**(i) **“***Corporate Goal***” means any of the Corporate Goals set forth on Exhibit A.     **(j) *****“Director”***means a person who is at the management level of Associate through ExecutiveDirector level, or at the technical level of Sr. Scientist II or Sr. Research Fellow, or PrincipalEngineer or Sr. Fellow Engineer.     **(k) *****“Individual Contributor”***means all other employees not in the Manager, Director, Officeror CEO role.     **(l) *****“Manager”***means a person who is at the management level of Supervisor through Sr. Manager,or at the technical level of Scientist I through Sr. Scientist I level, or Sr. Engineer I throughSr. Staff Engineer level.     **(m) *****“Officer”***means a person designated as such by the Board..     **(n) **“***Participant***” means an eligible Officer, Director, Manager or Individual Contributorselected by the Committee, in its sole discretion, to participate in the Bonus Plan.     **(o) **“***Performance Period***” means March 1, 2011 through February 29, 2012.     **(p) **“***Target Bonus Award***” means the target award payable under the Bonus Plan to a Participant,as determined by the Committee. Each Participant’s Target Bonus Award equals the product of suchParticipant’s (i) Base Salary, (ii) Target Bonus Percentage, and (ii) Multiplication Factor. Forexample, an Officer with a Base Salary is $200,000, whose Target Bonus Percentage is 40% would havehis or her Bonus Award calculated by reference to a Target Bonus Award of $80,000 ($200,000 x 40%).       **(q)** “***Target Bonus Percentage***” means: 60% for the chief executive officer;    40% for Officers;    20% for Directors;    15% for Managers; and    10% for Individual Contributors**3. Plan Administration.**     **(a) **The Committee shall be responsible for the general administration and interpretation ofthe Bonus Plan and for carrying out its provisions. The Committee may delegate specificadministrative tasks to Company Employees or others as appropriate for proper administration of theBonus Plan. The Committee shall have such powers as may be necessary to discharge its dutieshereunder, including, but not by way of limitation, the following powers and duties, but subject tothe terms of the Bonus Plan:          **(i)**authority to determine eligibility and the amount, manner and time of payment of any BonusAwards hereunder;          **(ii)**authority to construe and interpret the terms of the Bonus Plan;
 

 
          **(iii)**authority to adopt rules, regulations and bylaws and to take such actions as it deemsnecessary or desirable for the proper administration of the Bonus Plan.     **(b) **Any rule or decision by the Committee that is not inconsistent with the provisions of theBonus Plan shall be conclusive and binding on all persons, and shall be given the maximum deferencepermitted by law.**4. Earning of Bonus Award.**Participation in the Bonus Plan is at the discretion of the Committee.If an Officer, Director, Manager or Individual Contributor is hired after the beginning of thePerformance Period, the Committee shall have the discretion to determine whether such individualshould be eligible to participate in the Bonus Plan and whether such participation, if any, shouldbe prorated. A Participant must be in Continuous Service, and meeting the minimum standard ofperformance for their position in the company through the payment date to earn any Bonus Awardunder this Bonus Plan; if the Participant’s Continuous Service terminates before the payment dateof any Bonus Award, the Participant will not be eligible to receive a Bonus Award, or any portionof a Bonus Award, except as provided in an applicable severance plan or in an individual employmentor retention agreement with such Participant.**5. Timing of Payment.**     **(a) Corporate Goal 1 Bonus Awards.**If Corporate Goal 1, as set forth on Exhibit A, iscompleted during the Performance Period as determined by the Committee in its sole discretion, theCommittee shall determine Bonus Awards based on 50% of the Target Bonus Awards. The Company shalldistribute amounts payable to Participants within 60 days following the Bonus Determination Date inrespect of these Bonus Awards.     **(b) NDA Approval Bonus Awards.**If the NDA for AZ-004 is approved during the PerformancePeriod as determined by the Committee in its sole discretion, the Committee shall determine BonusAwards based on a Participant’s Target Bonus Award, overall Corporate Goal achievement, andindividual performance, less amounts paid upon the achievement of Corporate Goal 1.Notwithstanding the foregoing, individual performance will not increase or decrease anyParticipant’s Bonus Award by more than 30%. The Company shall distribute amounts payable toParticipants within 60 days following the Bonus Determination Date in respect of these BonusAwards.**6. Amendment and Termination of the Bonus Plan.**The Committee may amend, modify, suspend orterminate the Bonus Plan, in whole or in part, at any time, including adopting amendments deemednecessary or desirable to correct any defect or to supply omitted data or to reconcile anyinconsistency in the Bonus Plan or in any Bonus Award granted hereunder. At no time before theactual payment of Bonus Awards to Participants under the Bonus Plan shall any Participant accrueany vested interest or right whatsoever under the Bonus Plan.**7. Withholding.**Each Bonus Award shall be reduced by the sums required to satisfy the federal,state, local and foreign tax withholding obligations of the Company, if any, which arise inconnection with the payment of such Bonus Award.
 

 
**8. Unfunded Plan.**The Bonus Plan is unfunded and nothing in the Bonus Plan shall be construed tocreate a trust or to establish or evidence any Participant’s claim of any right to payment of aBonus Award other than as an unsecured general creditor with respect to any payment to which he orshe may be entitled. Each Bonus Award under the Bonus Plan shall be paid solely from the generalassets of the Company.**9. No Guarantee of Employment.**The Bonus Plan is intended to provide a financial incentive toParticipants and is not intended to confer any rights to continued employment upon Participantswhose employment will remain at-will and subject to termination by either the Company orParticipant at any time, with or without cause or notice.**10. Recovery**. Any amounts paid hereunder shall be subject to recoupment in accordance with TheDodd—Frank Wall Street Reform and Consumer Protection Act and any implementing regulationsthereunder, any clawback policy adopted by the Company or as is otherwise required by applicablelaw.
 

 
**Exhibit A****2011 Performance Goals****Corporate Goal 1**: Establish Commercial Pathway for AZ-004 **•** Acceptance of AZ-004 NDA resubmission  **•** Submit AZ-004 MAA  **•** Complete commercially viable partnership**Corporate Goal 2**: Prepare for AZ-004 Commercialization **•** Complete successful facility inspections (FDA, EMA)   *Metric**: No findings that impact product approval* **•** Successful manufacturing scale-up   *Metric**: Scale-up timeline as per partner requirements* **•** Gain NDA approval (≤ 6 months from resubmission)**Corporate Goal 3**: Advance Alexza and its pipeline **•** Continue internal AZ-007 development   *Metric**: Manufacture of DVT completed* **•** Execute *Staccato*nicotine development plan   *Metric**: Ship Phase 1 Clinical Trial Material***Corporate Goal 4**: Solidify the fiscal health of Alexza*Metrics**: Manage to the 2011 budget approved by the Board and end 2011 with18 months of forward-looking operating capital*