Document:

exv10w1

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT is made and dated as of May 4, 2010 and is entered into
by and between ALEXZA PHARMACEUTICALS, INC., a Delaware corporation (“Parent”), SYMPHONY ALLEGRO,
INC., a Delaware corporation (“Allegro”), and each of Parent’s other subsidiaries joined hereto
(“Joined Subsidiaries”, together with Parent and Allegro hereinafter collectively referred to as
the “Borrower”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation (“Lender”).

RECITALS

     A. Borrower has requested Lender to make available to Borrower a loan in an aggregate
principal amount of Fifteen Million ($15,000,000) (the “Term Loan”);

     B. Lender is willing to make the Term Loan on the terms and conditions set forth in this
Agreement.

AGREEMENT

     NOW, THEREFORE, Borrower and Lender agree as follows:

SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION

     1.1 Unless otherwise defined herein, the following capitalized terms shall have the
following meanings:

          “Account Control Agreement(s)” means any agreement entered into by and among the Lender,
Borrower and a third party Bank or other institution (including a Securities Intermediary) in which
Borrower maintains a Deposit Account or an account holding Investment Property and which is
intended to perfect Lender’s security interest in the subject account or accounts.

          “ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of
Exhibit I.

          “Addicere Proposed Transaction” means the formation of a Subsidiary of Borrower (the “Addicere
Entity”) for the purpose of receiving an exclusive license to Borrower’s Staccato© technology for
purposes of developing nicotine abatement pharmaceuticals.

          “Administrative Borrower” has the meaning given to it in Section 11.19.

          “Advance” means the Term Loan Advance.

          “Advance Date” means the funding date of the Advance.

          “Advance Request” means a request for an Advance submitted by Borrower to Lender in
substantially the form of Exhibit A.

 

 

          “Agreement” means this Loan and Security Agreement, as amended from time to time.

          “Assignee” has the meaning given to it in Section 11.13.

          “Borrower Products” means all products, software, service offerings, technical data or
technology currently being designed, manufactured or sold by Borrower or which Borrower intends to
sell, license, or distribute in the future including any products or service offerings under
development, collectively, together with all products, software, service offerings, technical data
or technology that have been sold, licensed or distributed by Borrower since its incorporation.

          “Cash” means all cash and liquid funds.

          “Change in Control” means any reorganization, recapitalization, consolidation or merger (or
similar transaction or series of related transactions) of Borrower or any Subsidiary, sale or
exchange of outstanding shares (or similar transaction or series of related transactions) of
Borrower or any Subsidiary in which the holders of Borrower or Subsidiary’s outstanding shares
immediately before consummation of such transaction or series of related transactions do not,
immediately after consummation of such transaction or series of related transactions, retain shares
representing more than fifty percent (50%) of the voting power of the surviving entity of such
transaction or series of related transactions (or the parent of such surviving entity if such
surviving entity is wholly owned by such parent), in each case without regard to whether Borrower
or Subsidiary is the surviving entity.

          “Claims” has the meaning given to it in Section 11.10.

          “Closing Date” means the date of this Agreement.

          “Collateral” means the property described in Section 3.

          “Commitment Fee” means $30,000, which fee has been paid to Lender prior to the Closing Date,
and shall be deemed fully earned on the Closing Date regardless of the early termination of this
Agreement.

          “Confidential Information” has the meaning given to it in Section 11.12.

          “Contingent Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend,
letter of credit or other obligation of another, including any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with
respect to undrawn letters of credit, corporate credit cards or merchant services issued for the
account of that Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent

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Obligation” shall not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the guarantee or other
support arrangement.

          “Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the
laws of the United States, any State thereof, or of any other country.

          “Copyright License” means any written agreement granting any right to use any Copyright or
Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest.

          “Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and
includes any checking account, savings account, or certificate of deposit.

          “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

          “Event of Default” has the meaning given to it in Section 9.

          “Facility Charge” means $150,000.

          “Financial Statements” has the meaning given to it in Section 7.1.

          “GAAP” means generally accepted accounting principles in the United States of America, as in
effect from time to time.

          “Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed
money or the deferred purchase price of property or services (excluding trade credit entered into
in the ordinary course of business due within sixty (60) days), including reimbursement and other
obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all
Contingent Obligations.

          “Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

          “Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses;
trade secrets and inventions; mask works; Borrower’s applications therefor and reissues,
extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing,
together with Borrower’s rights to sue for past, present and future infringement of Intellectual
Property and the goodwill associated therewith.

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          “Investment” means any beneficial ownership (including stock, partnership or limited liability
company interests) of or in any Person, or any loan, advance or capital contribution to any Person
or the acquisition of all, or substantially all, of the assets of another Person.

          “Joined Subsidiaries” has the meaning given to it in the preamble to this Agreement.

          “Joinder Agreements” means for each Subsidiary required to do so pursuant to Section 7.14, a
completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit G.

          “Lender” has the meaning given to it in the preamble to this Agreement.

          “License” means any Copyright License, Patent License, Trademark License or other license of
rights or interests.

          “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, and any lease in the nature of a security interest.

          “Loan Documents” means this Agreement, the Note, the ACH Authorization, the Account Control
Agreements, the Joinder Agreements, all UCC Financing Statements, the Warrant and any other
documents executed in connection with the Secured Obligations or the transactions contemplated
hereby, as the same may from time to time be amended, modified, supplemented or restated.

          “Material Adverse Effect” means a material adverse effect upon: (i) the business, operations,
properties, assets or condition (financial or otherwise) of Borrower; or (ii) the ability of
Borrower to perform the Secured Obligations in accordance with the terms of the Loan Documents, or
the ability of Lender to enforce any of its rights or remedies with respect to the Secured
Obligations; or (iii) the Collateral or Lender’s Liens on the Collateral or the priority of such
Liens. The parties agree that Borrower has reported net losses in every quarterly period since
inception and that as of December 31, 2009, Borrower’s liabilities exceeded its assets. In
addition, Borrower has submitted a new drug application to the FDA in December 2009 (the “NDA”).
The parties agree that the following shall not constitute a Material Adverse Effect: (a) continuing
losses as provided in the projections presented by Borrower to the Lender on April 6, 2010
(“Closing Projections”), (b) Borrower’s liabilities exceeding its assets in any given period as
provided in the Closing Projections and (c) any action by the FDA with respect to the NDA.

          “Maximum Term Loan Amount” means Fifteen Million and No/100 Dollars ($15,000,000).

          “Maximum Rate” shall have the meaning assigned to such term in Section 2.3.

          “Note” means the Term Note.

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          “Patent License” means any written agreement granting any right with respect to any invention
on which a Patent is in existence or a Patent application is pending, in which agreement Borrower
now holds or hereafter acquires any interest.

          “Patents” means all letters patent of, or rights corresponding thereto, in the United States
or in any other country, all registrations and recordings thereof, and all applications for letters
patent of, or rights corresponding thereto, in the United States or any other country.

          “Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender arising under
this Agreement or any other Loan Document; (ii) Indebtedness existing on the Closing Date which is
disclosed in Schedule 1A; provided, that Borrower agrees (x) that all principal, interest
and other amounts owed to General Electric Capital Corporation (“GE”) through the term of such
indebtedness shall, within 10 business days of the Closing Date, be deposited and maintained in a
separate deposit account subject to an Account Control Agreement until such indebtedness is paid in
full and (y) not to draw any advances or loans from GE or its assignee after the Closing Date;
(iii) Indebtedness of up to $2,000,000 outstanding at any time secured by a lien described in
clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the
lesser of the cost or fair market value of the Equipment financed with such Indebtedness; (iv)
Indebtedness to trade creditors incurred in the ordinary course of business, including Indebtedness
incurred in the ordinary course of business with corporate credit cards; (v) Indebtedness that also
constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations
in connection with letters of credit that are secured by cash or cash equivalents and issued on
behalf of the Borrower or a Subsidiary thereof in an amount not to exceed $50,000 at any time
outstanding, (viii) other Indebtedness in an amount not to exceed $250,000 at any time outstanding,
and (ix) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided
that the principal amount is not increased or the terms modified to impose materially more
burdensome terms upon Borrower or its Subsidiary, as the case may be.

          “Permitted Investment” means: (i) Investments existing on the Closing Date which are disclosed
in Schedule 1B; (ii) (a) marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency or any State thereof maturing within one year from the date
of acquisition thereof, (b) commercial paper maturing no more than one year from the date of
creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with
assets of at least $500,000,000 maturing no more than one year from the date of investment therein,
and (d) money market accounts; (iii) repurchases of stock from former employees, directors, or
consultants of Borrower under the terms of applicable repurchase agreements at the original
issuance price of such securities in an aggregate amount not to exceed $250,000 in any fiscal year,
provided that no Event of Default has occurred, is continuing or would exist after giving effect to
the repurchases; (iv) Investments accepted in connection with Permitted Transfers; (v) Investments
(including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the ordinary course of
Borrower’s business; (vi) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not affiliates, in the ordinary course
of business,

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provided that this subparagraph (vi) shall not apply to Investments of Borrower in any
Subsidiary; (vii) Investments consisting of loans not involving the net transfer on a substantially
contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase
of capital stock of Borrower pursuant to employee stock purchase plans or other similar agreements
approved by Borrower’s Board of Directors; (viii) Investments consisting of travel advances in the
ordinary course of business; (ix) Investments in newly-formed Subsidiaries organized in the United
States, provided that such Subsidiaries enter into a Joinder Agreement promptly after their
formation by Borrower and execute such other documents as shall be reasonably requested by Lender;
(x) Investments in Subsidiaries organized outside of the United States approved in advance in
writing by Lender; (xi) joint ventures or strategic alliances (other than the Addicere Proposed
Transaction) consisting of the licensing of technology or a product, the development of technology
or the providing of technical support, in each case, in the ordinary course of Borrower’s business
on commercially reasonable terms, provided that any cash Investments by Borrower do not exceed
$250,000 in the aggregate in any fiscal year; (xii) Investments in the Addicere Entity in an amount
not to exceed $50,000; (xiii) Investments consistent with the investment policy approved by
Borrower’s board of directors which has been provided to Lender prior to the Closing Date and (xiv)
additional Investments that do not exceed $250,000 in the aggregate.

          “Permitted Liens” means any and all of the following: (i) Liens in favor of Lender; (ii) Liens
existing on the Closing Date which are disclosed in Schedule 1C; (iii) Liens for taxes, fees,
assessments or other governmental charges or levies, either not delinquent or being contested in
good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor
in accordance with GAAP; (iv) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary course of
Borrower’s business and imposed without action of such parties; provided, that the payment thereof
is not yet required; (v) Liens arising from judgments, decrees or attachments in circumstances
which do not constitute an Event of Default hereunder; (vi) the following deposits, to the extent
made in the ordinary course of business: deposits under worker’s compensation, unemployment
insurance, social security and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or
other similar bonds for the performance of bids, tenders or contracts (other than for the repayment
of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or
environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other
similar bonds; (vii) Liens on Equipment or software or other intellectual property constituting
purchase money liens and liens in connection with capital leases securing Indebtedness permitted in
clause (iii) of “Permitted Indebtedness”; (viii) Liens incurred in connection with Subordinated
Indebtedness; (ix) leasehold interests in leases or subleases and licenses granted in the ordinary
course of business and not interfering in any material respect with the business of the licensor;
(x) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment
of custom duties that are promptly paid
on or before the date they become due; (xi) Liens on insurance proceeds securing the payment
of financed insurance premiums that are promptly paid on or before the date they become due
(provided that such Liens extend only to such insurance proceeds and not to any other property or
assets); (xii) statutory and common law rights of set-off and other similar rights as to deposits

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of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii)
easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business so long as they do not materially impair the
value or marketability of the related property; (xiv) Liens on cash or cash equivalents securing
obligations permitted under clause (vii) of the definition of Permitted Indebtedness; and (xv)
Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured
by Liens of the type described in clauses (i) through (xi) above; provided, that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and
the principal amount of the indebtedness being extended, renewed or refinanced (as may have been
reduced by any payment thereon) does not increase.

          “Permitted Transfers” means (i) sales of Inventory in the normal course of business, (ii)
exclusive and non-exclusive licenses and similar arrangements for the use of Intellectual Property
in the ordinary course of business and on commercially reasonable terms that could not result in a
legal transfer of title of the licensed property, (iii) dispositions of worn-out, obsolete or
surplus Equipment at fair market value in the ordinary course of business, (iv) other Transfers of
assets having a fair market value of not more than $250,000 in the aggregate in any fiscal year,
(v) disposition of ownership interests in the Addicere Entity pursuant to Section 7.15 and (vi)
Permitted Liens and Permitted Investments.

          “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability company, institution,
other entity or government.

          “Prime Rate” means for any day the prime rate as reported in The Wall Street Journal.

          “Preferred Stock” means at any given time any equity security issued by Borrower that has any
rights, preferences or privileges senior to Borrower’s common stock.

          “Prepayment Amount” shall have the meaning assigned to such term in Section 2.4.

          “Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit
Rights, and (ii) all customer lists, software, and business records related thereto.

          “Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document
(other than the Warrant or any equity-related document executed solely in connection with the
Warrant), including any obligation to pay any amount now owing or later arising.

          “Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in
amounts and on terms and conditions satisfactory to Lender in its sole discretion.

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          “Subsequent Financings” means the closing of all Borrower private offerings of equity
securities to institutional investors which become effective after the Closing Date but prior to
December 31, 2011.

          “Subsidiary” means an entity, whether corporate, partnership, limited liability company, joint
venture or otherwise, in which Borrower owns or controls 50% or more of the outstanding voting
securities, including each entity listed on Schedule 1 hereto.

          “Term Loan Advance” means any Term Loan funds advanced under this Agreement.

          “Term Loan Amortization Date” means February 1, 2011; provided, that if the FDA
approves AZ-004 (Staccato loxapine) for public sales and marketing in the United States on or
before February 1, 2011 the Term Loan Amortization Date shall be extended to May 1, 2011.

          “Term Loan Interest Rate” means the higher of (i) 10.75% and (ii) Prime Rate plus 6.50%;
provided, that in no event shall the Term Loan Interest Rate exceed 14%.

          “Term Loan Maturity Date” means the thirty third monthly anniversary of the Term Loan
Amortization Date.

          “Term Note” means a Promissory Note in substantially the form of Exhibit A.

          “Trademark License” means any written agreement granting any right to use any Trademark or
Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest.

          “Trademarks” means all trademarks (registered, common law or otherwise) and any applications
in connection therewith, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof.

          “UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the
State of California; provided, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s Lien
on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the
Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

          “Warrant” means the warrant entered into in connection with the Term Loan.

     Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto
to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding
Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise
specifically provided herein, any accounting term used in this Agreement or the other

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Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP, consistently applied.
Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in
the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.

SECTION 2.  THE TERM LOAN

     2.1 Term Loan.

     (a) Advance. Subject to the terms and conditions of this Agreement, Lender will make,
and Borrower agrees to draw, a Term Loan Advance equal to the Maximum Term Loan Amount on
the day following the Closing Date.

     (b) Advance Request. To obtain the Term Loan Advance, Borrower shall complete, sign
and deliver an Advance Request and Term Note to Lender. Lender shall fund the Term Loan
Advance in the manner requested by the Advance Request provided that each of the conditions
precedent to such Term Loan Advance is satisfied as of the requested Advance Date (or waived
by Lender). In the event that Lender shall, for any reason whatsoever fail to fund on such
Advance Request, then Lender shall immediately return the original Note to Borrower marked
“canceled”.

     (c) Interest. The principal balance of the Term Loan Advance shall bear interest
thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of
360 days, with interest computed daily based on the actual number of days elapsed. The Term
Loan Interest Rate will float and change on the day the Prime Rate changes from time to
time.

     (d) Payment. Borrower will pay interest on the Term Loan Advance in arrears on the
first day of each month, beginning June 1, 2010. Borrower shall repay the aggregate Term
Loan principal balance that is outstanding on the Term Loan Amortization Date in 33 equal
monthly installments of principal and interest commencing on the Term Loan Amortization Date
and continuing on the first business day of each month thereafter through the Term Loan
Maturity Date. The entire Term Loan principal balance and all accrued but unpaid interest
hereunder, shall be due and payable on Term Loan Maturity Date. Borrower shall make all
payments under this Agreement without setoff, recoupment or deduction and regardless of any
counterclaim or defense. Lender will initiate debit entries to the Borrower’s account as
authorized on the ACH Authorization on each payment date of all periodic obligations payable
to Lender under the Term Note or Term Loan Advance.

     2.2 Maximum Interest. Notwithstanding any provision in this Agreement, the Note, or any
other Loan Document, it is the parties’ intent not to contract for, charge or receive interest
at a rate that is greater than the maximum rate permissible by law that a court of competent
jurisdiction shall deem applicable hereto (which under the laws of the State of California
shall be deemed to be the laws relating to permissible rates of interest on

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commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to Lender an amount of interest in excess of the amount that would
have been payable if all of the Secured Obligations had at all times borne interest at the
Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows:
first, to the payment of principal outstanding on the Note; second, after all principal is
repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and
any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess
(if any) shall be refunded to Borrower.

     2.3 Default Interest. In the event any payment is not paid on the scheduled payment
date, an amount equal to five percent (5%) of the past due amount shall be payable on demand.
In addition, upon the occurrence and during the continuation of an Event of Default hereunder,
all Secured Obligations, including principal, interest, compounded interest, and professional
fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.1(c)
plus five percent (5%) per annum. In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in Section 2.1(c) or Section 2.4, as applicable.

     2.4 Prepayment. At its option upon at least 7 business days prior written notice to
Lender, Borrower may prepay all, but not less than all, of the outstanding Advances by paying
the entire principal balance, all accrued and unpaid interest, and all interest that would
have accrued had the Advances been outstanding through the Maturity Date (collectively, the
“Prepayment Amount”). If upon a Change in Control, Lender reasonably determines that the
surviving obligors comprising Borrower (taken as a whole) are less creditworthy than the
Borrower was immediately prior to the Change in Control and so notifies the Borrower in
writing within 30 days following the Change in Control, Borrower shall prepay the all of the
Secured Obligations (including, without limitation, the Prepayment Amount) within 30 days
following receipt of such written notice.

     2.5 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date,
(ii) the date that Borrower prepays the outstanding Secured Obligations, or (iii) the date
that the Secured Obligations become due and payable, Borrower shall pay Lender a charge of
$442,500. Notwithstanding the required payment date of such charge, it shall be deemed earned
by Lender as of the Closing Date.

SECTION 3. SECURITY INTEREST

     3.1 As security for the prompt, complete and indefeasible payment when due (whether on
the payment dates or otherwise) of all the Secured Obligations, Borrower grants to Lender a
security interest in all of Borrower’s personal property now owned or hereafter
acquired, including the following (collectively, the “Collateral”): (a) Receivables; (b)
Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property (but
excluding thirty-five percent (35%) of the voting capital stock of any foreign Subsidiary if
to not exclude such stock would cause Borrower adverse tax consequences under Internal Revenue
Code Section 956 (or any successor statute)); (g) Deposit Accounts; (h) Cash; (i)

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Goods; (j)
Commercial Tort Claims; all customer lists, software, and business records related to the
Collateral described in (a)-(j) above and any other tangible and intangible personal property
not otherwise expressly addressed above of Borrower whether now or hereafter owned or
existing, leased, consigned by or to, or acquired by, Borrower and wherever located; and, (k)
to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions
to, substitutions and replacements for, and rents, profits and products of each of the
foregoing; provided, however, that the Collateral shall not include the
Borrower’s Intellectual Property but shall include all Accounts and General Intangibles that
consist of rights to payment and proceeds from the sale, licensing or disposition of all or
any part, or rights in, the Intellectual Property (the “Rights to Payment”). Notwithstanding
the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a
security interest in the underlying Intellectual Property is necessary to have a security
interest in the Rights to Payment, then the Collateral shall automatically, and effective as
of the date of this Agreement, include the Intellectual Property to the extent necessary to
permit perfection of Lender’s security interest in the Rights to Payment.

SECTION 4. CONDITIONS PRECEDENT TO LOAN

          The obligations of Lender to make the Term Loan hereunder are subject to the satisfaction by
Borrower of the following conditions:

     4.1 Advance. On or prior to the Advance Date, Borrower shall have delivered to Lender
the following:

     (a) executed originals of the Loan Documents, Account Control Agreements, a legal
opinion of Borrower’s counsel, and all other documents and instruments reasonably required
by Lender to effectuate the transactions contemplated hereby or to create and perfect the
Liens of Lender with respect to all Collateral, in all cases in form and substance
reasonably acceptable to Lender;

     (b) certified copy of resolutions of Borrower’s board of directors evidencing approval
of (i) the Term Loan and other transactions evidenced by the Loan Documents; and (ii) the
Warrant and transactions evidenced thereby;

     (c) certified copies of the Certificate of Incorporation and the Bylaws, as amended
through the Closing Date, of Borrower;

     (d) a certificate of good standing for Borrower from its state of incorporation and
similar certificates from all other jurisdictions in which it does business and where the
failure to be qualified would reasonably be expected to have a Material Adverse Effect; and

     (e) such other documents as Lender may reasonably request.

     4.2 Further Conditions. On the Advance Date:

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     (a) Lender shall have received (i) an Advance Request and a Note for the Advance as
required by Section 2.1(b) each duly executed by Borrower’s Chief Executive Officer or Chief
Financial Officer, (ii) any other documents Lender may reasonably request and (iii) payment
of the Facility Charge and reimbursement of Lender’s documented expenses reimbursable
pursuant to this Agreement, which amounts may be deducted from the Advance;.

     (b) The representations and warranties set forth in this Agreement and in Section 5 and
in the Warrant shall be true and correct in all material respects on and as of the Advance
Date with the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

     (c) Borrower shall be in compliance with all the terms and provisions set forth herein
and in each other Loan Document on its part to be observed or performed, and at the time of
and immediately after such Advance no Event of Default shall have occurred and be
continuing.

     (d) The Advance Request shall be deemed to constitute a representation and warranty by
Borrower on the relevant Advance Date as to the matters specified in paragraphs (b) and (c)
of this Section 4.2 and as to the matters set forth in the Advance Request.

     4.3 No Default. As of the Closing Date and Advance Date, (i) no fact or condition exists
that would (or would, with the passage of time, the giving of notice, or both) constitute an
Event of Default and (ii) no event that has had or could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER

     Borrower represents and warrants that:

     5.1 Corporate Status. Each of Parent and Allegro is a corporation duly organized,
legally existing and in good standing under the laws of the State of Delaware, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of its business or
location of its properties require such qualifications and where the failure to be qualified
could reasonably be expected to have a Material Adverse Effect. Borrower’s present name,
former names (if any), locations, place of formation, tax identification number,
organizational identification number and other information are correctly set forth in Exhibit
C, as may be updated by Borrower in a written notice (including any Compliance Certificate)
provided to Lender after the Closing Date.

     5.2 Collateral. Borrower owns the Collateral and the Intellectual Property, free of all
Liens, except for Permitted Liens. Borrower has the power and authority to grant to Lender a
Lien in the Collateral as security for the Secured Obligations.

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     5.3 Consents. Borrower’s execution, delivery and performance of the Note, this Agreement
and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have been duly
authorized by all necessary corporate action of Borrower, (ii) will not result in the creation
or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens
created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of
Borrower’s Certificate or Articles of Incorporation (as applicable), bylaws, or any, law,
regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv)
except as described on Schedule 5.3, do not violate any material contract or agreement or
require the consent or approval of any other Person. The individual or individuals executing
the Loan Documents and the Warrant are duly authorized to do so.

     5.4 Material Adverse Effect. No event that has had or could reasonably be expected to
have a Material Adverse Effect has occurred and is continuing. Borrower is not aware of any
event likely to occur that is reasonably expected to result in a Material Adverse Effect.

     5.5 Actions Before Governmental Authorities. Except as described on Schedule 5.5, there
are no actions, suits or proceedings at law or in equity or by or before any governmental
authority now pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or its property (i) which involve any Loan Document or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely determined, would
reasonably be expected to, individually or in the aggregate, result in a Material Adverse
Effect.

     5.6 Laws. Borrower is not in violation of any law, rule or regulation, or in default
with respect to any judgment, writ, injunction or decree of any governmental authority, where
such violation or default is reasonably expected to result in a Material Adverse Effect.
Except as described on Schedule 5.6, Borrower is not in default in any manner under any
provision of any material agreement or instrument evidencing indebtedness, or any other
material agreement to which it is a party or by which it is bound.

     5.7 Information Correct and Current. No information, report, Advance Request, financial
statement, exhibit or schedule furnished, by or on behalf of Borrower to Lender in connection
with any Loan Document or included therein or delivered pursuant thereto contained, contains
or will contain any material misstatement of fact or omitted, omits or will omit to state any
material fact necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading at the time such statement was made
or deemed made. Additionally, any and all financial or business projections provided by
Borrower to Lender shall be (i) provided in good faith and based on the most current data and
information available to Borrower, and (ii) the most current of such projections provided to
Borrower’s Board of Directors.

     5.8 Tax Matters. Except as described on Schedule 5.8, (a) Borrower has filed all
federal, state and local tax returns that it is required to file, (b) Borrower has duly paid
or fully reserved for all taxes or installments thereof (including any interest or penalties) as

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and when due, which have or may become due pursuant to such returns, and (c) Borrower has
paid or fully reserved for any tax assessment received by Borrower for the three (3) years
preceding the Closing Date, if any (including any taxes being contested in good faith and by
appropriate proceedings).

     5.9 Intellectual Property Claims. Borrower is the sole owner of, or otherwise has the
right to use, the Intellectual Property. Except as described on Schedule 5.9,(i) each of the
material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part of
the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and
(iii) no claim has been made to Borrower that any material part of the Intellectual Property
violates the rights of any third party. Exhibit D is a true, correct and complete list of each
of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements
under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap
software licenses), together with application or registration numbers, as applicable, owned by
Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material
breach of, nor has Borrower failed to perform any material obligations under, any of the
foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to
any such contract, license or agreement is in material breach thereof or has failed to perform
any material obligations thereunder.

     5.10 Intellectual Property. Except as described on Schedule 5.10, Borrower has all
material rights with respect to (i) Intellectual Property necessary in the operation or
conduct of Borrower’s business as currently conducted by Borrower and (ii) the Staccato©
technology necessary to license such technology and otherwise conduct business related to such
technology as proposed to be conducted by Borrower. Without limiting the generality of the
foregoing, and in the case of Licenses, except for restrictions that are unenforceable under
Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s
business, to freely transfer, license or assign Intellectual Property without condition,
restriction or payment of any kind (other than (x) license payments in the ordinary course of
business and (y) payments due to Symphony Allegro Holdings LLC by Borrower related to payments
received with respect to AZ-104, AZ-002 and AZ-004 as specified in that certain Amended and
Restated Purchase Option by and among Parent, Allegro and Symphony Allegro Holdings LLC dated
as of June 15, 2009) to any third party, and Borrower owns or has the right to use, pursuant
to valid licenses, all software development tools, library functions, compilers and all other
third-party software and other items that are used in the design, development, promotion,
sale, license, manufacture, import, export, use or distribution of Borrower Products.

     5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual Property
owned by Borrower or Borrower Product has been or is subject to any actual or, to the
knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the
United States Patent and Trademark Office or any corresponding foreign office or agency) or
outstanding decree, order, judgment, settlement agreement or stipulation that
restricts in any material manner Borrower’s use, transfer or licensing thereof or that
may materially affect the validity, use or enforceability thereof. There is no decree, order,
judgment, agreement, stipulation, arbitral award or other provision entered into in

14

 

connection
with any litigation or proceeding that obligates Borrower to grant licenses or ownership
interest in any future Intellectual Property related to the operation or conduct of the
business of Borrower or Borrower Products. Borrower has not received any written notice or
claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning
Borrower’s ownership in any Intellectual Property (or written notice of any claim challenging
or questioning the ownership in any licensed Intellectual Property of the owner thereof) or
suggesting that any third party has any claim of legal or beneficial ownership with respect
thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim. Neither
Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products
materially infringes the Intellectual Property or other rights of others.

     5.12 Financial Accounts. Exhibit E, as may be updated by the Borrower in a written
notice provided to Lender after the Closing Date, is a true, correct and complete list of (a)
all banks and other financial institutions at which Borrower or any Subsidiary maintains
Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an
account holding Investment Property, and such exhibit correctly identifies the name, address
and telephone number of each bank or other institution, the name in which the account is held,
a description of the purpose of the account, and the complete account number therefor.

     5.13 Employee Loans. Borrower has no outstanding loans to any employee, officer or
director of the Borrower nor has Borrower guaranteed the payment of any loan made to an
employee, officer or director of the Borrower by a third party.

     5.14 Capitalization and Subsidiaries. Borrower’s capitalization as of the Closing Date
is set forth on Schedule 5.14 annexed hereto. Borrower does not own any stock, partnership
interest or other securities of any Person, except for Permitted Investments. Attached as
Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing
Date, is a true, correct and complete list of each Subsidiary.

SECTION 6. INSURANCE; INDEMNIFICATION

     6.1 Coverage. Borrower shall cause to be carried and maintained commercial general
liability insurance, on an occurrence form, against risks customarily insured against in
Borrower’s line of business. Such risks shall include the risks of bodily injury, including
death, property damage, personal injury, advertising injury, and contractual liability per the
terms of the indemnification agreement found in Section 6.3. Borrower has and agrees to
maintain a minimum (i) of $1,000,000 of commercial general liability insurance for each
occurrence, (ii) $10,000,000 of product liability insurance for each occurrence and (iii)
$15,000,000 of directors and officers’ insurance for each occurrence and $15,000,000 in the
aggregate. So long as there are any Secured Obligations outstanding, Borrower shall also
cause to be carried and maintained insurance upon the Collateral, insuring against “all
risks” of physical loss or damage howsoever caused, in an amount not less than the full
replacement cost of the Collateral, provided that such insurance may be subject to standard

15

 

exceptions and deductibles. Borrower shall also carry and maintain an employee dishonesty
insurance policy in an amount not less than $100,000.

     6.2 Certificates. Borrower shall deliver to Lender certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the
obligations contained in this Section 6.2. Borrower’s insurance certificate shall state
Lender is an additional insured for commercial general liability and a loss payee for property
damage insurance and, subject to the insurer’s approval, a loss payee for employee dishonesty
insurance, a loss payee for property insurance and an additional insured for liability
insurance for any future insurance that Borrower may acquire from such insurer. Attached to
the certificates of insurance will be additional insured endorsements for liability and
lender’s loss payable endorsements for all risk property damage insurance and employee
dishonesty. All certificates of insurance will provide for a minimum of thirty (30) days
advance written notice to Lender of cancellation. Any failure of Lender to scrutinize such
insurance certificates for compliance is not a waiver of any of Lender’s rights, all of which
are reserved.

     6.3 Indemnity. Borrower agrees to indemnify and hold Lender and its officers, directors,
employees, agents, in-house attorneys, representatives and shareholders (collectively, the
“Indemnitees”) harmless from and against any and all claims, costs, expenses, damages and
liabilities (including such claims, costs, expenses, damages and liabilities based on
liability in tort, including strict liability in tort), including reasonable attorneys’ fees
and disbursements and other costs of investigation or defense (including those incurred upon
any appeal) (collectively, “Claims”), that may be instituted or asserted against or incurred
by Lender or any such Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents or the administration of such
credit, or in connection with or arising out of the transactions contemplated hereunder and
thereunder, or any actions or failures to act in connection therewith, or arising out of the
disposition or utilization of the Collateral, excluding in all cases Claims to the extent
resulting from any Indemnitee’s gross negligence or willful misconduct. Borrower agrees to
pay, and to save Lender harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all excise, sales or other similar taxes (excluding taxes
imposed on or measured by the net income of Lender) that may be payable or determined to be
payable with respect to any of the Collateral or this Agreement.

SECTION 7. COVENANTS OF BORROWER

     Borrower agrees as follows:

     7.1 Financial Reports. Borrower shall furnish to Lender the Compliance Certificate in
the form of Exhibit F monthly within 30 days after the end of each month and the financial
statements listed hereinafter (the “Financial Statements”):

     (a) as soon as practicable (and in any event within 30 days) after the end of each
month, unaudited interim and year-to-date financial statements as of the end of such

16

 

month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income and cash flows accompanied by a report detailing any
material contingencies (including the commencement of any material litigation by or against
Borrower) or any other occurrence that would reasonably be expected to have a Material
Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial
Officer to the effect that they have been prepared in accordance with GAAP, except (i) for
the absence of footnotes, (ii) that they are subject to normal year end adjustments, and
(iii) they do not contain certain non-cash items that are customarily included in quarterly
and annual financial statements;

     (b) as soon as practicable (and in any event within 45 days) after the end of each
calendar quarter, unaudited interim and year-to-date financial statements as of the end of
such calendar quarter (prepared on a consolidated and consolidating basis, if applicable),
including balance sheet and related statements of income and cash flows accompanied by a
report detailing any material contingencies (including the commencement of any material
litigation by or against Borrower) or any other occurrence that would reasonably be expected
to have a Material Adverse Effect, certified by Borrower’s Chief Executive Officer or Chief
Financial Officer to the effect that they have been prepared in accordance with GAAP, except
(i) for the absence of footnotes, and (ii) that they are subject to normal year end
adjustments; as well as the most recent capitalization table for Borrower, including the
weighted average exercise price of employee stock options;

     (c) as soon as practicable (and in any event within 90 days) after the end of each
fiscal year, unqualified audited financial statements as of the end of such year (prepared
on a consolidated and consolidating basis, if applicable), including balance sheet and
related statements of income and cash flows, and setting forth in comparative form the
corresponding figures for the preceding fiscal year, certified by a firm of independent
certified public accountants selected by Borrower and reasonably acceptable to Lender,
accompanied by any management report from such accountants;

     (d) promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements, financial statements or reports that Borrower has made available to
holders of its stock and copies of any regular, periodic and special reports or registration
statements that Borrower files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or any national securities exchange
(provided, however, notwithstanding the foregoing provisions of this clause (d), Borrower
may satisfy its obligations under this clause (d) with respect to any materials that
Borrower files with the Securities and Exchange Commission by providing notice of such
filing to Lender, which notice shall include a URL for the webpage maintained by the
Securities and Exchange Commission where a copy of such filing is publicly available); and

     (e) financial and business projections promptly following their approval by Borrower’s
Board of Directors, as well as budgets, operating plans and other financial information
reasonably requested by Lender.

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The executed Compliance Certificate may be sent via facsimile to Lender at (650) 473-9194 or
via e-mail to kconte@herculestech.com. All Financial Statements required to be delivered
pursuant to clauses (a), (b) and (c) shall be sent via e-mail to
financialstatements@herculestech.com with a copy to kconte@herculestech.com provided, that if
e-mail is not available or sending such Financial Statements via e-mail is not possible, they
shall be sent via facsimile to Lender at: (866) 468-8916, attention Chief Credit Officer.

     7.2 Management Rights. Borrower shall permit any representative that Lender authorizes,
including its attorneys and accountants, to inspect the Collateral and examine and make copies
and abstracts of the books of account and records of Borrower at reasonable times and upon
reasonable notice during normal business hours; provided that such inspections and
examinations shall not take place more often than twice per calendar year unless an Event of
Default has occurred and is continuing. In addition, any such representative shall have the
right to meet with management and officers of Borrower to discuss such books of account and
records as part of such inspections. In addition, Lender shall be entitled at reasonable
times and intervals to consult with and advise the management and officers of Borrower
concerning significant business issues affecting Borrower. Such consultations shall not
unreasonably interfere with Borrower’s business operations. The parties intend that the
rights granted Lender shall constitute “management rights” within the meaning of 29 C.F.R
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Lender
with respect to any business issues shall not be deemed to give Lender, nor be deemed an
exercise by Lender of, control over Borrower’s management or policies.

     7.3 Further Assurances. Borrower shall from time to time execute, deliver and file,
alone or with Lender, any financing statements, security agreements, collateral assignments,
notices, control agreements, or other documents to perfect or give the highest priority to
Lender’s Lien (subject to Permitted Liens) on the Collateral. Borrower shall from time to
time procure any instruments or documents as may be requested by Lender, and take all further
action that may be necessary or desirable, or that Lender may reasonably request, to perfect
and protect the Liens granted hereby and thereby. In addition, and for such purposes only,
Borrower hereby authorizes Lender to execute and deliver on behalf of Borrower and to file
such financing statements, collateral assignments, notices, control agreements, security
agreements and other documents without the signature of Borrower either in Lender’s name or in
the name of Lender as agent and attorney-in-fact for Borrower. Borrower shall protect and
defend Borrower’s title to the Collateral and Lender’s Lien thereon against all Persons
claiming any interest adverse to Borrower or Lender other than Permitted Liens.

     7.4 Compromise of Agreements. With respect to Accounts with a combined value in excess
of twenty percent (20%) of all of Borrower’s Accounts then outstanding, if any, Borrower shall
not (a) grant any material extension of the time of payment thereof ,
(b) to any material extent, compromise, compound or settle the same for less than the
full amount thereof in excess of $250,000, (c) release, wholly or partly, any Person liable
for the payment thereof , or (d) allow any credit or discount whatsoever thereon other than
trade discounts granted by Borrower in the ordinary course of business of Borrower.

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     7.5 Indebtedness. Borrower shall not create, incur, assume, guarantee or be or remain
liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness, or prepay any Indebtedness (other than Indebtedness hereunder in
accordance with Section 2.4) or take any actions which impose on Borrower an obligation to
prepay any Indebtedness, except for the conversion of Indebtedness into equity securities and
the payment of cash in lieu of fractional shares in connection with such conversion.

     7.6 Collateral. Borrower shall at all times keep the Collateral, the Intellectual
Property and all other property and assets used in Borrower’s business or in which Borrower
now or hereafter holds any interest free and clear from any legal process or Liens whatsoever
(except for Permitted Liens), and shall give Lender prompt written notice of any legal process
affecting the Collateral, the Intellectual Property, such other property and assets, or any
Liens thereon. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s
title to its assets from and against all Persons claiming any interest adverse to such
Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s
property and assets free and clear from any legal process or Liens whatsoever (except for
Permitted Liens), and shall give Lender prompt written notice of any legal process affecting
such Subsidiary’s assets. Borrower shall not agree with any Person other than Lender not to
encumber its property, except for agreements with lenders or lessors with respect to specific
Equipment Permitted Liens so long as Lender’s Lien is permitted with respect to such
Equipment.

     7.7 Investments. Borrower shall not directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do, other than
Permitted Investments.

     7.8 Distributions. Borrower shall not, and shall not allow any Subsidiary to, (a)
repurchase or redeem any class of stock or other equity interest other than pursuant to
employee, director or consultant repurchase plans or other similar agreements, provided,
however, in each case the repurchase or redemption price does not exceed the original
consideration paid for such stock or equity interest, or (b) declare or pay any cash dividend
or make a cash distribution on any class of stock or other equity interest, except that a
Subsidiary may pay dividends or make distributions to Borrower, or (c) lend money to any
employees, officers or directors or guarantee the payment of any such loans granted by a third
party in excess of $250,000 in the aggregate or (d) waive, release or forgive any indebtedness
owed by any employees, officers or directors in excess of $250,000 in the aggregate.

     7.9 Transfers. Except for Permitted Transfers, Borrower shall not voluntarily or
involuntarily transfer, sell, lease, license, lend or in any other manner convey any
equitable, beneficial or legal interest in any material portion of their assets.

     7.10 Mergers or Acquisitions. Borrower shall not merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business organization (other
than mergers or consolidations of a Subsidiary into another Subsidiary

19

 

or into Borrower), or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital
stock or property of another Person.

     7.11 Taxes. Borrower and its Subsidiaries shall pay when due all taxes, fees or other
charges of any nature whatsoever (together with any related interest or penalties) now or
hereafter imposed or assessed against Borrower, Lender or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s rents,
receipts or earnings arising therefrom. Borrower shall file on or before the due date
therefor all personal property tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower and its Subsidiaries may contest, in good faith and by appropriate
proceedings, taxes for which Borrower or its Subsidiary (as applicable) maintains adequate
reserves therefor in accordance with GAAP.

     7.12 Corporate Changes. Neither Borrower nor any Subsidiary shall change its corporate
name, legal form or jurisdiction of formation without fifteen (15) days’ prior written notice
to Lender. Neither Borrower nor any Subsidiary shall relocate its chief executive office or
its principal place of business unless: (i) it has provided prior written notice to Lender;
and (ii) such relocation shall be within the continental United States. Neither Borrower nor
any Subsidiary shall relocate any item of Collateral (other than (x) sales of Inventory in the
ordinary course of business, (y) relocations of Equipment having an aggregate value of up to
$150,000 in any fiscal year, and (z) relocations of Collateral from a location described on
Exhibit C to another location described on Exhibit C) unless (i) it has provided prompt
written notice to Lender, (ii) such relocation is within the continental United States and,
(iii) if such relocation is to a third party bailee, it has delivered a bailee agreement in
form and substance reasonably acceptable to Lender.

     7.13 Deposit Accounts. Neither Borrower nor any Subsidiary shall maintain any Deposit
Accounts, or accounts holding Investment Property, except with respect to which Lender has an
Account Control Agreement; provided, that Alexza UK Limited shall be permitted to
maintain its deposit account listed on Exhibit E without an Account Control Agreement so long
as cash or other personal property in such account does not exceed $10,000.

     7.14 Subsidiaries. Borrower shall notify Lender of each Subsidiary formed subsequent to
the Closing Date and, within 15 days of formation, shall cause any such Subsidiary (other than
the Addicere Entity) to execute and deliver to Lender a Joinder Agreement unless to do so
would cause Borrower adverse tax consequences under Internal Revenue Code Section 956 (or any
successor statute).

     7.15 Addicere Proposed Transaction. Lender hereby consents to the Addicere Proposed
Transaction. Upon the formation of the Addicere Entity, the Addicere Entity shall not be
required to execute and deliver a Joinder Agreement pursuant to Section 7.14. Lender agrees
(i) to the disposition of any ownership interests in the Addicere Entity in connection with
the sale or transfer of such ownership interests to a joint venture partner in consideration
of a commercially reasonable investment in the Addicere Entity by such joint venture partner
and (ii) release its Lien over such ownership interests as required to effect

20

 

such transfer.
Borrower agrees to cause its portion of the Addicere Entity’s revenue to be upstreamed to
Borrower as soon as commercially practicable.

     7.16 Margin Regulations; Investment Company. Borrower shall not, nor permit any of its
Subsidiaries to, (i) become an “investment company” or a company “controlled” by an
“investment company” or a “subsidiary” of an “investment company,” all within the meaning of
the Investment Company Act of 1940 or (ii) undertake as one of its important activities
extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) or use any of the proceeds of the Term Loan directly
or indirectly, for the purpose of purchasing or carrying any “margin stock” (as defined in
Regulation U of the Federal Reserve Board), for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any “margin stock” or for any
other purpose which might cause any of the Loans to be considered a “purpose credit” within
the meaning of Regulation T, U or X of the Federal Reserve Board.

     7.17 Subsidiary Stock Certificates. Borrower shall, within 10 business days of the
Closing Date, deliver stock certificates evidencing the equity interests of Allegro, Alexza
Singapore Pte. Ltd. and Alexza Singapore Manufacturing Pte. Ltd. that comprise Collateral.

SECTION 8. RIGHT TO INVEST

     8.1 Lender or its assignee or nominee shall have the right, in its discretion, to
participate in any and all of the Subsequent Financings in an aggregate amount of up to One
Million Dollars ($1,000,000) on the same terms, conditions and pricing afforded to others
participating in any such Subsequent Financings.

     8.2 In lieu of giving notice to Lender or its assignee or nominee of, and an opportunity
to participate in, any Subsequent Financing prior to the closing thereof, Borrower may, at its
election, satisfy its obligations under Section 8.1 with respect to such Subsequent Financing
by giving notice (a “Sale Notice”) to Lender of the closing of such Subsequent
Financing, which such notice shall be delivered by Borrower within ten (10) business days of
such closing and shall include an offer by Borrower to sell to Lender or its assignee or
nominee, on terms and conditions (including with respect to pricing) that are no less
favorable to Lender than those provided to investors in such Subsequent Financing, up to the
number of the type of equity securities issued in such Subsequent Financing that may be
purchased for an amount equal to the difference between (i) One Million Dollars ($1,000,000)
and (ii) the amount previously invested by Lender or its assignees or
nominees pursuant to this Section 8. Lender or its assignee or nominee shall have ten
(10) business days from receipt of a Sale Notice to elect to accept the offer to sell equity
securities set forth therein by delivering a written notice of acceptance to Borrower. For
the avoidance of doubt, the fact that Lender may have the right pursuant to this Section 8.2
to purchase the type equity securities offered in a Subsequent Financing subsequent to the
closing of such Subsequent Financing shall not be considered a term or condition of any

21

 

offer made pursuant to this Section 8.2 that is less favorable to Lender than the terms and
conditions provided to investors in such Subsequent Financing.

SECTION 9. EVENTS OF DEFAULT

     The occurrence of any one or more of the following events shall be an Event of Default:

     9.1 Payments. Borrower fails to pay any amount due under this Agreement, the Note or any
of the other Loan Documents on the due date; provided, that in the event that Lender fails to
auto-debit Borrower’s account for a scheduled payment and Borrower has sufficient funds in
such account, then no Event of Default shall be deemed to have occurred and no late fees,
default interest or compounding of interest shall apply; or

     9.2 Covenants. Borrower breaches or defaults in the performance of any covenant or
Secured Obligation under this Agreement, the Note, or any of the other Loan Documents, and (a)
with respect to a default under any covenant under this Agreement (other than under Sections
6, 7.5, 7.6, 7.7, 7.8 or 7.9) such default continues for more than ten (10) days after the
earlier of the date on which (i) Lender has given notice of such default to Borrower and (ii)
Borrower has actual knowledge of such default or (b) with respect to a default under any of
Sections 6, 7.5, 7.6, 7.7, 7.8 or 7.9, the occurrence of such default; or

     9.3 Material Adverse Effect. A circumstance has occurred that would reasonably be
expected to have a Material Adverse Effect; or

     9.4 Other Loan Documents. The occurrence of any default under any Loan Document not
otherwise specifically referenced in this Section 9 or any other agreement between Borrower
and Lender and such default continues for more than ten (10) days after the earlier of (a)
Lender has given notice of such default to Borrower, or (b) Borrower has actual knowledge of
such default; or

     9.5 Representations. Any representation or warranty made by Borrower in any Loan
Document or in the Warrant shall have been false or misleading in any material respect at the
time when made; or

     9.6 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of creditors;
or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform
under the Loan Documents; or (iii) shall file a voluntary petition in bankruptcy; or (iv)
shall file any petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation pertinent to such circumstances; or (v)
shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets
or property of Borrower; or (vi) shall cease operations of its business as its business has
normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or
its directors or majority shareholders shall take any action initiating any of the foregoing
actions

22

 

described in clauses (i) through (vi); or (B) either (i) forty-five (45) days shall
have expired after the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, without such action being
dismissed or all orders or proceedings thereunder affecting the operations or the business of
Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set
aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall
file any answer admitting or not contesting the material allegations of a petition filed
against Borrower in any such proceedings; or (iv) the court in which such proceedings are
pending shall enter a decree or order granting the relief sought in any such proceedings; or
(v) forty-five (45) days shall have expired after the appointment, without the consent or
acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any
substantial part of the properties of Borrower without such appointment being vacated; or

     9.7 Attachments; Judgments. Any portion of Borrower’s assets is attached or seized, or a
levy is filed against any such assets, or a judgment or judgments is/are entered for the
payment of money, individually or in the aggregate, of at least $250,000 which is not paid or
bonded within twenty (20) days, or Borrower is enjoined or in any way prevented by court order
from conducting any part of its business; or

     9.8 Other Obligations. The occurrence of any default under any agreement or obligation
of Borrower involving any Indebtedness in excess of $250,000, or the occurrence of any default
under any agreement or obligation of Borrower that could reasonably be expected to have a
Material Adverse Effect.

SECTION 10. REMEDIES

     10.1 General. Upon and during the continuance of any one or more Events of Default, (i)
Lender may, at its option, accelerate and demand payment of all or any part of the Secured
Obligations together with a Prepayment Amount and declare them to be immediately due and
payable (provided, that upon the occurrence of an Event of Default of the type described in
Section 9.6, the Note and all of the Secured Obligations shall automatically be accelerated
and made due and payable, in each case without any further notice or act), and (ii) Lender may
notify any of Borrower’s account debtors to make payment directly to Lender, compromise the
amount of any such account on Borrower’s behalf and endorse Lender’s name without recourse on
any such payment for deposit directly to Lender’s account. Lender may exercise all rights and
remedies with respect to the Collateral under the Loan Documents or otherwise available to it
under the UCC and other applicable law, including the right to release, hold, sell, lease,
liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to
occupy, utilize, process and commingle the Collateral. All Lender’s rights and remedies
shall be cumulative and not exclusive.

     10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of any
Event of Default, Lender may, at any time or from time to time, apply, collect, liquidate,
sell in one or more sales, lease or otherwise dispose of, any or all of the

23

 

Collateral, in its
then condition or following any commercially reasonable preparation or processing, in such
order as Lender may elect. Any such sale may be made either at public or private sale at its
place of business or elsewhere. Borrower agrees that any such public or private sale may
occur upon ten (10) calendar days’ prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place designated by
Lender that is reasonably convenient to Lender and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be applied by
Lender in the following order of priorities:

First, to Lender in an amount sufficient to pay in full Lender’s costs and
professionals’ and advisors’ fees and expenses as described in Section 11.11;

Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in such
order and priority as Lender may choose in its sole discretion; and

Finally, after the full, final, and indefeasible payment in Cash of all of the
Secured Obligations, to any creditor holding a junior Lien on the Collateral, or to
Borrower or its representatives or as a court of competent jurisdiction may direct.

Lender shall be deemed to have acted reasonably in the custody, preservation and disposition of any
of the Collateral if it complies with the obligations of a secured party under the UCC.

     10.3 No Waiver. Lender shall be under no obligation to marshal any of the Collateral for
the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any,
to require Lender to marshal any Collateral.

     10.4 Forbearance from Exercise of Rights Under Account Control Agreements. Lender agrees
that Lender shall not exercise any rights with respect to the Account Control Agreements
(including without limitation, the exercise of exclusive control) unless an Event of Default
shall have occurred and be continuing.

     10.5 Cumulative Remedies. The rights, powers and remedies of Lender hereunder shall be
in addition to all rights, powers and remedies given by statute or rule of law and are
cumulative. The exercise of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of or election of remedies with respect to any other
rights, powers and remedies of Lender.

SECTION 11. MISCELLANEOUS

     11.1 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective only to the extent and duration of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

24

 

     11.2 Notice. Except as otherwise provided herein, any notice, demand, request, consent,
approval, declaration, service of process or other communication (including the delivery of
Financial Statements) that is required, contemplated, or permitted under the Loan Documents or
with respect to the subject matter hereof shall be in writing, and shall be deemed to have
been validly served, given, delivered, and received upon the earlier of: (i) the day of
transmission by facsimile or hand delivery or delivery by an overnight express service or
overnight mail delivery service; or (ii) the third calendar day after deposit in the United
States mails, with proper first class postage prepaid, in each case addressed to the party to
be notified as follows:

	 	(a)	 	If to Lender:
	 
	 	 	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Nick Martitsch

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3068
	 
	 	(b)	 	If to Borrower:
	 
	 	 	 	ALEXZA PHARMACEUTICALS, INC.

Attention: Chief Financial Officer

2091 Stierlin Court

Mountain View, CA 94043

Facsimile: 650-944-7999

Telephone: 650-944-7000

     or to such other address as each party may designate for itself by like notice.

     11.3 Entire Agreement; Amendments. This Agreement, the Note, and the other Loan
Documents constitute the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof and thereof, and supersede and replace in their entirety any
prior proposals, term sheets, letters, negotiations or other documents or agreements, whether
written or oral, with respect to the subject matter hereof or thereof (including Lender’s
revised proposal letter dated March 11, 2010). None of the terms of this Agreement, the Note
or any of the other Loan Documents may be amended except by an instrument executed by each of
the parties hereto.

     11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.

25

 

     11.5 No Waiver. The powers conferred upon Lender by this Agreement are solely to protect
its rights hereunder and under the other Loan Documents and its interest in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. No omission or delay by
Lender at any time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be
a waiver of any such right or remedy to which Lender is entitled, nor shall it in any way
affect the right of Lender to enforce such provisions thereafter.

     11.6 Survival. All agreements, representations and warranties contained in this
Agreement, the Note and the other Loan Documents or in any document delivered pursuant hereto
or thereto shall be for the benefit of Lender and shall survive the execution and delivery of
this Agreement and the expiration or other termination of this Agreement.

     11.7 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its permitted assigns
(if any). Borrower shall not assign its obligations under this Agreement, the Note or any of
the other Loan Documents without Lender’s express prior written consent, and any such
attempted assignment shall be void and of no effect. Lender may assign, transfer, or endorse
its rights hereunder and under the other Loan Documents without prior notice to Borrower, and
all of such rights shall inure to the benefit of Lender’s successors and assigns.

     11.8 Governing Law. This Agreement, the Note and the other Loan Documents have been
negotiated and delivered to Lender in the State of California, and shall have been accepted by
Lender in the State of California. Payment to Lender by Borrower of the Secured Obligations
is due in the State of California. This Agreement, the Note and the other Loan Documents
shall be governed by, and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the application of laws of
any other jurisdiction.

     11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the
reference requirement of Section 11.10 is not applicable) arising in or under or related to
this Agreement, the Note or any of the other Loan Documents may be brought in any state or
federal court located in the State of California. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive
personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as
to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection with this
Agreement, the Note or the other Loan Documents. Service of process on any party hereto in
any action arising out of or relating to this Agreement shall be effective if given in
accordance with the requirements for notice set forth in Section
11.2, and shall be deemed effective and received as set forth in Section 11.2. Nothing
herein shall affect the right to serve process in any other manner permitted by law or shall
limit the right of either party to bring proceedings in the courts of any other jurisdiction.

26

 

     11.10 Mutual Waiver of Jury Trial / Judicial Reference.

     (a) Because disputes arising in connection with complex financial transactions are most
quickly and economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH OF
BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE
OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR BY LENDER OR
ITS ASSIGNEE AGAINST BORROWER. This waiver extends to all such Claims, including Claims
that involve Persons other than Borrower and Lender; Claims that arise out of or are in any
way connected to the relationship between Borrower and Lender; and any Claims for damages,
breach of contract, tort, specific performance, or any equitable or legal relief of any
kind, arising out of this Agreement, any other Loan Document.

     (b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference to a private
judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a
mutually acceptable referee or, if the parties cannot agree, a referee selected by the
Presiding Judge of the Santa Clara County, California. Such proceeding shall be conducted
in Santa Clara County, California, with California rules of evidence and discovery
applicable to such proceeding.

     (c) In the event Claims are to be resolved by judicial reference, either party may seek
from a court identified in Section 11.9, any prejudgment order, writ or other relief and
have such prejudgment order, writ or other relief enforced to the fullest extent permitted
by law notwithstanding that all Claims are otherwise subject to resolution by judicial
reference.

     11.11 Professional Fees. Borrower promises to pay Lender’s fees and expenses necessary
to finalize the loan documentation, including but not limited to reasonable attorneys fees,
UCC searches, filing costs, and other miscellaneous expenses in an amount not to exceed
$50,000. In addition, Borrower promises to pay any and all reasonable attorneys’ and other
professionals’ fees and expenses (including fees and expenses of in-house counsel) incurred by
Lender after the Closing Date in connection with or related to: (a) the Term Loan; (b) the
administration, collection, or enforcement of the Term Loan; (c) the amendment or modification
of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan
Documents; (e) the protection, preservation, sale, lease, liquidation, or disposition of
Collateral or the exercise of remedies with respect to the Collateral; (f) any legal,
litigation, administrative, arbitration, or out of court proceeding in
connection with or related to Borrower or the Collateral, and any appeal or review
thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan
Documents, including representing Lender in any adversary proceeding or contested matter

27

 

commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

     11.12 Confidentiality. Lender acknowledges that certain items of Collateral and
information provided to Lender by Borrower are confidential and proprietary information of
Borrower, if and to the extent such information either (x) is marked as confidential by
Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential
(the “Confidential Information”). Accordingly, Lender agrees that any Confidential
Information it may obtain in the course of acquiring, administering, or perfecting Lender’s
security interest in the Collateral shall not be disclosed to any other person or entity in
any manner whatsoever, in whole or in part, without the prior written consent of Borrower,
except that Lender may disclose any such information: (a) to its own directors, officers,
employees, accountants, counsel and other professional advisors and to its affiliates if
Lender in its sole discretion determines that any such party should have access to such
information in connection with such party’s responsibilities in connection with the Term Loan
or this Agreement and, provided that such recipient of such Confidential Information either
(i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is
otherwise subject to confidentiality restrictions that reasonably protect against the
disclosure of Confidential Information; (b) if such information is generally available to the
public through no fault of the Lender; (c) if required or appropriate in any report, statement
or testimony submitted to any governmental authority having or claiming to have jurisdiction
over Lender; (d) if required or appropriate in response to any summons or subpoena or in
connection with any litigation, to the extent permitted or deemed advisable by Lender’s
counsel; (e) to comply with any legal requirement or law applicable to Lender; (f) to the
extent reasonably necessary in connection with the exercise of any right or remedy under any
Loan Document, including Lender’s sale, lease, or other disposition of Collateral after
default; (g) to any participant or assignee of Lender or any prospective participant or
assignee; provided, that such participant or assignee or prospective participant or assignee
agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the
prior consent of Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of Borrower or any of its affiliates or any guarantor under
this Agreement or the other Loan Documents. Lender hereby acknowledges that Borrower is a
publicly traded company and the trading in securities of Borrower is subject to applicable
securities legislation. Lender hereby further acknowledges that as a result of the disclosure
that may be made to it of any Confidential Information, it may possess material, non-public
information of Borrower. Accordingly, Lender hereby acknowledges that any trading by its
employees, officers, agents or representatives in the securities of Borrower may entail the
violation by Lender, its employees, officers, agents or representatives of applicable
securities and other legislation and regulations.

     11.13 Assignment of Rights. Borrower acknowledges and understands that Lender may sell
and assign all or part of its interest hereunder and under the Note(s) and Loan Documents to
any person or entity (an “Assignee”). After such assignment the term “Lender” as used in the
Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with
all rights, powers and remedies of Lender hereunder with

28

 

respect to the interest so assigned;
but with respect to any such interest not so transferred, Lender shall retain all rights,
powers and remedies hereby given. No such assignment by Lender shall relieve Borrower of any
of its obligations hereunder. Lender agrees that in the event of any transfer by it of the
Note(s), it will endorse thereon a notation as to the portion of the principal of the Note(s),
which shall have been paid at the time of such transfer and as to the date to which interest
shall have been last paid thereon.

     11.14 Revival of Secured Obligations. This Agreement and the Loan Documents shall remain
in full force and effect and continue to be effective if any petition is filed by or against
Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an
assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any
significant part of Borrower’s assets, or if any payment or transfer of Collateral is
recovered from Lender. The Loan Documents and the Secured Obligations and Collateral security
shall continue to be effective, or shall be revived or reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations or any transfer of Collateral to
Lender, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must
otherwise be restored or returned by, or is recovered from, Lender or by any obligee of the
Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment, performance, or transfer of Collateral had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced, avoided,
avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations
shall be deemed, without any further action or documentation, to have been revived and
reinstated except to the extent of the full, final, and indefeasible payment to Lender in
Cash.

     11.15 Counterparts. This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an original, but all of
which counterparts shall constitute but one and the same instrument.

     11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are intended,
nor will be interpreted, to provide or create any third-party beneficiary rights or any other
rights of any kind in any person other than Lender and Borrower unless specifically provided
otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents
will be personal and solely between the Lender and the Borrower.

     11.17 Publicity. Lender may use Borrower’s name and logo, and include a brief
description of the relationship between Borrower and Lender, in Lender’s marketing materials.

     11.18 Joint and Several Liability. Each of Parent, Allegro and the Joined Subsidiaries
is accepting joint and several liability hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by Lender under this Agreement,
for the mutual benefit, directly and indirectly, of each of Parent, Allegro and the Joined
Subsidiaries and in consideration of their undertakings to accept joint and several liability
for the Secured Obligations. Each of Parent, Allegro and the

29

 

Joined Subsidiaries, jointly and
severally, hereby irrevocably, absolutely and unconditionally accepts, not merely as a surety
but also as a co-debtor, joint and several liability with respect to the payment and
performance of all of the Secured Obligations (including, without limitation, any Secured
Obligations arising under this Section 11.18), it being the intention of Parent,
Allegro and the Joined Subsidiaries that all the Secured Obligations shall be the joint and
several obligations of Parent, Allegro and the Joined Subsidiaries without preferences or
distinction among them. If and to the extent that any of Parent, Allegro or the Joined
Subsidiaries shall fail to make any payment with respect to any of the Secured Obligations as
and when due or to perform any of the Secured Obligations in accordance with the terms
thereof, then in each such event, the other Persons composing Borrower will make such payment
with respect to, or perform, such Secured Obligation. Each of Parent, Allegro and the Joined
Subsidiaries hereby agrees that it will not enforce any of its rights of contribution or
subrogation against any other Persons composing Borrower with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments made by it to
Lender with respect to any of the Secured Obligations or any collateral security therefor
until such time as all of the Secured Obligations have been paid in full in cash. Any claim
which any of Parent, Allegro or the Joined Subsidiaries may have against any other Persons
composing Borrower with respect to any payments to Lender hereunder or under any other Loan
Documents are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Secured Obligations arising hereunder or thereunder, to
the prior payment in full in cash of the Secured Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding
under the laws of any jurisdiction relating to any of Parent, Allegro or the Joined
Subsidiaries, their respective debt or assets, whether voluntary or involuntary, all such
Secured Obligations shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Persons
composing Borrower therefor.

     11.19 Administrative Borrower. Allegro and each of the Joined Subsidiaries irrevocably
appoints Parent as the borrowing agent and attorney-in-fact (“Administrative Borrower”) for
all Persons composing Borrower which appointment shall remain in full force and effect unless
and until Lender shall have received prior written notice signed by Allegro and each of the
Joined Subsidiaries that such appointment has been revoked and that another Person has been
appointed Administrative Borrower.

(SIGNATURES TO FOLLOW)

30

 

     IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this Loan and
Security Agreement as of the day and year first above written.

	 	 	 	 	 	 	 

	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	ALEXZA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:
	 	/s/ Thomas B. King
 

	 	 
	 

	 	Print Name:
	 	Thomas B. King	 	 
	 

	 	Title:
	 	President & Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 
	 	 	SYMPHONY ALLEGRO, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:
	 	/s/ Thomas B. King
 

	 	 
	 

	 	Print Name:
	 	Thomas B. King	 	 
	 

	 	Title:
	 	President	 	 

Accepted in Palo Alto, California:

	 	 	 	 	 	 	 

	 

	 	LENDER:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:
	 	/s/ K. Nicholas Martitsch
 

	 	 
	 

	 	Print Name:
	 	K. Nicholas Martitsch	 	 
	 

	 	Title:
	 	Associate General Counsel	 	 

31exv10w2

Exhibit 10.2

Execution Version

THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT AGREEMENT

To Purchase Shares of the Common Stock of

ALEXZA PHARMACEUTICALS, INC.

Dated as of May 4, 2010 (the “Effective Date”)

     WHEREAS, Alexza Pharmaceuticals, Inc., a Delaware corporation (the “Company”), has
entered into a Loan and Security Agreement of even date herewith (the “Loan Agreement”)
with Hercules Technology Growth Capital, Inc., a Maryland corporation (the
“Warrantholder”);

     WHEREAS, the Company desires to grant to Warrantholder, in consideration for, among other
things, the financial accommodations provided for in the Loan Agreement, the right to purchase
shares of its Common Stock (as defined below) pursuant to this Warrant Agreement (this
“Warrant”);

     NOW, THEREFORE, in consideration of the Warrantholder executing and delivering the Loan
Agreement and providing the financial accommodations contemplated therein, and in consideration of
the mutual covenants and agreements contained herein, the Company and Warrantholder agree as
follows:

          SECTION 1. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.

     For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and
purchase, from the Company, up to One Million Twelve Thousand Five Hundred and No/100 Dollars
($1,012,500) in fully paid and non-assessable shares of the Common Stock at the Exercise Price (as
defined below) per share. The number and Exercise Price of such shares are subject to adjustment
as provided in Section 8. As used herein, the following terms shall have the following meanings:

     “1934 Act” means the Securities Exchange Act of 1934, as amended.

     “Acknowledgment of Exercise” has the meaning given to it in Section 3(a).

     “Act” means the Securities Act of 1933, as amended.

     “Charter” means the Company’s Certificate of Incorporation or other constitutional
document, as the same may be amended from time to time.

     “Claims” has the meaning given to it in Section 12(p).

     “Common Stock” means the Company’s common stock, $0.0001 par value per share.

     “Company” has the meaning given to it in the preamble to this Warrant.

 

 

     “Effective Date” has the meaning given to it in the preamble to this Warrant.

     “Exercise Price” means $2.69.

     “Lender” has the meaning given to it in the Loan Agreement.

     “Loan Agreement” has the meaning given to it in the preamble to this Warrant.

     “Merger Event” means (i) a merger or consolidation involving the Company in which
(x) the Company is not the surviving entity, or (y) the outstanding shares of the Company’s
capital stock are otherwise converted into or exchanged for shares of capital of another
entity; or (ii) the sale of all or substantially all of the assets of the Company.

     “Net Issuance” has the meaning given to it in Section 3(a).

     “Notice of Exercise” has the meaning given to it in Section 3(a).

     “Preferred Stock” means at any given time any equity security issued by Company
that has any rights, preferences or privileges senior to the Common Stock.

     “Purchase Price” means, with respect to any exercise of this Warrant, an amount
equal to the Exercise Price as of the relevant time multiplied by the number of shares of
Common Stock requested to be exercised under this Warrant pursuant to such exercise.

     “SEC” means the Securities and Exchange Commission.

     “Transfer Notice” has the meaning given to it in Section 11.

     “Warrant” has the meaning given to it in the preamble to this Warrant.

     “Warrant Term” has the meaning given to it in Section 2.

     “Warrantholder” has the meaning given to it in the preamble to this Warrant.

          SECTION 2. TERM OF THE AGREEMENT.

     Except as otherwise provided for herein, the term of this Warrant (the “Warrant Term”)
and the right to purchase Common Stock as granted herein shall commence on the Effective Date and
shall be exercisable for a period ending five (5) years from the Effective Date.

          SECTION 3. EXERCISE OF THE PURCHASE RIGHTS.

     (a) Exercise. The purchase rights set forth in this Warrant are exercisable by the
Warrantholder, in whole or in part, at any time, or from time to time, during the Warrant Term, by
tendering to the Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the “Notice of Exercise”), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the
terms set forth below, and in no event later than five (5) business days thereafter, the Company
shall issue to the Warrantholder a certificate for the number of shares of Common Stock purchased
and shall execute the acknowledgment of exercise in the form attached hereto as Exhibit II
(the “Acknowledgment of Exercise”) indicating the number of shares which remain subject to
future purchases, if any.

     The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or
(ii) by surrender of all or a portion of this Warrant for shares of Common Stock to be exercised
under this Warrant and, if applicable, an amended Warrant representing the remaining number of
shares purchasable hereunder, as determined below (“Net Issuance”). If the Warrantholder
elects the Net Issuance method, the Company will issue Common Stock in accordance with the
following formula:

2

 

	 	 	 	 	 	 	 

	X

	 	=
	 	Y(A-B)
 

	 	 
	 

	 	 	 	A
	 	 

	 	 	 	 	 

	Where:

	 	X =
	 	the number of shares of Common Stock to be issued to the
Warrantholder.
	 
	 	 	 	 
	 

	 	 	 	          Y = the number of shares of Common Stock
requested to be exercised under this Warrant.
	 
	 	 	 	 
	 

	 	 	 	          A = the fair market value of one (1) share of
Common Stock at the time of the exercise of this Warrant.
	 
	 	 	 	 
	 

	 	B =
	 	the Exercise Price.

  For purposes of the above calculation, the fair market value of one (1) share of Common Stock
shall mean:

     (i) if the Common Stock is traded on the New York Stock Exchange, the American
Stock Exchange, any exchange operated by the NASDAQ Stock Market, Inc. or any other
securities exchange, the fair market value of one (1) share of Common Stock shall be
deemed to be the average of the closing prices over a five (5) day period ending three
(3) days before the day the fair market value of one (1) share of Common Stock is
being determined; or

     (ii) if, at the time of determination of the fair market value of one (1) share
of Common Stock in accordance with the terms of this Warrant, the Common Stock is not
listed on any securities exchange, the fair market value of one (1) share of Common
Stock shall be the highest price per share that the Company could obtain from a
willing buyer (not a current employee or director) for one (1) share of Common Stock
sold by the Company (based upon the valuation of all shares of the Company), from
authorized but unissued shares, as determined in good faith by its Board of Directors,
unless the Company shall become subject to a Merger Event, in which case the fair
market value of one (1) share of Common Stock shall be deemed to be the per share
value received by the holders of Common Stock on a common equivalent basis pursuant to
such Merger Event.

     Upon partial exercise by either cash or Net Issuance, the Company shall promptly issue an
agreement substantially in the form of this Warrant representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such agreement shall be identical to
those contained herein, including, but not limited to, the Effective Date hereof.

     (b) Exercise Prior to Expiration. To the extent that the Warrantholder has not
exercised its purchase rights under this Warrant to all Common Stock subject hereto, and if the
fair market value of one (1) share of the Common Stock is greater than the Exercise Price then in
effect, this Warrant shall be deemed automatically exercised pursuant to the Net Issuance method
set forth in Section 3(a) (even if not surrendered) as of the date immediately prior to the date of
expiration of the Warrant Term. For purposes of such automatic exercise, the fair market value of
one (1) share of the Common Stock upon such automatic exercise shall be determined as of the date
immediately prior to the date of expiration of the Warrant Term pursuant to Section 3(a). To the
extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this
Section 3(b), the Company agrees to promptly notify the Warrantholder of the number of shares of
Common Stock, if any, the Warrantholder is to receive by reason of such automatic exercise.

3

 

     (c) Legend. Each certificate for shares of Common Stock issuable upon exercise of
this Warrant, unless at the time of exercise such shares are registered under the Act, shall bear
the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.”

Any certificate for shares of Common Stock issuable upon exercise of this Warrant issued at any
time in exchange or substitution for any certificate bearing such legend (unless at that time such
shares are registered under the Act or otherwise may be issued without legends under Rule 144 under
the Act) shall also bear such legend unless, in the written opinion of counsel selected by the
holder of such certificate, which such opinion and counsel shall be reasonably acceptable to the
Company, the Common Stock represented thereby need no longer be subject to restrictions on resale
under the Act.

          SECTION 4. RESERVATION OF SHARES.

     During the Warrant Term, the Company will at all times have authorized, reserved and, subject
to Section 9(j), registered, as applicable, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights to purchase Common Stock as provided for herein.

          SECTION 5. NO FRACTIONAL SHARES OR SCRIP.

     No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment
therefor upon the basis of the Exercise Price then in effect.

          SECTION 6. NO RIGHTS AS STOCKHOLDER.

     This Warrant does not entitle the Warrantholder to any voting rights or other rights as a
shareholder/stockholder of the Company prior to the exercise of this Warrant.

          SECTION 7. WARRANTHOLDER REGISTRY.

     The Company shall maintain a registry showing the name, address and facsimile number of the
registered holder of this Warrant. Warrantholder’s initial address and facsimile number, for
purposes of such registry, is set forth in Section 12(g). Warrantholder may change such address or
facsimile number by giving written notice of such changed address to the Company.

          SECTION 8. ADJUSTMENT RIGHTS.

     The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject
to adjustment, as follows:

     (a) Merger Event. If at any time there shall be a Merger Event, then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder shall thereafter be
entitled to receive, upon exercise of this Warrant, the kind, amount and value of shares of common
stock or other securities or property of the successor, surviving or purchasing corporation
resulting from, or participating in, such Merger Event that would have been issuable if
Warrantholder had exercised this Warrant immediately prior to the Merger Event. In any such

4

 

case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect to the rights and
interests of the Warrantholder after the Merger Event to the end that the provisions of this
Warrant (including adjustments of the Exercise Price) shall be applicable in their entirety, and to
the greatest extent possible. Without limiting the foregoing, in connection with any Merger Event,
upon the closing thereof, the successor, surviving or purchasing entity shall assume the
obligations of this Warrant. The provisions of this Section 8(a) shall similarly apply to
successive Merger Events. In connection with a Merger Event and upon Warrantholder’s written
election to the Company, the Company shall cause this Warrant to be exchanged for the consideration
that Warrantholder would have received if Warrantholder chose to exercise its right to have shares
issued pursuant to the Net Issuance provisions of this Warrant without actually exercising such
right, acquiring such shares and exchanging such shares for such consideration.

     (b) Reclassification of Shares. Except as set forth in Section 8(a), if the Company
at any time shall, by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were subject to the
purchase rights under this Warrant immediately prior to such combination, reclassification,
exchange, subdivision or other change.

     (c) Subdivision or Combination of Shares. If the Company at any time shall combine or
subdivide its Common Stock, (i) in the case of a subdivision, the Exercise Price shall be
proportionately decreased, and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be proportionately increased, or (ii) in the case of a combination, the Exercise
Price shall be proportionately increased, and the number of shares of Common Stock issuable upon
the exercise of this Warrant shall be proportionately decreased.

     (d) Stock Dividends. If the Company at any time while this Warrant is outstanding and
unexpired shall:

     (i) pay a dividend with respect to the Common Stock payable in Common Stock, then the
Exercise Price shall be adjusted, from and after the date of determination of stockholders
entitled to receive such dividend or distribution, to that price determined by multiplying
the Exercise Price in effect immediately prior to such date of determination by a fraction
(A) the numerator of which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (B) the denominator of which shall
be the total number of shares of Common Stock outstanding immediately after such dividend
or distribution; or

     (ii) pay any dividend or make any distribution with respect to the Common Stock
payable in assets of the Company (other than cash), except any such distribution
specifically provided for in Sections 8(a), (b), (c) or (d)(i), then the Exercise Price
shall be adjusted, from and after the date of such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to the date of
such dividend or distribution by a fraction (A) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the date of such dividend
or distribution multiplied by the fair market value of one (1) share of Common Stock as of
such date as determined in accordance with Section 3(a), less the fair market value (as
determined by the Company’s Board of Directors in good faith) of said assets so
distributed, and (B) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the date of such dividend or distribution

5

 

multiplied by the fair market value of one (1) share of Common Stock as of such date
as determined in accordance with Section 3(a).

     (iii) make any other distribution with respect to Common Stock, except any
distribution specifically provided for in any other clause of this Section 8 and except for
any equity or equity equivalent security issued pursuant to any stockholder rights plan
adopted by the Company’s Board of Directors providing for the issuance to, or acquisition
by, existing stockholders of the Company of additional shares of Common Stock upon the
occurrence of actions specified in such stockholder rights plan, including acquisition by
any person of a specified percentage of the outstanding Common Stock (a “Rights
Plan”), then, in each such case, provision shall be made by the Company such that the
Warrantholder shall receive upon exercise or conversion of this Warrant a proportionate
share of any such distribution as though it were the holder of the Common Stock as of the
record date fixed for the determination of the stockholders of the Company entitled to
receive such distribution.

     (e) Antidilution Rights. To the extent that any antidilution rights applicable to the
Common Stock purchasable hereunder may be set forth in the Company’s Charter, the Company shall
promptly provide the Warrantholder with a copy of any restatement, amendment, modification or
waiver of the Charter that impairs or reduces such antidilution rights; provided, that no such
amendment, modification or waiver shall impair or reduce the antidilution rights, if any, set forth
in the Company’s Charter with respect to the Common Stock issuable hereunder unless such amendment,
modification or waiver affects the rights of Warrantholder with respect to the Common Stock
issuable hereunder in the same manner as it affects all other holders of Common Stock. The Company
shall, within ten (10) business days of the end of each fiscal quarter following the Effective
Date, provide Warrantholder with written notice of any issuance of its stock or other equity
security during such fiscal quarter that triggered an antidilution adjustment under the
antidilution rights applicable to the Common Stock purchasable hereunder, if any, set forth in the
Company’s Charter , which notice shall include (a) the price at which such stock or security was
sold, (b) the number of shares issued, and (c) such other information as reasonably necessary for
Warrantholder to verify that such antidilution adjustment occurred and the amount of any such
adjustment. For the avoidance of doubt, there shall be no duplicate antidilution adjustment
pursuant to this subsection (e), the forgoing subsection (d) and the Company’s Charter.

     (f) Notice of Adjustments. If: (i) the Company shall declare any dividend or
distribution upon its Common Stock, whether in stock, cash, property or other securities (other
than with respect to any equity or equity equivalent security issued pursuant to any Rights Plan
adopted by the Company’s Board of Directors); (ii) the Company shall offer for subscription prorata
to the holders of any Common Stock any additional shares of stock of any class or other rights;
(iii) there shall be any Merger Event; or (iv) there shall be any voluntary dissolution,
liquidation or winding up of the Company; then, in connection with each such event, the Company
shall send to the Warrantholder: (A) at least ten (10) days’ prior written notice of the date on
which the books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of Common Stock shall
be entitled thereto) or for determining rights to vote in respect of such Merger Event,
dissolution, liquidation or winding up; and (B) in the case of any such Merger Event, dissolution,
liquidation or winding up, at least ten (10) days’ prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up).

6

 

     Each such written notice shall set forth, in reasonable detail, (i) the event requiring the
notice, and (ii) if, pursuant to an adjustment right in this Section 8, any adjustment is required
to be made, (A) the amount of such adjustment, (B) the method by which such adjustment was
calculated, (C) the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D) the
number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be
given in accordance with Section 12(g)(i) or (iii). To the extent that any of the items referred
to in the foregoing clauses (A)-(D) are not determinable as of the date of such written notice, the
written notice shall, if applicable, include a good faith estimate of such items.

     (g) Timely Notice. Failure to timely provide such notice required by subsection (f)
above shall entitle Warrantholder to retain the benefit of the applicable notice period
notwithstanding anything to the contrary contained in any insufficient notice received by
Warrantholder; provided, that, notwithstanding anything herein to the contrary, Warrantholder may
not seek to enjoin any proposed transaction or unwind any completed transaction described in the
foregoing clause (f) for which notice was not timely delivered but Warrantholder shall be entitled
to applicable monetary damages.

          SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

     (a) Reservation of Common Stock. The Common Stock issuable upon exercise of the
Warrantholder’s rights has been duly and validly reserved and, when issued in accordance with the
provisions of this Warrant, will be validly issued, fully paid and non-assessable, and will be free
of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the
Common Stock issuable pursuant to this Warrant may be subject to restrictions on transfer under
state and/or federal securities laws. The Company has made available to the Warrantholder true,
correct and complete copies of its current Charter and current bylaws. The issuance of certificates
for shares of Common Stock upon exercise of this Warrant shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Common Stock; provided,
that the Company shall not be required to pay any tax that may be payable in respect of any
transfer of this Warrant, the Common Stock issuable upon exercise of this Warrant or the issuance
and delivery of any certificate representing the Common Stock issuable upon exercise of this
Warrant in a name other than that of the Warrantholder.

     (b) Due Authority. The execution and delivery by the Company of this Warrant and the
performance of all obligations of the Company hereunder, including the issuance to Warrantholder of
the right to acquire the shares of Common Stock, have been duly authorized by all necessary
corporate action on the part of the Company. This Warrant: (1) does not violate the Company’s
current Charter or current bylaws; (2) does not contravene any law or governmental rule, regulation
or order applicable to it; and (3) does not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which the Company is a
party or by which it is bound as of the date hereof. This Warrant constitutes a legal, valid and
binding agreement of the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws affecting the enforcement of creditors’ rights in general, and except that
the enforceability of this Warrant is subject to general principles of equity.

     (c) Consents and Approvals. As of the Effective Date, no consent or approval of,
giving of notice to, registration with, or taking of any other action in respect of any state,
federal or other governmental authority or agency is required with respect to the execution,
delivery and performance by the Company of its obligations under this Warrant, except for the
filing of (i) any

7

 

filings required pursuant to Regulation D under the Act, (ii) any filing required by
applicable state securities law, (iii) any filings required pursuant to Section 9(j) and (iv) any
periodic or current reports required by the 1934 Act to be filed by Company. Each filing required
by the foregoing clauses (i)-(iv) will be effective by the time required thereby.

     (d) Issued Securities. All issued and outstanding shares of Common Stock, Preferred
Stock or any other securities of the Company have been duly authorized and validly issued and all
issued and outstanding shares of Common Stock, Preferred Stock or any equity other securities of
the Company are fully paid and nonassessable. All outstanding shares of Common Stock, Preferred
Stock and any other securities of the Company were issued in compliance with all applicable federal
and state securities laws in all material respects. In addition, the capitalization of
the Company as of the Effective Date is set forth on Schedule 5.14 annexed to the Loan Agreement.
Except as set forth in the Loan Agreement, as of the Effective Date, no stockholder of the Company
has preemptive rights to purchase new issuances of the Company’s capital stock.

     (e) Insurance. The Company has in full force and effect insurance policies, with
extended coverage, insuring the Company and its property and business against such losses and
risks, and in such amounts, as are customary for corporations engaged in a similar business and
similarly situated and as otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f) [Reserved.]

     (g) Exempt Transaction. Subject to the accuracy of the Warrantholder’s
representations in Section 10, the issuance of the Common Stock upon exercise of this Warrant will
each constitute a transaction exempt from (i) the registration requirements of Section 5 of the
Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the
applicable state securities laws, in each case, pursuant to applicable laws and regulations in
effect as of the Effective Date.

     (h) Compliance with Rule 144. If the Warrantholder proposes to sell Common Stock
issuable upon the exercise of this Warrant in compliance with Rule 144 under the Act, then, upon
Warrantholder’s written request to the Company, the Company shall furnish to the Warrantholder,
within ten (10) days after receipt of such request, a written statement confirming the Company’s
compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be
amended from time to time; provided, that this subsection (e) shall not require the Company
to make any filings with the SEC (including, without limitation, any filing under the Act or the
Exchange Act), if any, that the Company is not otherwise obligated to make.

     (i) Information Rights. During the term of this Warrant, Warrantholder shall be
entitled to the information rights contained in Section 7.1 of the Loan Agreement, and Section 7.1
of the Loan Agreement is hereby incorporated into this Warrant by this reference as though fully
set forth herein; provided, however, that the Company shall not, once all Indebtedness (as defined
in the Loan Agreement) owed by the Company to Warrantholder has been repaid, be required to (i)
deliver a Compliance Certificate nor (ii) deliver any such other information required by Section
7.1 of the Loan Agreement so long as the Company is subject to SEC reporting obligations under
Section 13(a) or Section 15(d) of the 1934 Act and the Company has complied with such reporting
obligations.

     (j) Registration of Shares. The Company shall list the shares of Common Stock subject
to this Warrant for trading on The NASDAQ Global Market pursuant to an application for additional
listing of such shares which the Company shall deliver to NASDAQ prior to 5:30 p.m. (Eastern Time)
on or before the fifth business day following the Effective Date. Following such listing the
Company shall (i) remain subject to SEC reporting obligations under Section 13(a) or

8

 

Section 15(d) of the 1934 Act and (ii) otherwise use commercially reasonable efforts to
maintain such listing, in each case, at all times during the Warrant Term.

          SECTION 10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

     This Warrant has been entered into by the Company in reliance upon the following
representations and covenants of the Warrantholder:

     (a) Investment Purpose. The right to acquire Common Stock or the Common Stock
issuable upon exercise of the Warrantholder’s rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof, and the
Warrantholder has no present intention of selling or engaging in any public distribution of the
same except as would not result in a violation of the Act or any applicable state securities laws.

     (b) Private Issue. The Warrantholder understands (i) that the Common Stock issuable
upon exercise of this Warrant is not registered under the Act or qualified under applicable state
securities laws on the ground that the issuance contemplated by this Warrant will be exempt from
the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on
such exemption is predicated on the representations set forth in this Section 10.

     (c) Disposition of the Warrantholder’s Rights. Warrantholder agrees to make any
disposition of any of its rights to acquire Common Stock hereunder or any Common Stock received
upon exercise of this Warrant in accordance with applicable state and federal securities laws.

     (d) Financial Risk. The Warrantholder has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its investment, and has
the ability to bear the economic risks of its investment.

     (e) Risk of No Registration. The Warrantholder understands that if the Company does
not file reports pursuant to either Section 13(a) or Section 15(d) of the 1934 Act, or if a
registration statement covering this Warrant or the shares of Common Stock issuable upon exercise
of this Warrant, as applicable, is not in effect when it desires to sell (i) the rights to purchase
Common Stock pursuant to this Warrant or (ii) the Common Stock issuable upon exercise of the right
to purchase, the Warrantholder may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of (A) its rights hereunder to purchase Common
Stock or (B) Common Stock issued or issuable hereunder that might be made by it in reliance upon
Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule.
The Warrantholder hereby acknowledges and agrees that if a registration statement under the Act
covering the shares of Common Stock issuable upon exercise of this Warrant is not effective at the
time this Warrant is exercised, the Warrantholder shall only be permitted to exercise this Warrant
by means of a “Net Issuance” pursuant to Section 3(a).

     (f) Accredited Investor. Warrantholder is an “accredited investor” within the meaning
of the Rule 501 of Regulation D under the Act, as presently in effect.

          SECTION 11. TRANSFERS.

     Subject to compliance with applicable federal and state securities laws and the terms and
conditions contained in Section 10, this Warrant and all rights hereunder are transferable, in
whole or in part, without charge to the holder hereof (except for transfer taxes) upon surrender of
this Warrant properly endorsed. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when
endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed and its transfer

9

 

recorded on the Company’s books, shall be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant. Subject to compliance with applicable federal and state
securities laws and the terms and conditions contained in Section 10, the transfer of this Warrant
shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer
in the form attached hereto as Exhibit III (the “Transfer Notice”) at its principal
offices and the payment to the Company of all transfer taxes and other governmental charges imposed
on such transfer. Until the Company receives such Transfer Notice, the Company may treat the
registered owner hereof as the owner for all purposes.

          SECTION 12. MISCELLANEOUS.

     (a) Effective Date. The provisions of this Warrant shall be construed and shall be
given effect in all respects as if it had been executed and delivered by the Company on the date
hereof. This Warrant shall be binding upon any successors or assigns of the Company and
Warrantholder.

     (b) Remedies. In the event of any default hereunder, the non-defaulting party
reserves its right to protect and enforce its rights either by suit in equity and/or by action at
law, including but not limited to an action for damages as a result of any such default; provided,
that the parties hereto declare that it is impossible to measure in money the damages which will
accrue to Warrantholder by reason of the Company’s failure to perform any of the obligations under
this Warrant and agree that the terms of this Warrant shall be specifically enforceable by
Warrrantholder. If Warrantholder institutes any action or proceeding to specifically enforce the
provisions hereof, any person against whom such action or proceeding is brought hereby waives the
claim or defense therein that Warrantholder has an adequate remedy at law, and such person shall
not offer in any such action or proceeding the claim or defense that such remedy at law exists.

     (c) No Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be reasonably necessary or appropriate in order to
protect the rights of the Warrantholder against impairment.

     (d) Additional Documents. The Company, upon execution of this Warrant, shall provide
the Warrantholder with certified resolutions authorizing this Warrant in form and substance
reasonably acceptable to Warrantholder.

     (e) Attorney’s Fees. In any litigation, arbitration or court proceeding between the
Company and the Warrantholder relating hereto, the prevailing party shall be entitled to reasonable
attorneys’ fees and expenses and all reasonable costs of proceedings incurred in enforcing this
Warrant. For the purposes of this Section 12(e), attorneys’ fees shall include without limitation
reasonable fees incurred in connection with the following: (i) contempt proceedings; (ii)
discovery; (iii) any motion, proceeding or other activity of any kind in connection with an
insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v)
post-judgment motions and proceedings of any kind, including without limitation any activity taken
to collect or enforce any judgment.

     (f) Severability. In the event any one or more of the provisions of this Warrant
shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this
Warrant shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced
by a mutually acceptable valid, legal and enforceable provision, which comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable provision.

10

 

     (g) Notices. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication that is required,
contemplated, or permitted under this Warrant or with respect to the subject matter hereof shall be
in writing, and shall be deemed to have been validly served, given, delivered, and received: (i)
upon personal delivery, (ii) upon confirmation receipt that the communication was successfully sent
to the applicable number if sent by facsimile; (iii) one day after being sent, when sent by
professional overnight courier service, of (iv) five (5) days after posting when sent by registered
or certified mail, and shall be addressed to the party to be notified as follows:

          If to Warrantholder:

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Manuel Henriquez

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

          (i) If to the Company:

ALEXZA PHARMACEUTICALS, INC.

Attention: Chief Financial Officer

2091 Stierlin Court

Mountain View, CA 94043

Facsimile: 650-944-7999

Telephone: 650-944-7000

or to such other address as each party may designate for itself by like notice.

     (h) Entire Agreement; Amendments. This Warrant constitutes the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof, and supersedes and
replaces in their entirety any prior proposals, term sheets, letters, negotiations or other
documents or agreements, whether written or oral, with respect to the subject matter hereof
(including Lender’s proposal letter dated March 11, 2010). None of the terms of this Warrant may
be amended except by an instrument executed by each of the parties hereto.

     (i) Headings. The various headings in this Warrant are inserted for convenience only
and shall not affect the meaning or interpretation of this Warrant or any provisions hereof.

     (j) Advice of Counsel. Each of the parties represents to each other party hereto that
it has discussed (or had an opportunity to discuss) with its counsel this Warrant and,
specifically, the provisions of Sections 12(n), 12(o), 12(p) and 12(q).

     (k) No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Warrant. In the event an ambiguity or question of intent or
interpretation arises, this Warrant shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Warrant.

     (l) No Waiver. Except for the requirement that this Warrant be exercised (or be
deemed exercised), if at all, during the Warrant Term, no omission or delay by either party hereto
at any time to enforce any right or remedy reserved to it, or to require performance of any of the

11

 

terms, covenants or provisions hereof by the other party hereto at any time designated, shall
be a waiver of any such right or remedy to which such party is entitled, nor shall it in any way
affect the right of such party to enforce such provisions thereafter.

     (m) Survival. All agreements, representations and warranties contained in this
Warrant or in any document delivered pursuant hereto shall be for the benefit of Warrantholder or
the Company, as the case may be, and shall survive the execution and delivery of this Warrant and
the expiration or other termination of this Warrant.

     (n) Governing Law. This Warrant has been negotiated and delivered to Warrantholder in
the State of California, and shall have been accepted by Warrantholder in the State of California.
Delivery of Common Stock to Warrantholder by the Company under this Warrant is due in the State of
California. This Warrant shall be governed by, and construed and enforced in accordance with, the
laws of the State of California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

     (o) Consent to Jurisdiction and Venue. All judicial proceedings arising in or under
or related to this Warrant may be brought in any state or federal court of competent jurisdiction
located in the State of California. By execution and delivery of this Warrant, each party hereto
generally and unconditionally: (i) consents to personal jurisdiction in Santa Clara County, State
of California; (ii) waives any objection as to jurisdiction or venue in Santa Clara County, State
of California; (iii) agrees not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (iv) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Warrant. Service of process on any party hereto in any action arising out of
or relating to this Warrant shall be effective if given in accordance with the requirements for
notice set forth in Section 12(g), and shall be deemed effective and received as set forth in
Section 12(g). Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of either party to bring proceedings in the courts of any
other jurisdiction.

     (p) Mutual Waiver of Jury Trial. Because disputes arising in connection with complex
financial transactions are most quickly and economically resolved by an experienced and expert
person and the parties wish applicable state and federal laws to apply (rather than arbitration
rules), the parties desire that their disputes arising out of this Warrant be resolved by a judge
applying such applicable laws. EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT
IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY
CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR
ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY RELATING TO THIS WARRANT.
This waiver extends to all such Claims, including Claims that involve Persons other than the
Company and Warrantholder and any Claims for damages, breach of contract, specific performance, or
any equitable or legal relief of any kind, arising out of this Warrant.

     (q) Judicial Reference. If the Mutual Waiver of Jury Trial set forth in Section 12(p)
is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before
a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding
Judge of Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such proceeding. In the
event Claims are to be resolved by judicial reference, either party may seek from a court
identified in Section 12(o), any prejudgment order, writ or other relief and have such

12

 

prejudgment order, writ or other relief enforced to the fullest extent permitted by law
notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

     (r) Counterparts. This Warrant and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts, and by different parties hereto in separate
counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.

     (s) Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen,
mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may
reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any
time enforceable by anyone.

[Remainder of Page Intentionally Left Blank]

13

 

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed by its officers
thereunto duly authorized as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	COMPANY:	 	 	 	ALEXZA PHARMACEUTICALS, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ August J. Moretti
 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	August J. Moretti	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 Title: SVP and Chief Financial Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	WARRANTHOLDER:	 	 	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ K. Nicholas Martitsch
 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	K. Nicholas Martitsch	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	Title: Associate General Counsel	 	 	 	 	 	 

14

 

EXHIBIT I

NOTICE OF EXERCISE

To: ALEXZA PHARMACEUTICALS, INC. (the “Company”)

	(1)	 	The undersigned Warrantholder hereby elects to purchase [                    ] shares of the Common Stock
of the Company, pursuant to the terms of that certain Warrant Agreement, dated as of May 4,
2010, between the Company and the Warrantholder (the “Warrant”), and [CASH PAYMENT:
tenders herewith payment of the Purchase Price in full, together with all applicable transfer
taxes, if any.] [NET ISSUANCE: elects pursuant to Section 3(a) of the Agreement to effect a
Net Issuance.]

	(2)	 	Please issue a certificate or certificates representing said shares of Common Stock in the
name of the Warrantholder or in such other name as is specified below.

	 	 	 	 	 

	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	(Name)	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(Address)	 	 

     WARRANTHOLDER: HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	K. Nicholas Martitsch 	 
	 	 	Its:       Associate General Counsel 	 
	 

15

 

EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned, as representative of Alexza Pharmaceuticals, Inc. (the “Company”), hereby
acknowledges receipt of the “Notice of Exercise” from Hercules Technology Growth Capital, Inc. (the
“Warrantholder “), to purchase [                    ] shares of the Common Stock of the Company, pursuant to the
terms of that certain Warrant Agreement, dated as of May 4, 2010, between the Company and the
Warrantholder (the “Warrant”), and further acknowledges that [                    ] shares remain subject
to purchase under the terms of the Warrant.

	 	 	 	 	 	 	 	 	 

	 	 	COMPANY:	 	ALEXZA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

16

 

EXHIBIT III

TRANSFER NOTICE

FOR VALUE RECEIVED, that certain Warrant Agreement, dated as of May 4, 2010, between Alexza
Pharmaceuticals, Inc. and Hercules Technology Growth Capital, Inc., as the Warrantholder (the
“Warrant”), and all rights evidenced thereby are hereby transferred and assigned to

	 	 	 	 	 

	   	 	 
	(Please Print)
	 	 	 	 
	 
	 	 	 	 
	whose address is

	 	 

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 

Dated:                                                                                                     

Holder’s Signature:                                                                            

Holder’s Address:                                                              
                   

                                                                                                              

Signature Guaranteed:                                                                 
                                              

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations
and those acting in a fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.

17

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