thereinwith respect to the fiscal year in which this Agreement shall terminate, expire and end without anyfurther obligation by Symphony Allegro or Holdings thereunder.               (b) Indemnification. To the greatest extent permitted by applicable law, Alexza shallindemnify and hold harmless Holdings and Symphony Allegro and Holdings shall indemnify and holdharmless Alexza, and each of their respective Affiliates, officers, directors, employees, agents,partners, members, successors, assigns, representatives of, and each Person, if any (including anyofficers, directors, employees, agents, partners, members of such Person) who controls Holdings,Symphony Allegro and Alexza, as applicable, within the meaning of the Securities Act or theExchange Act, (each, an “Indemnified Party”), from and against any and all actions, causesof action, suits, claims, losses, costs, interest, fees, liabilities and damages, and expenses inconnection therewith (irrespective of whether any such Indemnified Party is a party to the actionfor which indemnification hereunder is sought), and including reasonable attorneys’ fees anddisbursements (hereinafter, a “Loss”), incurred by any Indemnified Party to the extentresulting from, arising out of, or relating to: (i) in the case of Alexza being the IndemnifyingParty, (A) any breach of any representation or warranty made by Alexza herein or in Section5.1 of the Novated and Restated Technology License Agreement, or (B) any breach of anycovenant, agreement or obligation of Alexza contained herein, and (ii) in the case of Holdingsbeing the Indemnifying Party, (A) any breach of any representation or warranty made by Holdings orSymphony Allegro herein, or (B) any breach of any covenant, agreement or obligation of Holdings orSymphony Allegro contained herein. To the extent that the foregoing undertaking by Alexza orHoldings may be unenforceable for any reason, such Party shall make the maximum contribution to thepayment 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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               (c) Notice of Claims. Any Indemnified Party that proposes to assert a right to beindemnified under this Section 10 shall notify Alexza or Holdings, as applicable (the“Indemnifying Party”), promptly after receipt of notice of commencement of any action, suitor proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect ofwhich a claim is to be made under this Section 10, or the incurrence or realization of anyLoss in respect of which a claim is to be made under this Section 10, of the commencementof such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of allrelevant documents, including all papers served and claims made, but the omission to so notify theapplicable Indemnifying Party promptly of any such Indemnified Proceeding or incurrence orrealization shall not relieve (x) such Indemnifying Party from any liability that it may have tosuch Indemnified Party under this Section 10 or otherwise, except, as to such IndemnifyingParty’s liability under this Section 10, to the extent, but only to the extent, that suchIndemnifying Party shall have been prejudiced by such omission, or (y) any other indemnitor fromliability that it may have to any Indemnified Party under the Operative Documents.               (d) Defense of Proceedings. In case any Indemnified Proceeding shall be broughtagainst any Indemnified Party, it shall notify the applicable Indemnifying Party of thecommencement thereof as provided in Section 10(c), and such Indemnifying Party shall beentitled to participate in, and provided such Indemnified Proceeding involves a claim solely formoney damages and does not seek an injunction or other equitable relief against the IndemnifiedParty and is not a criminal or regulatory action, to assume the defense of, such IndemnifiedProceeding with counsel reasonably satisfactory to such Indemnified Party. After notice from suchIndemnifying Party to such Indemnified Party of such Indemnifying Party’s election so to assume thedefense 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 tosuch Indemnified Party for legal or other expenses related to suchIndemnified Proceedings incurred after such notice of election to assume such defense exceptas provided below and except for the reasonable costs of investigating, monitoring or cooperatingin such defense subsequently incurred by such Indemnified Party reasonably necessary in connectionwith the defense thereof. Such Indemnified Party shall have the right to employ its counsel in anysuch Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense ofsuch Indemnified Party unless:                    (i) the employment of counsel by such Indemnified Party at the expense of the applicableIndemnifying Party has been authorized in writing by such Indemnifying Party;                    (ii) such Indemnified Party shall have reasonably concluded in its good faith (whichconclusion shall be determinative unless a court determines that such conclusion was not reachedreasonably and in good faith) that there is or may be a conflict of interest between the applicableIndemnifying Party and such Indemnified Party in the conduct of the defense of such IndemnifiedProceeding or that there are or may be one or more different or additional defenses, claims,counterclaims, [*]  **=** **Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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or causes of action available to such Indemnified Party (it being agreed that in anycase referred to in this clause (ii) such Indemnifying Party shall not have the right todirect the defense of such Indemnified Proceeding on behalf of the Indemnified Party);                    (iii) the applicable Indemnifying Party shall not have employed counsel reasonably acceptableto the Indemnified Party, to assume the defense of such Indemnified Proceeding within a reasonabletime after notice of the commencement thereof; provided, however, that (A) thisclause (iii) shall not be deemed to constitute a waiver of any conflict of interest thatmay arise with respect to any such counsel, and (B) an Indemnified Party may not invoke thisclause (iii) if such Indemnified Party failed to timely object to such counsel pursuant tothe first paragraph of this Section 10(d) above (it being agreed that in any case referredto in this clause (iii) such Indemnifying Party shall not have the right to direct thedefense of such Indemnified Proceeding on behalf of the Indemnified Party); or                    (iv) any counsel employed by the applicable Indemnifying Party shall fail to timely commenceor 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 beingagreed that in any case referred to in this clause (iv) such Indemnifying Party shall nothave the right to direct the defense of such Indemnified Proceeding on behalf of the IndemnifiedParty);in each of which cases the fees and expenses of counsel for such Indemnified Party shall be at theexpense of such Indemnifying Party. Only one counsel shall be retained by all Indemnified Partieswith respect to any Indemnified Proceeding, unless counsel for any Indemnified Party reasonablyconcludes in good faith (which conclusion shall be determinative unless a court determines thatsuch conclusion was not reached reasonably and in good faith) that there is or may be a conflict ofinterest between such Indemnified Party and one or more other Indemnified Parties in the conduct ofthe defense of suchIndemnified 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.               (e) Settlement. Without the prior written consent of such Indemnified Party, suchIndemnifying Party shall not settle or compromise, or consent to the entry of any judgment in, anypending or threatened Indemnified Proceeding, unless such settlement, compromise, consent orrelated judgment (i) includes an unconditional release of such Indemnified Party from all liabilityfor 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 inequity), (iii) involves no admission of fact adverse to the Indemnified Party or finding oradmission of any violation of law or the rights of any Person by the Indemnified Party, and (iv) isnot in the nature of a criminal or regulatory action. No Indemnified Party shall settle orcompromise, or consent to the entry of any judgment in, any pending or threatened IndemnifiedProceeding (A) in respect of which any payment would result hereunder or under any other OperativeDocument, (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 ofany violation of law or 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 Rule24b-2 of the Securities Exchange Act of 1934, as amended.**
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rights of any Person by the Indemnifying Party, or (D) which is in thenature of a criminal or regulatory action, without the prior written consent of the IndemnifyingParty, such consent not to be unreasonably conditioned, withheld or delayed.          Section 11. No Petition. Each of Alexza and Holdings covenants and agrees that, prior to the date which is one yearand one day after the expiration of the Purchase Option Period, it will not institute or join inthe institution of any bankruptcy, insolvency, reorganization or similar proceeding againstSymphony Allegro. The provisions of this Section 11 shall survive the termination of thisAgreement.          Section 12. Third-Party Beneficiary. Each of the Parties agrees that each Symphony Fund shall be a third-party beneficiary ofthis Agreement.Section 13. Notices. Any notice, request, demand, waiver, consent, approval or other communication which is requiredor permitted to be given to any Party shall be in writing addressed to the Party at its address setforth below and shall be deemed given (i) when delivered to the Party personally, (ii) if sent tothe Party by facsimile transmission (promptly followed by a hard-copy delivered in accordance withthis Section 13), when the transmitting Party obtains written proof of transmission andreceipt; provided, however, that notwithstanding the foregoing, any communication sent by facsimiletransmission after 5:00 PM (receiving Party’s time) or not on a Business Day shall not be deemedreceived until the next Business Day, (iii) when delivered by next Business Day delivery by anationally recognized courier service, or (iv) if sent by registered or certified mail, whenreceived, provided postage and registration or certification fees are prepaid and delivery isconfirmed by a return receipt:          Alexza:Alexza Pharmaceuticals, Inc.