Document:

exv10w2

Exhibit 10.2

INDEMNITY AGREEMENT

     THIS INDEMNITY AGREEMENT (this “Agreement”) dated as of                     , 2008 is
made by and between Alexza Pharmaceuticals, Inc. a Delaware corporation (the “Company”),
and                     (“Indemnitee”).

R E C I T A L S:

     A. The Company desires to attract and retain the services of highly qualified individuals as
directors, officers, employees and agents.

     B. The Company’s Restated Certificate of Incorporation (the “Certificate of
Incorporation”) authorizes the Company to provide indemnification of agents for breach of duty
to the Company and its stockholders through bylaw provisions or through agreements with the agents,
or otherwise, to the extent provided therein.

     C. The Company’s bylaws (the “Bylaws”) require that the Company indemnify its
directors, and empowers the Company to indemnify its officers, employees and agents, as authorized
by the Delaware General Corporation Law, as amended (the “Code”), under which the Company
is organized, and such Bylaws expressly provide that the indemnification provided therein is not
exclusive and contemplate that the Company may enter into separate agreements with its directors,
officers and other persons to set forth specific indemnification provisions.

     D. Indemnitee does not regard the protection currently provided by applicable law, the
Company’s Certificate of Incorporation, the Company’s Bylaws and available insurance as adequate,
and the Company has determined that Indemnitee and other directors, officers, employees and agents
of the Company may not be willing to serve or continue to serve in such capacities without
additional protection.

     E. The Company desires and has requested Indemnitee to serve or continue to serve as a
director, officer, employee or agent of the Company, as the case may be, and has proferred this
Agreement to Indemnitee as an additional inducement to serve in such capacity.

     E. Indemnitee is willing to serve, or to continue to serve, as a director, officer, employee
or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity provided for
herein by the Company.

A G R E E M E N T :

     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

     1. Definitions.

          (a) Agent. For purposes of this Agreement, the term “agent” of the Company means any
person who: (i) is or was a director, officer, employee or other fiduciary of the Company or a
subsidiary of the Company; or (ii) is or was serving at the request or for the convenience of, or
representing the interests of, the Company or a subsidiary of the Company, as

 

 

a director, officer, employee or other fiduciary of a foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.

          (b) Expenses. For purposes of this Agreement, the term “expenses” shall be broadly
construed and shall include, without limitation, all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys’, witness, or other professional
fees and related disbursements, and other out-of-pocket costs of whatever nature), actually and
reasonably incurred by Indemnitee in connection with the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification under this Agreement, the Code
or otherwise, and amounts paid in settlement by or on behalf of Indemnitee, but shall not include
any judgments, fines or penalties actually levied against Indemnitee for such individual’s
violations of law. The term “expenses” shall also include reasonable compensation for time spent
by Indemnitee for which he is not compensated by the Company or any subsidiary or third party (i)
for any period during which Indemnitee is not an agent, in the employment of, or providing services
for compensation to, the Company or any subsidiary; and (ii) if the rate of compensation and
estimated time involved is approved by the directors of the Company who are not parties to any
action with respect to which expenses are incurred, for Indemnitee while an agent of, employed by,
or providing services for compensation to, the Company or any subsidiary.

          (c) Proceedings. For purposes of this Agreement, the term “proceeding” shall be
broadly construed and shall include, without limitation, any threatened, pending, or completed
action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought in
the right of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, and whether formal or informal in any case, in which Indemnitee was, is or
will be involved as a party or otherwise by reason of: (i) the fact that Indemnitee is or was a
director or officer of the Company; (ii) the fact that any action taken by Indemnitee or of any
action on Indemnitee’s part while acting as director, officer, employee or agent of the Company; or
(iii) the fact that Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, and in any such case described above, whether or not serving in
any such capacity at the time any liability or expense is incurred for which indemnification,
reimbursement, or advancement of expenses may be provided under this Agreement.

          (d) Subsidiary. For purposes of this Agreement, the term “subsidiary” means any
corporation or limited liability company of which more than 50% of the outstanding voting
securities or equity interests are owned, directly or indirectly, by the Company and one or more of
its subsidiaries, and any other corporation, limited liability company, partnership, joint venture,
trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary.

          (e) Independent Counsel. For purposes of this Agreement, the term “independent
counsel” means a law firm, or a partner (or, if applicable, member) of such a law firm, that is
experienced in matters of corporation law (specifically including litigation and indemnification of
agents) and neither presently is, nor in the past five (5) years has been, retained to represent:
(i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party
to the proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “independent counsel” shall not include any person

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who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.

     2. Agreement to Serve. Indemnitee will serve, or continue to serve, as a director,
officer, employee or agent of the Company or any subsidiary, as the case may be, faithfully and to
the best of his or her ability, at the will of such corporation (or under separate agreement, if
such agreement exists), in the capacity Indemnitee currently serves as an agent of such
corporation, so long as Indemnitee is duly appointed or elected and qualified in accordance with
the applicable provisions of the bylaws or other applicable charter documents of such corporation,
or until such time as Indemnitee tenders his or her resignation in writing; provided, however, that
nothing contained in this Agreement is intended as an employment agreement between Indemnitee and
the Company or any of its subsidiaries or to create any right to continued employment of Indemnitee
with the Company or any of its subsidiaries in any capacity. The Company acknowledges that it has
entered into this Agreement and assumes the obligations imposed on it hereby, in addition to and
separate from its obligations to Indemnitee under the Bylaws and Certificate of Incorporation, to
induce Indemnitee to serve, or continue to serve, as a director, officer, employee or agent of the
Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as
a director, officer, employee or agent of the Company.

     3. Indemnification.

          (a) Indemnification in Third Party Proceedings. Subject to Section 10 below, the
Company shall indemnify Indemnitee to the fullest extent permitted by the Code, as the same may be
amended from time to time (but, only to the extent that such amendment permits Indemnitee to
broader indemnification rights than the Code permitted prior to adoption of such amendment), if
Indemnitee is a party to or threatened to be made a party to or otherwise involved in any
proceeding, for any and all expenses, actually and reasonably incurred by Indemnitee in connection
with the investigation, defense, settlement or appeal of such proceeding.

          (b) Indemnification in Derivative Actions and Direct Actions by the Company. Subject
to Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the
Code, as the same may be amended from time to time (but, only to the extent that such amendment
permits Indemnitee to broader indemnification rights than the Code permitted prior to adoption of
such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any proceeding by or in the right of the Company to procure a judgment in its favor,
against any and all expenses actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, settlement, or appeal of such proceedings.

     4. Indemnification of Expenses of Successful Party. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any proceeding or in defense of any claim, issue or matter therein,
including the dismissal of any action without prejudice, the Company shall indemnify Indemnitee
against all expenses actually and reasonably incurred in connection with the investigation, defense
or appeal of such proceeding.

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     5. Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses actually and
reasonably incurred by Indemnitee in the investigation, defense, settlement or appeal of a
proceeding, but is precluded by applicable law or the specific terms of this Agreement to
indemnification for the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled.

     6. Advancement of Expenses. To the extent not prohibited by law, the Company shall
advance the expenses incurred by Indemnitee in connection with any proceeding, and such
advancement shall be made within twenty (20) days after the receipt by the Company of a statement
or statements requesting such advances (which shall include invoices received by Indemnitee in
connection with such expenses but, in the case of invoices in connection with legal services, any
references to legal work performed or to expenditures made that would cause Indemnitee to waive any
privilege accorded by applicable law shall not be included with the invoice) and upon request of
the Company, an undertaking to repay the advancement of expenses if and to the extent that it is
ultimately determined by a court of competent jurisdiction in a final judgment, not subject to
appeal, that Indemnitee is not entitled to be indemnified by the Company. Advances shall be
unsecured, interest free and without regard to Indemnitee’s ability to repay the expenses. Advances
shall include any and all expenses actually and reasonably incurred by Indemnitee pursuing an
action to enforce Indemnitee’s right to indemnification under this Agreement, or otherwise and this
right of advancement, including expenses incurred preparing and forwarding statements to the
Company to support the advances claimed. Indemnitee acknowledges that the execution and delivery
of this Agreement shall constitute an undertaking providing that Indemnitee shall, to the fullest
extent required by law, repay the advance if and to the extent that it is ultimately determined by
a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is
not entitled to be indemnified by the Company. The right to advances under this Section shall
continue until final disposition of any proceeding, including any appeal therein. This Section 6
shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section
10(b).

     7. Notice and Other Indemnification Procedures.

          (a) Notification of Proceeding. Indemnitee will notify the Company in writing
promptly upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any proceeding or matter which may be subject to indemnification or
advancement of expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to Indemnitee under this
Agreement or otherwise.

          (b) Request for Indemnification and Indemnification Payments. Indemnitee will notify
the Company in writing promptly upon receiving notice of any demand, judgment or other requirement
for payment that Indemnitee reasonably believes to be subject to indemnification under the terms of
this Agreement, and shall request payment thereof by the Company. Upon written request by
Indemnitee for indemnification pursuant to Section 3 hereof, a determination, if required by
applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case
by one of the following three methods, which shall be at the election of Indemnitee: (1) by a
majority vote of the disinterested directors, even though less than a quorum, (2) by independent
legal counsel in a written opinion or (3) by the stockholders. If the determination of entitlement
to indemnification is to be made by independent counsel the

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independent counsel shall be selected by Indemnitee (unless Indemnitee requests that such
selection be made by the Board of Directors) and shall be reasonably acceptable to the Board of
Directors; provided, however, that any objection by the Board of Directors may be asserted only on
the ground that the independent counsel so selected does not meet the requirements of “independent
counsel” as defined above. Indemnification payments requested by Indemnitee under Section 3 hereof
shall be made by the Company no later than sixty (60) days after receipt of the written request of
Indemnitee. Claims for advancement of expenses shall be made under the provisions of Section 6
herein.

          (c) Application for Enforcement. If the Company fails to make timely payments as set
forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to any court of
competent jurisdiction for the purpose of enforcing Indemnitee’s right to indemnification or
advancement of expenses pursuant to this Agreement. In such an enforcement hearing or proceeding,
the burden of proof shall be on the Company to prove that indemnification or advancement of
expenses to Indemnitee is not required under this Agreement or permitted by applicable law. Such
burden of proof shall be the burden of persuasion by clear and convincing evidence. Any
determination by the Company (including its Board of Directors, stockholders or independent
counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a defense by
the Company to the action nor create any presumption that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder.

          (d) Indemnification of Certain Expenses. The Company shall indemnify Indemnitee
against all expenses incurred in connection with any hearing or proceeding under this Section 7,
unless the Company prevails in such hearing or proceeding on the merits in all material respects.

     8. Assumption of Defense. If Indemnitee requests that the Company pay the expenses of
any proceeding, the Company, if appropriate, shall be entitled to assume the defense of such
proceeding, or to participate to the extent permissible in such proceeding, with counsel reasonably
acceptable to Indemnitee. Upon assumption of the defense by the Company and the retention of such
counsel by the Company, the Company shall not be liable to Indemnitee under this Agreement for any
fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided
that Indemnitee shall have the right to employ separate counsel in such proceeding at Indemnitee’s
sole cost and expense. Notwithstanding the foregoing, if Indemnitee’s counsel delivers a written
notice to the Company stating that such counsel has reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any such defense or the
Company shall not, in fact, have employed counsel or otherwise actively pursued the defense of such
proceeding within a reasonable time, then in any such event the fees and expenses of Indemnitee’s
counsel to defend such proceeding shall be subject to the indemnification and advancement of
expenses provisions of this Agreement.

     9. Insurance. To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, or agents of the Company or of
any subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies. If, at the time of the receipt
of a notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the

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insurers in accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or appropriate action to cause such insurers to pay, on behalf
of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of
such policies.

     10. Exceptions.

          (a) Certain Matters. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on
account of any proceeding with respect to (i) remuneration paid to Indemnitee if it is determined
by final judgment or other final adjudication that such remuneration was in violation of law (and,
in this respect, both the Company and Indemnitee have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for indemnification
should be submitted to appropriate courts for adjudication, as indicated in Section 10(d) below);
(ii) a final judgment rendered against Indemnitee for an accounting, disgorgement or repayment of
profits made from the purchase or sale by Indemnitee of securities of the Company against
Indemnitee or in connection with a settlement by or on behalf of Indemnitee to the extent it is
acknowledged by Indemnitee and the Company that such amount paid in settlement resulted from
Indemnitee’s conduct from which Indemnitee received monetary personal profit, pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or other provisions
of any federal, state or local statute or rules and regulations thereunder; (iii) a final judgment
or other final adjudication that Indemnitee’s conduct was in bad faith, knowingly fraudulent or
deliberately dishonest or constituted willful misconduct (but only to the extent of such specific
determination); or (iv) on account of conduct that is established by a final judgment as
constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal
profit or advantage to which Indemnitee is not legally entitled. For purposes of the foregoing
sentence, a final judgment or other final adjudication may be reached in either the underlying
proceeding or action in connection with which indemnification is sought or a separate proceeding or
action to establish rights and liabilities under this Agreement.

          (b) Claims Initiated by Indemnitee. Any provision herein to the contrary
notwithstanding, the Company shall not be obligated to indemnify or advance expenses to Indemnitee
with respect to proceedings or claims initiated or brought by Indemnitee against the Company or its
directors, officers, employees or other agents and not by way of defense, except (i) with respect
to proceedings brought to establish or enforce a right to indemnification or advancement of
expenses under this Agreement or under any other agreement, provision in the Bylaws or Certificate
of Incorporation or applicable law, or (ii) with respect to any other proceeding initiated by
Indemnitee that is either approved by the Board of Directors or Indemnitee’s participation is
required by applicable law. However, indemnification or advancement of expenses may be provided by
the Company in specific cases if the Board of Directors determines it to be appropriate.

          (c) Unauthorized Settlements. Any provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding effected without the
Company’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold consent
to any proposed settlement; provided, however, that the

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Company may in any event decline to consent to (or to otherwise admit or agree to any
liability for indemnification hereunder in respect of) any proposed settlement if the Company is
also a party in such proceeding and determines in good faith that such settlement is not in the
best interests of the Company and its stockholders.

          (d) Securities Act Liabilities. Any provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee
or otherwise act in violation of any undertaking appearing in and required by the rules and
regulations promulgated under the Securities Act of 1933, as amended (the “Act”), or in any
registration statement filed with the SEC under the Act. Indemnitee acknowledges that paragraph
(h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in
connection with any registration statement filed under the Act to submit the issue of the
enforceability of Indemnitee’s rights under this Agreement in connection with any liability under
the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any
final adjudication of such issue. Indemnitee specifically agrees that any such undertaking shall
supersede the provisions of this Agreement and to be bound by any such undertaking.

     11. Nonexclusivity and Survival of Rights. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which Indemnitee may at any time be entitled under any provision of applicable law, the
Company’s Certificate of Incorporation, Bylaws or other agreements or D&O Insurance, both as to
actions or omissions in Indemnitee’s official capacity and Indemnitee’s actions and omissions as an
agent of the Company, in any court in which a proceeding is brought, and Indemnitee’s rights
hereunder shall continue after Indemnitee has ceased acting as an agent of the Company and shall
inure to the benefit of the heirs, executors, administrators and assigns of Indemnitee. The
obligations and duties of the Company to Indemnitee under this Agreement shall be binding on the
Company and its successors and assigns until terminated in accordance with its terms. The Company
shall require any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.

          No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his or her official corporate capacity prior to such amendment, alteration or
repeal. To the extent that a change in the Code, whether by statute or judicial decision, permits
greater indemnification or advancement of expenses than would be afforded currently under the
Company’s Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not
prevent the concurrent assertion or employment of any other right or remedy by Indemnitee.

     12. Term. This Agreement shall continue until and terminate upon the later of: (a)
five (5) years after the date that Indemnitee shall have ceased to serve as a director or and/or

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officer, employee or agent of the Company; or (b) one (1) year after the final termination of
any proceeding, including any appeal then pending, in respect to which Indemnitee was granted
rights of indemnification or advancement of expenses hereunder.

          No legal action shall be brought and no cause of action shall be asserted by or in the right
of the Company against an Indemnitee or an Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of five (5) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within such five-year
period; provided, however, that if any shorter period of limitations is otherwise applicable to
such cause of action, such shorter period shall govern.

     13. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at
the request and expense of the Company, shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such rights; provided that if
Indemnitee has personal liability insurance coverage not paid for by the Company, the Company will
not have the right to seek payment from such personal insurance liability coverage.

     14. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.

     15. Severability. If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability
of the remaining provisions of the Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to Section 14 hereof.

     16. Amendment and Waiver. No supplement, modification, amendment, or cancellation of
this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

     17. Notice. Except as otherwise provided herein, any notice or demand which, by the
provisions hereof, is required or which may be given to or served upon the parties hereto shall be
in writing and, if by electronic mail, telegram, telecopy or telex, shall be deemed to have been
validly served, given or delivered one business day after transmission, if by overnight delivery,
courier or personal delivery, shall be deemed to have been validly served, given or delivered upon
actual delivery and, if mailed, shall be deemed to have been validly served, given or delivered
three (3) business days after deposit in the United States mail, as registered or certified

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mail, with proper postage prepaid and addressed to the party or parties to be notified at the
addresses set forth on the signature page of this Agreement (or such other address(es) as a party
may designate for itself by like notice). If to the Company, notices and demands shall be
delivered to the attention of the Secretary of the Company.

     18. Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware, as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.

     19. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original but all of which together shall constitute
but one and the same Agreement. Only one such counterpart need be produced to evidence the
existence of this Agreement.

     20. Headings. The headings of the sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction hereof.

     21. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings and negotiations, written and oral, between the parties with respect to
the subject matter of this Agreement provided, however, that this Agreement is a supplement to and
in furtherance of the Company’s Certificate of Incorporation, Bylaws, the Code and any other
applicable law, and shall not be deemed a substitute therefor, and does not diminish or abrogate
any rights of Indemnitee thereunder.

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     IN WITNESS WHEREOF, the parties hereto have entered into this Agreement effective as
of the date first above written.

	 	 	 	 	 
	 	COMPANY

Alexza Pharmaceuticals, Inc.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	INDEMNITEE
 	 
	 	
 	 
	 	Signature of Indemnitee 	 
	 	 	 
	 	
 	 
	 	Print or Type Name of Indemnitee 	 
	 	 	 
	 

10.exv10w1

Exhibit 10.1

July 10, 2008

CONFIDENTIAL

Mr. Raymond C. Kubacki, Jr.

c/o Psychemedics Corporation

125 Nagog Park

Suite 200

Acton, MA 01720

Dear Ray:

     This letter sets forth the agreements we have made regarding your employment with Psychemedics
Corporation (the “Company”).

	 	1.	 	If at any time after the effective date hereof and prior to the date which is
five (5) years following the date hereof, your employment is terminated by the Company
without “Cause” (as defined in paragraph 13 below), or you voluntarily terminate your
employment for “Good Reason” (as defined in paragraph 13 below), in either case at the
time of, or within twelve (12) months following, a “Change of Control of the Company”
(as defined in paragraph 13 below), then you will continue to be paid monthly an amount
equal to your average monthly compensation for the twelve full months preceding the
date of such termination (“Termination Pay”) for a period of twelve (12) months from
the date of such termination, provided that in the case of your voluntary termination
of your employment for the “Good Reason” defined in clause (iv) of paragraph 13(d)
below, then such Termination Pay shall be for a period of six (6) months from the date
of termination. For purposes of the foregoing sentence, average monthly compensation
shall be determined with reference to the aggregate base salary and cash bonus
compensation earned by you during such period, including any cash bonus compensation
accrued for such period or any portion of such period but not paid as of the date of
such termination). Your Termination Pay will be subject to normal deductions for
taxes, benefit plan contributions, other payroll deductions and any amount due the
Company as a result of cash advances. The Company agrees to continue to make health
insurance available to you, under such health insurance plan as the Company has in
effect, for twelve months so long as you contribute such portion of the premiums for
such insurance as is required of employees under such plan. You agree, however, that if
you obtain health insurance coverage through another employer while you are eligible to
receive health insurance under this Agreement, the Company shall no longer be required
to make health insurance available to you

 

 

	 	 	 	under this Agreement. You agree to give the Company at least fourteen (14) days
prior written notice of the termination of your employment in the event of your
voluntary termination without Good Reason. You shall not be entitled to Termination
Pay as a result of termination by reason of your death or “Disability” (as defined
in paragraph 13 below) following a Change of Control of the Company.

	 	2.	 	Notwithstanding any other provision of this Agreement, the Termination Pay
contemplated to be paid to you under certain circumstances set forth in this Agreement
shall only be paid in consideration of the execution and delivery by you of a release
reasonably satisfactory to the Company waiving all claims you, your heirs, or legal
representatives have or may have against the Company or any of its shareholders,
officers, directors, employees or agents with respect to your employment or the
termination thereof, or any other claim.

	 	3.	 	You acknowledge that, as the Company’s Chief Executive Officer, you are in
possession of specialized information concerning the total operations, conduct,
management, and strategy of the Company, as well as proprietary information concerning
the Company’s products and services and that the applicability of your knowledge of
these matters is applicable to all geographic areas in which the Company does business.
You further acknowledge that the Company has a legitimate business interest in
protecting its hair testing business from unfair competition.
	 
	 	4.	 	You shall not, without the prior and express written approval of the Company,
either during or subsequent to the term of your employment, disclose or use or enable
another to disclose or use any secret, private or confidential information, trade
secret or other proprietary knowledge of the Company, or its subsidiaries, divisions,
employees or agents. Upon termination of your employment with the Company, you shall
deliver to the Company all equipment, records and copies of records, notes, data,
memoranda, prototypes, designs, customer lists and other information which is embodied
in physical media and documents belonging to the Company which are then in your
possession. You agree that all such information and documents shall be the property of
the Company and that the obligations set forth in this paragraph shall survive
termination of your employment.
	 
	 	5.	 	You agree that, if you or the Company shall terminate your employment in such a
manner as to entitle you to Termination Pay under paragraph 1, above, you shall not,
for so long as you are entitled to receive such Termination Pay:

(a) directly or indirectly own, manage, operate or control, or participate in the
ownership, management, operation or control of, or become

 

 

associated in any capacity with any business enterprise, firm, corporation or
company related to the field of testing for the detection of drug use, which is in
competition with the business of the Company, or directly or indirectly accept
employment with or render services on behalf of a competitor of the Company, or any
other third party, in any capacity which may reasonably be considered to be useful
to the competitor or such other third party to become a competitor, without
receiving the Company’s prior written approval; or

(b) induce or attempt to induce any employee, officer, consultant, or agent of the
Company to leave the employ thereof or in any way interfere with the relationship
between the Company and any employee, officer, consultant, or agent thereof; hire
directly or through another entity any person who was an employee of the Company at
any time during the six (6) months prior to the date such person is to be so hired;
or induce or attempt to induce any customer, client, supplier, licensee, or other
business relation of the Company to cease doing business with the Company or in any
way interfere with the relationship between any such customer, client, supplier,
licensee, or business relation and the Company (including, without limitation,
making any negative statements or communications concerning the Company).

	 	6.	 	You agree that your obligations under paragraphs 4, and 5 are special, unique,
and extraordinary and that any breach by you of such obligations shall be deemed
material, and shall be deemed to cause irreparable injury not properly compensable by
damages in an action at law, and the rights and remedies of the Company under
paragraphs 4, and 5 may, therefore, be enforced both at law and in equity, by
injunction or otherwise. For purposes of paragraphs 4, and 5, the term “Company” shall
include any and all subsidiaries or divisions of the Company.
	 
	 	7.	 	The five year period set forth in paragraph 1 above may be extended only with
the mutual written agreement of the parties.
	 
	 	8.	 	If at any time a controversy between you and the Company arises as to the
meaning or operation of this Agreement, such controversy shall be submitted to
arbitration by either party in Boston, Massachusetts, before an arbitrator to be named
by the President of the Boston Branch of the American Arbitration Association, provided
however, that the Company shall also have the rights set forth in paragraph 6 above.
Such arbitration proceedings shall be conducted in accordance with the rules and
procedures then in effect of the American Arbitration Association. The decision of the
arbitrator shall be binding upon the parties and judgment on any award made by the
arbitrator may be entered in any court having jurisdiction thereof. The costs of the
arbitrator shall be borne equally by you and the Company. Each party will bear his or
its own legal costs.

 

 

	 	9.	 	This Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts without reference to principles of conflict of
laws.
	 
	 	10.	 	This Agreement contains the entire agreement of the parties in respect of this
transaction and supersedes any prior agreement or understanding relating to your
employment by the Company. No amendment or modification of any provision of this
Agreement will be valid unless in writing signed by both parties. Any waiver must be
in writing and signed by you or an authorized officer of the Company, as the case may
be.
	 
	 	11.	 	This Agreement shall be binding upon and inure to the benefit of: (a) the Company, and any successors or assigns of the Company, whether by way of a
merger or consolidation, or liquidation of the Company, or by way of the Company
selling all or substantially all of the assets and business of the Company to a
successor entity; and, subject to the Company’s right to terminate your employment
at any time, the Company agrees to require any successor entity to expressly assume
or unconditionally guarantee the Company’s obligations under this Agreement (unless
such obligations are assumed by operation of law); and (b) you and your heirs,
executors and administrators.
	 
	 	12.	 	Any notice or other communication required hereunder shall be in writing, shall
be deemed to have been given and received when delivered in person, or, if mailed,
shall be deemed to have been given when deposited in the United States mail, first
class, registered or certified, return receipt requested, with proper postage prepaid,
and shall be deemed to have been received on the third business day thereafter, and
shall be addressed as follows:
	 
	 	 	 	If to the Company, addressed to:

Psychemedics Corporation

125 Nagog Park

Suite 200

Acton, MA 01720

Attn: General Counsel

	 	 	 	If to you, addressed to:

Raymond C. Kubacki, Jr.

Psychemedics Corporation

125 Nagog Park

Suite 200

Acton, MA 01720

 

 

or such other address as to which any party hereto may have notified the other in
writing.

	 	13.	 	Definitions.

(a) “Cause” shall mean: (i) theft or embezzlement, or attempted theft or
embezzlement, by you of money or property of the Company, your perpetration or
attempted perpetration of fraud, or your participation in a fraud or attempted fraud
upon the Company; (ii) your unauthorized appropriation of, or attempt to
misappropriate, any tangible or intangible assets or property of the Company, or
your appropriation of, or attempt to appropriate, a business opportunity of the
Company, including but not limited to attempting to secure or securing any profit
for yourself or any of your family members or personal associates in connection with
any transaction entered into on behalf of the Company; (iii) any act or acts of
disloyalty, misconduct, or moral turpitude by you, including but not limited to
violation of the Company’s sexual harassment or non-harassment policy, any of which
the Board of Directors of the Company determines in good faith has been or is likely
to be materially injurious to the interest, property, operations, business, or
reputation of the Company, or its directors, employees or shareholders; (iv) any act
or omission constituting gross negligence in connection with the performance of your
duties on behalf of the Company which is materially injurious to the interest,
property, operations, business, or reputation of the Company; (v) your conviction of
a crime other than minor traffic violations or other similar minor offenses
(including pleading guilty or entering a plea of no contest), or your indictment for
a felony or its equivalent, or your being charged with a violent crime, a crime
involving moral turpitude, or any other crime for which imprisonment is a possible
punishment; (vi) your willful refusal or material failure (other than by reason of
Disability) to carry out reasonable and lawful instructions and directives from the
Board of Directors and your failure to cure or correct such refusal or failure
within ten (10) days after receiving written notice from the Board of Directors
describing such refusal or failure; or (vii) the material breach by you of your
obligations under paragraphs 4, or 5 hereof or under any other confidentiality,
non-compete, non-solicitation, non-disparagement or similar agreement with the
Company.

(b) “Change in Control of the Company” shall mean

(i) any person or group as defined in Rule 13d-3 under the Securities
Exchange Act of 1934 (the “Exchange Act”) shall own more than 30% of the
then outstanding shares of the outstanding Common Stock of the Company; or

 

 

(ii) the consummation of a reorganization, merger or consolidation or sale
or disposition of all or substantially all of the assets of the Company (a
“Business Combination”), unless, in each case following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the beneficial owners of the Common Stock of the Company
immediately before the consummation of such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a corporation that
as a result of the transaction owns the Company or all or substantially all
of the assets of the Company either directly or indirectly through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Common Stock of the
Company; and (B) no person or group (as defined in Section 13(d) of the
Exchange Act) of the Company or the corporation resulting from the Business
Combination) beneficially owns, directly or indirectly, more than 30% of the
then outstanding shares of the common stock of the corporation resulting
from the Business Combination or of the combined voting power of the then
outstanding voting securities of the corporation; or

(iii) Individuals who, as of the date of this Agreement, constitute the
Board of Directors of the Company (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board of Directors of
the Company, provided, however, that any individual’s becoming a
director after the date of this Agreement whose election, or nomination
for election by the stockholders of the Company, was approved by a vote
of at least a majority of the directors then comprising the Incumbent
Board will be considered as though the individual were a member of the
Incumbent Board, but excluding, for this purpose, any individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.

	 	(c)	 	“Disability” shall mean your inability because of physical or
mental incapacity to perform your usual duties at the Company for a period of
one hundred eighty (180) days in any consecutive twelve (12) month period.

 

 

	 	(d)	 	“Good Reason” shall mean: (i) reduction in your base salary
below $391,400 or such higher base salary as is in effect immediately prior to
such reduction; (ii) removal from your position as President of the Company,
or failure to re-elect or reappoint you to such position or, if the Company
shall no longer exist as a result of the Change of Control, failure to elect or
appoint you to the position of President of the division or separate entity
succeeding to the business of the Company; (iii) a material decrease in your
duties or responsibilities or the assignment to you of duties and
responsibilities, which are materially inconsistent with such position; or (iv)
the Company’s requiring you to relocate your work location outside the Greater
Boston, Massachusetts area.

     If this letter correctly sets forth our understanding and agreement, please indicate your
acceptance by signing both copies of this letter and returning one copy.

	 	 	 	 	 
	 	Very truly yours,

PSYCHEMEDICS CORPORATION

 	 
	 	By:  	/s/ Jennifer Chmieleski
 	 
	 	 	Jennifer Chmieleski, Vice President 	 
	 	 	 	 
	 

	 	 	 	 	 
	Agreed to: July 10, 2008

 	 
	/s/ Raymond C. Kubacki, Jr.
 	 
	Raymond C. Kubacki, Jr.

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