Document:

exv10w27

 

Exhibit 10.27

EXECUTION COPY

WARRANT PURCHASE AGREEMENT

between

ALEXZA PHARMACEUTICALS, INC.

and

SYMPHONY ALLEGRO HOLDINGS LLC

 

Dated as of December 1, 2006

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF WARRANTS
	 	 	1	 
	 
	 	 	 	 
	Section 2.01 Authorization to Issue Warrants
	 	 	1	 
	Section 2.02 Purchase and Sale of Warrants
	 	 	2	 
	Section 2.03 Warrant Date
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III CONDITIONS OF PURCHASE
	 	 	2	 
	 
	 	 	 	 
	Section 3.01 Conditions Precedent to Each Party’s Obligations
	 	 	2	 
	Section 3.02 Conditions Precedent to Holdings’ Obligations
	 	 	2	 
	Section 3.03 Conditions Precedent to Alexza’s Obligations
	 	 	4	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	5	 
	 
	 	 	 	 
	Section 4.01 Representations, Warranties and Covenants of Holdings
	 	 	5	 
	Section 4.02 Representations, Warranties and Covenants of Alexza
	 	 	7	 
	 
	 	 	 	 
	ARTICLE V INDEMNITY
	 	 	9	 
	 
	 	 	 	 
	Section 5.01 Indemnification
	 	 	9	 
	Section 5.02 Notice of Claims
	 	 	10	 
	Section 5.03 Defense of Proceedings
	 	 	10	 
	Section 5.04 Settlement
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VI TRANSFER RESTRICTIONS
	 	 	12	 
	 
	 	 	 	 
	Section 6.01 Transfer Restrictions
	 	 	12	 
	Section 6.02 Legends
	 	 	13	 
	Section 6.03 Warrant Legend Removal
	 	 	13	 
	Section 6.04 Improper Transfer
	 	 	14	 
	Section 6.05 Limits on Daily Disposition
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS
	 	 	15	 
	 
	 	 	 	 
	Section 7.01 Notice of Breach
	 	 	15	 
	Section 7.02 Notices
	 	 	16	 
	Section 7.03 Governing Law; Consent to Jurisdiction and Service of Process
	 	 	17	 
	Section 7.04 Waiver of Jury Trial
	 	 	17	 
	Section 7.05 Entire Agreement
	 	 	18	 
	Section 7.06 Amendment and Waivers
	 	 	18	 

 

 

	 	 	 	 	 
	 	 	Page	 
	Section 7.07 Counterparts
	 	 	18	 
	Section 7.08 Assignment and Successors
	 	 	18	 

	 	 	 
	Annex A

	 	Certain Definitions
	Exhibit A

	 	Form of opinion of Cooley Godward Kronish LLP
	Exhibit B

	 	Form of Warrant
	Exhibit C

	 	Warrant Conversion Example

 

 

WARRANT PURCHASE AGREEMENT

     This WARRANT PURCHASE AGREEMENT (this “Agreement”) is dated as of December 1, 2006, by
and between Alexza Pharmaceuticals, Inc., a Delaware corporation (“Alexza”), and SYMPHONY
ALLEGRO HOLDINGS LLC, a Delaware limited liability company (together with its permitted successors,
assigns and transferees, “Holdings”).

     WHEREAS, contemporaneously with the execution of this Agreement, Holdings, Alexza, and
Symphony Allegro, Inc., a Delaware corporation (“Symphony Allegro”) are entering into a
Purchase Option Agreement (the “Purchase Option Agreement”) pursuant to which, among other
things, Holdings is granting to Alexza an option to purchase all of the equity securities of
Symphony Allegro (the “Symphony Allegro Equity Securities”) owned, or hereafter acquired,
by Holdings on the terms set forth in the Purchase Option Agreement (the “Purchase
Option”); and

     WHEREAS, in consideration for Holdings’ grant of the Purchase Option to Alexza, Alexza desires
to issue and sell to Holdings the Warrants described herein on the terms hereof;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
(the “Parties”) agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01 Definitions. Capitalized terms used but not defined herein are used as
defined in Annex A hereto.

ARTICLE II

PURCHASE AND SALE OF WARRANTS

     Section 2.01 Authorization to Issue Warrants. Alexza has authorized the issuance of
certain warrants (the “Warrants”) representing the right to purchase 2,000,000 shares of
Alexza’s common stock (“Alexza Common Stock”), par value $0.0001 per share, at a price per
share that shall be an amount equal to 125% of the average closing price per share of Alexza Common
Stock, as reported by the NASDAQ Global Market, or other national exchange that is the primary
exchange on which Alexza Common Stock is listed, over a continuous period of sixty (60) trading
days immediately preceding (but not including) the second trading day prior to the Closing Date
(such shares, the “Warrant Shares”). The Warrants shall have a term of five (5) years and
shall be evidenced by certificates issued pursuant to this Agreement in the form set forth in
Exhibit B hereto, with such appropriate insertions, omissions, substitutions, and other
variations as are required or permitted by this Agreement.

Warrant Purchase Agreement

 

 

     Section 2.02 Purchase and Sale of Warrants. Alexza hereby agrees to issue to
Holdings, and Holdings hereby agrees to acquire from Alexza, the Warrants on the Closing Date
(hereinafter, the “Warrant Date”), subject to the fulfillment of the conditions precedent
described in Article III below. The Warrants will be issued to Holdings as consideration
for the execution and delivery by Holdings of the Purchase Option Agreement.

     Section 2.03 Warrant Date. Subject to the terms and conditions of this Agreement, the
issuance, sale and purchase of the Warrants contemplated by this Agreement shall take place at a
closing on the Warrant Date (the “Warrant Closing”) to be held at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019, at
4:30 P.M., Eastern Time, following the satisfaction or waiver of all other conditions to the
obligations of the Parties set forth in Section 2.02 hereof, or at such other place or at
such other time or such other date as Holdings and Alexza shall mutually agree upon in writing.

ARTICLE III

CONDITIONS OF PURCHASE

     Section 3.01 Conditions Precedent to Each Party’s Obligations. The respective
obligations of Alexza and Holdings to effect the transactions contemplated hereby shall be subject
to the satisfaction of the conditions precedent contained in this Section 3.01 or the
waiver thereof in writing by Holdings and Alexza prior to or on the Warrant Date.

          (a) Approvals. All Governmental Approvals imposed by any Governmental Authority in
connection with the transactions contemplated by this Agreement and the other Operative Documents
required to be in effect prior to or on the Warrant Date shall be in effect, the failure of which
to be in effect would, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on either of the Parties.

          (b) Litigation. No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law or Governmental Order (whether temporary,
preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby or in the other Operative Documents.

     Section 3.02 Conditions Precedent to Holdings’ Obligations. The obligation of
Holdings to effect the transactions contemplated hereby shall be subject to the satisfaction of the
further conditions precedent contained in this Section 3.02, or the waiver thereof in
writing by Holdings, prior to or on the Warrant Date.

          (a) Authorization, Execution and Delivery of Documents. This Agreement and each of
the other Operative Documents (including all schedules, annexes and exhibits thereto) required to
be entered into on or prior to the Warrant Date shall have

Warrant Purchase Agreement

2

 

been duly authorized, executed and delivered by each of the parties thereto (other than
Holdings) and shall be in full force and effect.

          (b) Issuance of Warrants. All actions required by any applicable law, or necessary in
the reasonable opinion of Holdings, to issue the Warrants shall have been duly taken by Alexza (or
provisions therefor shall have been made), including, without limitation, the making of all
registrations and filings required to be made prior to or on the Warrant Date, and all necessary
consents shall have been received.

          (c) Performance of Obligations by Alexza; Representations and Warranties. Alexza
shall have performed in all material respects and complied in all material respects with all
agreements and conditions contained in this Agreement and the other Operative Documents that are
required to be performed or complied with by it prior to or on the Warrant Date. Alexza’s
representations and warranties set forth in Section 4.02 of this Agreement shall be true
and correct in all respects as of the Warrant Date.

          (d) Opinion of Counsel. Holdings shall have received an opinion letter from Cooley
Godward Kronish LLP, counsel to Alexza, in form and substance acceptable to Holdings.

          (e) Closing Certificate. At the Warrant Closing, Holdings shall have received a
certificate from Alexza executed by its Chief Financial Officer or other duly authorized executive
officer, dated as of the Warrant Date, in form and substance reasonably satisfactory to Holdings,
certifying:

               (i) (A) that the Operative Documents to which Alexza is a party have been duly authorized,
executed and delivered by Alexza, and are in full force and effect, and (B) that Alexza has
satisfied all conditions precedent contained in the Operative Documents to which it is a party
required to be satisfied by it on or prior to the Warrant Date; and

               (ii) as to (A) the accuracy and completeness of the contents of Alexza’s charter documents,
(B) the resolutions of Alexza’s board of directors, duly authorizing Alexza’s execution, delivery
and performance of each Operative Document to which it is or is to be a party and each other
document required to be executed and delivered by it in accordance with the provisions hereof or
thereof, and (C) the incumbency and signature of Alexza’s representatives authorized to execute and
deliver documents on its behalf in connection with the obligations contemplated hereby and by the
other Operative Documents.

          (f) Further Documents, Certificates, Etc. Holdings shall have received such other
documents, certificates or opinions as Holdings may reasonably request in connection with the
consummation of the transactions contemplated by this Agreement.

Warrant Purchase Agreement

3

 

          (g) No Events of Default. No breach, default, event of default or other similar event
by Alexza, and no event which with the giving of notice, the passage of time, or both, would
constitute any of the foregoing, under any Operative Document or any other material contract or
agreement to which Alexza is a party, shall have occurred and be continuing, and no condition shall
exist that constitutes, or with the giving of notice, the passage of time, or both, would
constitute such default, event of default or other similar event.

          (h) No Violation. The transactions contemplated hereby shall comply with all
applicable law in effect as of the Warrant Date, and no party (other than Holdings) to such
transactions shall be in violation of any such applicable law. Holdings shall not be subject to
any penalty or liability pursuant to any violation of applicable law in effect as of such Warrant
Date by virtue of the transactions contemplated hereby and by each of the other Operative
Documents.

          (i) Change in Law. There shall have been no change in any law, rule or regulation or
the interpretation thereof (including any law, rule or regulation relating to taxes) that prohibits
or prevents the consummation of this Agreement or any of the transactions contemplated hereby
(including the sale and purchase of the Warrants) or by the Operative Documents or that results in
any material increase in taxes payable by Holdings or Investors.

     Section 3.03 Conditions Precedent to Alexza’s Obligations. The obligation of Alexza
to effect the transactions contemplated hereby shall be subject to the satisfaction of the further
conditions precedent contained in this Section 3.03, or the waiver thereof in writing by
Alexza, prior to or on the Warrant Date.

          (a) Authorization, Execution and Delivery of Documents. This Agreement and each of
the other Operative Documents (including all schedules and exhibits thereto) required to be entered
into on or prior to the Warrant Date shall have been duly authorized, executed and delivered by
each of the parties thereto (other than Alexza) and shall be in full force and effect.

          (b) Performance of Obligations by Holdings; Representations and Warranties. As of the
Warrant Date, Holdings shall have performed in all material respects and complied in all material
respects with all agreements and conditions contained in this Agreement and the other Operative
Documents required to be performed or complied with by it prior to or at the Warrant Date. Each of
Holdings’ representations and warranties set forth in Section 4.01 of this Agreement shall
be true and correct in all respects as of the Warrant Date with the same effect as though such
representations and warranties were made on and as of the Warrant Date (or if stated to have been
made as of an earlier date, as of such date).

          (c) No Events of Default. No breach, default, event of default or other similar event
by Holdings, and no event which with the giving of notice, the passage of time, or both, would
constitute any of the foregoing, under any Operative Document or any other material contract or
agreement to which Holdings is a party, shall

Warrant Purchase Agreement

4

 

have occurred and be continuing, and no condition shall exist that constitutes, or with the
giving of notice, the passage of time, or both, would constitute such default, event of default or
other similar event.

          (d) No Violation. The transactions contemplated hereby shall comply in all material
respects with all applicable law in effect as of the Warrant Date, and no party (other than Alexza)
to such transactions shall be in material violation of any such applicable law. Alexza shall not
be subject to any penalty or liability pursuant to any violation of applicable law in effect as of
such Warrant Date by virtue of the transactions contemplated hereby and by each of the other
Operative Documents, the failure to comply with which would, either individually or in the
aggregate, reasonably be expected to have a material adverse effect on the Programs.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

     Section 4.01 Representations, Warranties and Covenants of Holdings.

          (a) Holdings hereby represents and warrants to Alexza that:

               (i) Organization. Holdings is a limited liability company, duly formed, validly
existing and in good standing under the laws of the State of Delaware.

               (ii) Authority and Validity. Holdings has all requisite limited liability company
power and authority to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and performance by
Holdings of this Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary action required on the part of Holdings, and no other
proceedings on the part of Holdings are necessary to authorize this Agreement or for Holdings to
perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and
legally binding obligation of Holdings, enforceable in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors’ rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law or in equity.

               (iii) No Violation or Conflict. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not (A) violate, conflict with or result in
the breach of any provision of the Organizational Documents of Holdings, (B) conflict with or
violate any law or Governmental Order applicable to Holdings or any of its assets, properties or
businesses, or (C) conflict with, result in any breach of, constitute a default (or event that with
the giving of notice or lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration, suspension, revocation
or

Warrant Purchase Agreement

5

 

cancellation of, or result in the creation of any Encumbrance on any of the assets or
properties of Holdings, pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement to which Holdings is
a party except, in the case of clauses (B) and (C), to the extent that such
conflicts, breaches, defaults or other matters would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Holdings.

               (iv) Governmental Consents and Approvals. The execution, delivery and performance of
this Agreement by Holdings do not, and the consummation of the transactions contemplated hereby do
not and will not, require any Governmental Approval which has not already been obtained, effected
or provided, except with respect to which the failure to so obtain, effect or provide would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Holdings.

               (v) Litigation. There are no actions by or against Holdings pending before any
Governmental Authority or, to the knowledge of Holdings, threatened to be brought by or before any
Governmental Authority, that would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Holdings. There are no pending or, to the knowledge of Holdings,
threatened actions to which Holdings is a party (or threatened to be named as a party) to set
aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the
Operative Documents or the consummation of the transactions contemplated hereby or thereby by any
party hereto or thereto. Holdings is not subject to any Governmental Order (nor, to the knowledge
of Holdings, is there any such Governmental Order threatened to be imposed by any Governmental
Authority) that would, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Holdings.

               (vi) Accredited Investor.

                    (A) Holdings is and will remain at all relevant times an “Accredited Investor”.

                    (B) Holdings has relied completely on the advice of, or has consulted with or has had the
opportunity to consult with, its own personal tax, investment, legal or other advisors and has not
relied on Alexza or any of its Affiliates for advice. Holdings has reviewed the Investment
Overview and is aware of the risks disclosed therein. Holdings acknowledges that it has had a
reasonable opportunity to conduct its own due diligence with respect to the Products, the Programs,
Symphony Allegro, Alexza and the transactions contemplated by the Operative Documents.

                    (C) Holdings has been advised and understands that the offer and sale of the Warrants and the
Warrant Shares have not been registered under the Securities Act. Holdings is able to bear the
economic risk of such investment for an indefinite period and to afford a complete loss thereof.

Warrant Purchase Agreement

6

 

                    (D) Holdings is acquiring the Warrants and the Warrant Shares solely for Holdings’ own account
for investment purposes as a principal and not with a view to the resale of all or any part
thereof; provided, that Holdings may transfer the Warrants as set forth in Section 6.01
hereof. Holdings agrees that the Warrants and the Warrant Shares may not be resold (1) without
registration thereof under the Securities Act (unless an exemption from such registration is
available), or (2) in violation of any law. Holdings is not and will not be an underwriter within
the meaning of Section 2(11) of the Securities Act with respect to the Warrants and the Warrant
Shares.

                    (E) No person or entity acting on behalf of, or under the authority of, Holdings is or will be
entitled to any broker’s, finder’s, or similar fees or commission payable by Alexza or any of its
Affiliates.

                    (F) Holdings acknowledges and agrees to treat the Warrants for federal, state and local income
tax purposes as option premium paid in return for the grant and maintenance of the Purchase Option.

     Section 4.02 Representations, Warranties and Covenants of Alexza.

          (a) Alexza hereby represents and warrants to Holdings that:

               (i) Organization. Alexza is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware.

               (ii) Authority and Validity. Alexza has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by Alexza of this
Agreement and the consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action required on the part of Alexza, and no other proceedings on the
part of Alexza are necessary to authorize this Agreement or for Alexza to perform its obligations
under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation
of Alexza, enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in equity.

               (iii) No Violation or Conflict. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not (A) violate, conflict with or result in
the breach of any provision of the Organizational Documents of Alexza, (B) conflict with or violate
any law or Governmental Order applicable to Alexza or any of its assets, properties or businesses,
or (C) conflict with, result in any breach of, constitute a default (or event that with the giving
of notice or lapse of time, or both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension, revocation or

Warrant Purchase Agreement

7

 

cancellation of, or result in the creation of any Encumbrance on any of the assets or
properties of Alexza, pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement to which Alexza is a
party except, in the case of clauses (B) and (C), to the extent that such
conflicts, breaches, defaults or other matters would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Alexza.

               (iv) Governmental Consents and Approvals. The execution, delivery and performance of
this Agreement by Alexza do not, and the consummation of the transactions contemplated hereby do
not and will not, require any Governmental Approval which has not already been obtained, effected
or provided, except with respect to which the failure to so obtain, effect or provide would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Alexza.

               (v) Litigation. Except as disclosed in any Alexza Public Filings available as of the
date hereof, there are no actions by or against Alexza pending before any Governmental Authority
or, to the knowledge of Alexza, threatened to be brought by or before any Governmental Authority,
that would, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Alexza. There are no pending or, to the knowledge of Alexza, threatened actions, to
which Alexza is a party (or is threatened to be named as a party) to set aside, restrain, enjoin or
prevent the execution, delivery or performance of this Agreement or the Operative Documents or the
consummation of the transactions contemplated hereby or thereby by any party hereto or thereto.
Alexza is not subject to any Governmental Order (nor, to the knowledge of Alexza, is there any such
Governmental Order threatened to be imposed by any Governmental Authority) that would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on Alexza.

               (vi) Private Placement. Assuming the accuracy of Holdings’ representations and
warranties set forth in Section 4.01, (i) the purchase and sale of the Warrants is exempt
from the registration requirements of the Securities Act, and (ii) no other offering of Common
Stock by Alexza will be integrated with the offering of the Warrants or the Warrant Shares.
Neither Alexza nor any Person acting on its behalf has or will offer the Warrants or the Warrant
Shares by any form of general solicitation or general advertising and all filings required under
Rule 503 of the Securities Act will be made in a timely manner.

          (b) Alexza covenants and agrees with Holdings that, so long as any of the Warrants are
outstanding (including as such Warrants may be reissued pursuant to transfer in accordance with
Section 6.01 hereof), Alexza shall take all action necessary to reserve and keep available
out of its authorized and unissued Alexza Common Stock, solely for the purpose of effecting the
exercise of the Warrants, 100% of the number of shares of Alexza Common Stock issuable upon
exercise of the Warrants. Upon exercise in accordance with the Warrants, the Alexza Common Stock
delivered thereby will be validly issued, fully paid and nonassessable and free from all taxes,
liens

Warrant Purchase Agreement

8

 

and charges with respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of the Alexza Common Stock.

          (c) Alexza acknowledges and agrees to treat the Warrants for federal, state and local income
tax purposes as option premium paid in return for the grant of the Purchase Option.

ARTICLE V

INDEMNITY

     Section 5.01 Indemnification. To the greatest extent permitted by applicable law,
Alexza shall indemnify and hold harmless Holdings, and Holdings shall indemnify and hold harmless
Alexza, and each of their respective Affiliates, officers, directors, employees, agents, partners,
members, successors, assigns, representatives of, and each Person, if any (including any officers,
directors, employees, agents, partners, members of such Person) who controls, Holdings and Alexza,
as applicable, within the meaning of the Securities Act or the Exchange Act, (each, an
“Indemnified Party”), from and against any and all actions, causes of action, suits,
claims, losses, costs, interest, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(hereinafter, a “Loss”), incurred by any Indemnified Party to the extent resulting from,
arising out of or relating to: (i) in the case of Alexza being the Indemnifying Party, (A) any
breach of any representation or warranty made by Alexza herein, (B) any breach of any covenant,
agreement or obligation of Alexza contained herein, or (C) any untrue statement of a material fact
about Alexza contained in the reports filed by Alexza with the SEC, or the omission therefrom of a
material fact about Alexza required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, to
the extent that such reports are attached to the Investment Overview; provided, that the
information contained in a later filed report filed prior to the date of this Agreement shall be
deemed to update any related information contained in a previously filed report (the items set
forth herein in clauses (A), (B) and (C) being hereinafter referred to as
the “Holdings Claims”), and (ii) in the case of Holdings being the Indemnifying Party, (x)
any breach of any representation or warranty made by Holdings herein, (y) any breach of any
covenant, agreement or obligation of Holdings contained herein, or (z) any untrue statement or
alleged untrue statement of a material fact about Holdings contained in the Investment Overview or
the omission or alleged omission therefrom of a material fact about Holdings required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, (the items set forth herein in clauses (x),
(y) and (z) being hereinafter referred to as the “Alexza Claims”). To the
extent that the foregoing undertaking by Alexza or Holdings may be unenforceable for any reason,
such Party shall make the maximum contribution to the payment and satisfaction of any Loss that is
permissible under applicable law.

Warrant Purchase Agreement

9

 

     Section 5.02 Notice of Claims. Any Indemnified Party that proposes to assert a right
to be indemnified under this Article V shall notify Alexza or Holdings, as applicable (the
“Indemnifying Party”), promptly after receipt of notice of commencement of any action, suit
or proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect of
which a claim is to be made under this Article V, or the incurrence or realization of any
Loss in respect of which a claim is to be made under this Article V, of the commencement of
such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of all relevant
documents, including all papers served and claims made, but the omission to so notify the
applicable Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or
realization shall not relieve (x) such Indemnifying Party from any liability that it may have to
such Indemnified Party under this Article V or otherwise, except, as to such Indemnifying
Party’s liability under this Article V, to the extent, but only to the extent, that such
Indemnifying Party shall have been prejudiced by such omission, or (y) any other indemnitor from
liability that it may have to any Indemnified Party.

     Section 5.03 Defense of Proceedings. In case any Indemnified Proceeding shall be
brought against any Indemnified Party, it shall notify the applicable Indemnifying Party of the
commencement thereof as provided in Section 5.02, and such Indemnifying Party shall be
entitled to participate in, and provided such Indemnified Proceeding involves a claim
solely for money damages and does not seek an injunction or other equitable relief against the
Indemnified Party and is not a criminal or regulatory action, to assume the defense of, such
Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified Party. After
notice from such Indemnifying Party to such Indemnified Party of such Indemnifying Party’s election
to so assume the defense thereof and the failure by such Indemnified Party to object to such
counsel within ten (10) Business Days following its receipt of such notice, such Indemnifying Party
shall not be liable to such Indemnified Party for legal or other expenses related to such
Indemnified Proceedings incurred after such notice of election to assume such defense except as
provided below and except for the reasonable costs of investigating, monitoring or cooperating in
such defense subsequently incurred by such Indemnified Party reasonably necessary in connection
with the defense thereof. Such Indemnified Party shall have the right to employ its counsel in any
such Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless:

               (i) the employment of counsel by such Indemnified Party at the expense of the applicable
Indemnifying Party has been authorized in writing by such Indemnifying Party;

               (ii) such Indemnified Party shall have reasonably concluded in its good faith (which
conclusion shall be determinative unless a court determines that such conclusion was not reached
reasonably and in good faith) that there is or may be a conflict of interest between the applicable
Indemnifying Party and such Indemnified Party in the conduct of the defense of such Indemnified
Proceeding or that there are or may be one or more different or additional defenses, claims,
counterclaims,

Warrant Purchase Agreement

10

 

or causes of action available to such Indemnified Party (it being agreed that in any case
referred to in this clause (ii) such Indemnifying Party shall not have the right to direct
the defense of such Indemnified Proceeding on behalf of the Indemnified Party);

               (iii) the applicable Indemnifying Party shall not have employed counsel reasonably acceptable
to the Indemnified Party, to assume the defense of such Indemnified Proceeding within a reasonable
time after notice of the commencement thereof; provided, however, that (A) this
clause (iii) shall not be deemed to constitute a waiver of any conflict of interest that
may arise with respect to any such counsel, and (B) an Indemnified Party may not invoke this
clause (iii) if such Indemnified Party failed to timely object to such counsel pursuant to
the first paragraph of this Section 5.03 above (it being agreed that in any case referred
to in this clause (iii) such Indemnifying Party shall not have the right to direct the
defense of such Indemnified Proceeding on behalf of the Indemnified Party); or

               (iv) any counsel employed by the applicable Indemnifying Party shall fail to timely commence
or diligently conduct the defense of such Indemnified Proceeding and such failure has prejudiced
(or is in immediate danger of prejudicing) the outcome of such Indemnified Proceeding (it being
agreed that in any case referred to in this clause (iv) such Indemnifying Party shall not
have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified
Party);

in each of which cases the reasonable fees and expenses of counsel for such Indemnified Party shall
be at the expense of such Indemnifying Party. Only one counsel shall be retained by all
Indemnified Parties with respect to any Indemnified Proceeding, unless counsel for any Indemnified
Party reasonably concludes in good faith (which conclusion shall be determinative unless a court
determines that such conclusion was not reached reasonably and in good faith) that there is or may
be a conflict of interest between such Indemnified Party and one or more other Indemnified Parties
in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or
more different or additional defenses, claims, counterclaims, or causes or action available to such
Indemnified Party.

     Section 5.04 Settlement. Without the prior written consent of such Indemnified Party,
such Indemnifying Party shall not settle or compromise, or consent to the entry of any judgment in,
any pending or threatened Indemnified Proceeding, unless such settlement, compromise, consent or
related judgment (i) includes an unconditional release of such Indemnified Party from all liability
for Losses arising out of such claim, action, investigation, suit or other legal proceeding, (ii)
provides for the payment of money damages as the sole relief for the claimant (whether at law or in
equity), (iii) involves no admission of fact adverse to the Indemnified Party or finding or
admission of any violation of law or the rights of any Person by the Indemnified Party, and (iv) is
not in the nature of a criminal or regulatory action. No Indemnified Party shall settle or
compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified
Proceeding (A) in respect of which any payment would result hereunder or under, (B) which includes
an injunction that will materially adversely affect any Indemnifying Party, (C) which involves an
admission of fact adverse to the Indemnifying

Warrant Purchase Agreement

11

 

Party or a finding or admission of any violation of law or the rights of any Person by the
Indemnifying Party, or (D) which is in the nature of a criminal or regulatory action, without the
prior written consent of the Indemnifying Party, such consent not to be unreasonably conditioned,
withheld or delayed.

ARTICLE VI

TRANSFER RESTRICTIONS

     Section 6.01 Transfer Restrictions. Holdings agrees (and agrees to cause all of its
members and any subsequent transferees thereof to so agree) that (i) except as specifically set
forth in the proviso immediately below, it will not, directly or indirectly, offer, sell, assign,
transfer, distribute, grant or sell a participation in, pledge or otherwise dispose of any Warrants
or Warrant Shares or solicit any offers to buy or otherwise acquire, or take a pledge of, any
Warrants (collectively, “Transfer”) unless such Warrants or Warrant Shares are registered
and/or qualified under the Securities Act and applicable state securities laws, or unless an
exemption from the registration or qualification requirements is otherwise available;
provided, that, prior to such registration or qualification, (x) Holdings may
Transfer Warrants or Warrant Shares to Investors, RRD and each Symphony Fund, (y) Investors may
Transfer Warrants or Warrant Shares to its members, and (z) SCP may, in a single distribution,
further Transfer Warrants or Warrant Shares to its limited partners, but in no event shall any of
RRD, the members of Investors (other than SCP) or SCP’s limited partners further Transfer such
Warrants or Warrant Shares prior to their registration or qualification (unless in accordance with
clauses (x), (y) or (z)); (ii) (A) no Transfer of such Warrants, or (B)
with respect to a private placement of the Warrant Shares, no Transfer of such Warrant Shares,
shall be effective or recognized unless the transferor and the transferee make the representations
and agreements contained herein and furnish to Alexza such certifications and other information as
Alexza may reasonably request to confirm that any proposed transfer complies with the restrictions
set forth herein and any applicable laws; and (iii) (1) except with respect to a Transfer made
pursuant to the proviso in clause (i) above, Warrants may only be transferred in minimum
denominations of Warrants representing the right to purchase at least 30,000 Warrant Shares, and
(2) prior to the registration of Warrant Shares as contemplated in the Registration Rights
Agreement, the Warrant Shares may only be transferred in minimum denominations of at least 30,000
Warrant Shares (other than a Transfer following a Transaction Event); provided,
however, that in the event that any holder of any Warrants or Warrant Shares holds Warrants
representing the right to purchase less than 30,000 Warrant Shares, or holds less than 30,000
Warrant Shares, as the case may be, such holder shall be entitled to exercise all, but not less
than all, such Warrants and sell all, but not less than all, such Warrant Shares delivered to it in
connection therewith, notwithstanding the fact that the number of such Warrant Shares is less than
30,000; provided, further, that Holdings agrees (and agrees to cause its members
and any subsequent transferees thereof to so agree), that with respect to the Warrants, such holder
of Warrants will not sell or otherwise transfer any Warrants, except in private placements to
Accredited Investors or as otherwise permitted hereunder. Notwithstanding anything to the contrary
contained herein, it is understood and agreed

Warrant Purchase Agreement

12

 

that Holdings (and its Affiliates) and any transferees thereof shall be entitled to
immediately exercise all or any portion of its Warrants and Transfer such Warrant Shares without
regard to the minimum share limitations hereunder at any time after a Transaction Event;
provided, however, that following the public announcement by Alexza that the
proposed transaction has been terminated in accordance with its terms, holders of Warrant Shares
shall be subject to the share limitations hereunder.

     Section 6.02 Legends.

          (a) Holdings acknowledges and agrees that Alexza shall affix to each certificate evidencing
outstanding Warrants (and any certificates issued upon the transfer of the Warrants) a legend in
substantially the following form (a “Warrant Legend”):

“NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN THE SUBJECT OF REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH RESPECT TO THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF) ISSUED IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

THE WARRANT EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE WARRANT PURCHASE
AGREEMENT, DATED AS OF DECEMBER 1, 2006, COPIES OF WHICH ARE ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO
REGISTRATION OF TRANSFER OF THIS WARRANT WILL BE MADE ON THE BOOKS
OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN
COMPLIED WITH.”

     Section 6.03 Warrant Legend Removal. If the certificates representing such Warrants,
include a Warrant Legend (as set forth in Section 6.02 hereof), Alexza shall, upon a
request from Holdings, or a member or subsequent transferee thereof, as

Warrant Purchase Agreement

13

 

soon as practicable but in no event more than thirty (30) days after receiving such request,
remove or cause to be removed (i) if the Warrants cease to be restricted securities, the securities
law portion of the Warrant Legend and/or (ii) in the event of a sale of the Warrants in compliance
with the transfer restrictions, the transfer restriction portion of the Warrant Legend, from such
certificates representing the Warrants as Holdings, or such member or transferee, shall designate,
in accordance with the terms hereof and, if applicable, in accordance with the terms of the
applicable Warrant.

     Section 6.04 Improper Transfer. Any attempt to sell, assign, transfer, grant or sell
a participation in, pledge or otherwise dispose of any Warrants or any Warrant Shares, not in
compliance with this Agreement shall be null and void and Alexza, and such transfer agent as Alexza
may employ, shall give no effect to, and shall not register or record a transfer pursuant to, such
attempted sale, assignment, transfer, grant, sale of a participation, pledge or other disposition
that is not made in accordance with the terms of this Agreement.

     Section 6.05 Limits on Daily Disposition. Holdings and its Affiliates each agree
that, in the event that any holder of Warrants exercises some or all of such Warrants and
determines to dispose of the resulting Warrant Shares on the market, Holdings (and its Affiliates)
or the transferee of Holdings of those Warrant Shares will not sell or otherwise dispose in any
single day of Warrant Shares totaling, in the aggregate, in excess of the greater of (x) 35,000
shares or (y) 25% of the average daily trading volume of Alexza Common Stock over the course of the
previous twenty-eight (28) calendar days (as reported on the NASDAQ Global Market or such other
national exchange representing the primary exchange on which Alexza Common Stock is listed) (the
“Average Daily Volume”), and that, upon any transfer of the Warrant Shares to multiple
holders, each subsequent holder shall be subject to a daily disposition limit in respect of its
Warrant Shares that is its pro rata share of the 35,000 share limit or 25% of the Average Daily
Volume, whichever is greater, reflecting its proportionate share of the total number of Warrant
Shares; provided, however, that Holdings (and its Affiliates) and any transferees
thereof may sell or otherwise dispose of their Warrant Shares without regard to the share
limitations hereunder (i) at any time after the public announcement (a “Transaction Event”)
by Alexza that it has entered into an agreement relating to the merger, sale, reorganization,
reclassification, acquisition, disposition or consolidation of Alexza, including without
limitation, any Change of Control transaction, upon the consummation of which Alexza will not be
the Surviving Entity; provided, however, that following the public announcement by
Alexza that the proposed transaction has been terminated in accordance with its terms, holders of
Warrant Shares shall be subject to the share limitations hereunder, and (ii) in a private placement
to accredited investors; and provided further, that any holder of Warrant Shares
holding less than 35,000 shares shall not be subject to the disposition restrictions set forth in
this Section 6.05. Holdings and its Affiliates shall notify any transferee of the Warrants
or Warrant Shares of the terms of this Section 6.05, but shall in no event be responsible
for monitoring the disposition of the Warrant Shares by any transferee.

Warrant Purchase Agreement

14

 

          (a) Holdings acknowledges and agrees that any stock certificate(s) representing Warrant Shares
issued by Alexza pursuant hereto may contain a legend (the “Warrant Share Legend”)
substantially as follows:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN ARTICLE VI OF THE
WARRANT PURCHASE AGREEMENT, DATED AS OF DECEMBER 1, 2006, BY AND
BETWEEN THE ISSUER HEREOF AND SYMPHONY ALLEGRO HOLDINGS LLC
(COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE ISSUER HEREOF), INCLUDING, BUT NOT LIMITED TO, A DAILY SHARE
DISPOSITION LIMIT, WHICH IS THE GREATER OF (X) 35,000 SHARES OR
(Y) 25% OF THE AVERAGE DAILY TRADING VOLUME OF ALEXZA COMMON STOCK
OVER THE COURSE OF THE PREVIOUS TWENTY-EIGHT (28) CALENDAR DAYS
(AS REPORTED ON THE NASDAQ GLOBAL MARKET OR SUCH OTHER NATIONAL
EXCHANGE REPRESENTING THE PRIMARY EXCHANGE ON WHICH ALEXZA COMMON
STOCK IS LISTED) PER DAY IN RESPECT OF THE WARRANT SHARES OF THE
HOLDER HEREOF. UPON A SALE OR OTHER TRANSACTION RESULTING IN A
DIVISION OF THE SHARES REPRESENTED HEREBY, SUCH MAXIMUM DAILY
DISPOSITION AMOUNT WILL BE DIVIDED PRO RATA AMONG SUBSEQUENT
HOLDERS OF THE WARRANT SHARES.

ARTICLE VII

MISCELLANEOUS

     Section 7.01 Notice of Breach. Each Party covenants and agrees that, upon its
acquiring Knowledge of any breach by it of any representation, warranty, covenant or any other term
or condition of this Agreement or acquiring Knowledge of a material event or development that is,
or is reasonably expected to be, adverse to the other Party with respect to any Program or the
transactions contemplated hereby, such Party shall promptly notify the other Party in writing
within three (3) Business Days of acquiring such Knowledge; provided, that the failure to
provide such notice shall not impair or otherwise be deemed a waiver of any rights any Party may
have arising from such breach, material event or development and that notice under this Section
7.01 shall not in itself constitute notice of any breach, unless explicitly stated in such
notice.

Warrant Purchase Agreement

15

 

     Section 7.02 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted to be given to any Party shall be in writing addressed
to the Party at its address set forth below and shall be deemed given (i) when delivered to the
Party personally, (ii) if sent to the Party by facsimile transmission (promptly followed by a
hard-copy delivered in accordance with this Section 7.02), when the transmitting Party
obtains written proof of transmission and receipt; provided, however, that notwithstanding the
foregoing, any communication sent by facsimile transmission after 5:00 PM (receiving Party’s time)
or not on a Business Day shall not be deemed received until the next Business Day, (iii) when
delivered by next Business Day delivery by a nationally recognized courier service, or (iv) if sent
by registered or certified mail, when received, provided postage and registration or certification
fees are prepaid and delivery is confirmed by a return receipt:

     Alexza:

Alexza Pharmaceuticals, Inc.

1020 East Meadow Circle

Palo Alto, CA 94303

Attn: August J. Moretti

Facsimile: (650) 687-3999

     with a copy to:

Cooley Godward Kronish LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 94306-2155

Attn: Barbara A. Kosacz, Esq.

Facsimile: (650) 849-7400

     Holdings:

Symphony Allegro Holdings LLC

7361 Calhoun Place, Suite 325

Rockville, MD 20855

Attn: Robert L. Smith, Jr.

Facsimile: (301) 762-6154

     with a copy to:

Symphony Capital Partners, L.P.

875 Third Avenue, 18th Floor

New York, NY 10022

Attn: Mark Kessel

Facsimile: (212) 632-5401

     and

Warrant Purchase Agreement

16

 

Symphony Strategic Partners, LLC

875 Third Avenue, 18th Floor

New York, NY 10022

Attn: Mark Kessel

Facsimile: (212) 632-5401

or to such other address as such Party may from time to time specify by notice given in the manner
provided herein to each other Party entitled to receive notice hereunder.

     Section 7.03 Governing Law; Consent to Jurisdiction and Service of Process.

          (a) This Agreement shall be governed by, and construed in accordance with, the laws of the
State of New York; except to the extent that this Agreement pertains to the internal
governance of Alexza, and to such extent this Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.

          (b) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court and any Delaware State court
or federal court of the United States of America sitting in The City of New York, Borough of
Manhattan or Wilmington, Delaware, and any appellate court from any jurisdiction thereof, in any
action or proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and determined in any such
New York State court, any such Delaware State court or, to the fullest extent permitted by law, in
such federal court. Each of the Parties agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that any
Party may otherwise have to bring any action or proceeding relating to this Agreement.

          (c) Each of the Parties irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any New
York State or federal court, or any Delaware State or federal court. Each of the Parties hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court. Each of the parties hereby consent
to service of process by mail.

     Section 7.04 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Warrant Purchase Agreement

17

 

     Section 7.05 Entire Agreement. This Agreement (including any Annexes, Schedules,
Exhibits or other attachments here) constitutes the entire agreement between the Parties with
respect to the matters covered hereby and supersedes all prior and contemporaneous agreements,
correspondence, discussion and understandings with respect to such matters between the Parties,
excluding the Operative Documents.

     Section 7.06 Amendment and Waivers. The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a written instrument
signed by each of the Parties. Any Party may waive, solely with respect to itself, any one or more
of its rights hereunder without the consent of any other Party hereto; provided, that no such
waiver shall be effective unless set forth in a written instrument executed by the Party hereto
against whom such waiver is to be effective.

     Section 7.07 Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed an original but all of which taken
together shall constitute one and the same Agreement.

     Section 7.08 Assignment and Successors. Except as otherwise permitted pursuant to
Article VI hereof, neither Alexza nor Holdings may Transfer, in whole or in part, any or
all of its rights or obligations hereunder to any Person (a “Transferee”) without the prior
written approval of the other Party; provided, however, that Alexza, without the
prior approval of the other Party, acting in accordance with Section 2A of the Purchase
Option Agreement, may make such Transfer to any Person which acquires all or substantially all of
Alexza’s assets or business (or assets or business related to the Programs) or which is the
surviving or resulting Person in a merger or consolidation with Alexza; provided
further, that in the event of any permitted Transfer by Holdings, Holdings shall provide
written notice to Alexza of any such Transfer not later than thirty (30) days after such Transfer
setting forth the identity and address of the Transferee and summarizing the terms of the Transfer.
In the event that the surviving or resulting “parent” entity (the “Surviving Entity”) in a
merger or acquisition involving Alexza is an entity other than Alexza, then Holdings or any
subsequent holder of a Warrant shall either exercise such Warrant (which will become immediately
exercisable upon a Transaction Event) or surrender such Warrant in exchange for a new Warrant
exercisable for shares of the common stock of the Surviving Entity (the “Replacement
Warrant”); provided, that:

               (i) if the terms of such merger or acquisition shall provide for consideration that consists
of a combination of cash and stock of the Surviving Entity, then any Replacement Warrant issued to
the holders of the Warrants shall be solely for stock of the Surviving Entity, at an exchange ratio
reflecting the total consideration paid by the Surviving Entity at the time of such change in
control as if the total consideration (including cash) for each share of Alexza Common Stock was
instead paid only in stock of the Surviving Entity at the time of such change of control (as
illustrated on Exhibit C hereto), and the holders of the Replacement Warrants shall have
the registration rights for stock issuable upon exercise of the Replacement Warrants as provided
under the Registration Rights Agreement; and

Warrant Purchase Agreement

18

 

               (ii) if prior to the end of the Term, such a merger or acquisition shall occur and the
consideration for such merger or acquisition shall be paid entirely in cash, then any holder of any
outstanding Warrant shall then have the option to elect within fifteen (15) Business Days of
receiving notice of the public announcement of the merger or acquisition by written notice of
election to Alexza, either (A) to retain such Warrant and the right to exercise such Warrant for
shares of Alexza Common Stock in accordance with the terms of such Warrant and this Agreement,
which exercise shall occur no later than immediately prior to the closing of such merger or
acquisition; or (B) to surrender such outstanding Warrant to Alexza in consideration of a cash
payment for each share of Alexza Common Stock subject to purchase under such Warrant in an amount
equal to 40% of the per share cash consideration to be received by a holder of one share of Alexza
Common Stock to be tendered in the merger or acquisition; provided that the aggregate total
cash payments to all holders of the Warrants shall not exceed $10,000,000 (the “Warrant
Surrender Price”). The Warrant Surrender Price shall be paid upon the surrender of the
Warrants promptly following the closing of the all cash merger or acquisition. Any failure by the
Holder to deliver a written notice of election to Alexza pursuant to this Section 7.08(ii)
shall be deemed an election of clause (A) of this Section 7.08(ii).

Following a merger or acquisition involving the payment of non-cash consideration in which Alexza
is not the Surviving Entity, any reference to “Alexza Common Stock” shall be deemed instead
to refer to the common stock of the Surviving Entity. For purposes of this Section 7.08
“common stock of the Surviving Entity” shall include stock of such corporation of any class which
is not preferred as to dividends or assets over any other class of stock of such corporation, and
which is not subject to redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the occurrence of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 7.08 shall similarly apply to successive mergers, acquisitions, consolidations
or disposition of assets.

[SIGNATURES FOLLOW ON NEXT PAGE]

Warrant Purchase Agreement

19

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective
officers or other representatives thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	ALEXZA PHARMACEUTICALS, INC.

 	 
	 	By:  	          /s/ August J. Moretti
 	 
	 	 	Name:  	August J. Moretti 	 
	 	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 

	 	 	 	 	 	 	 
	 	 	SYMPHONY ALLEGRO HOLDINGS LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Symphony Capital Partners, L.P.,
	 	 
	 

	 	 	 	its Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Symphony Capital GP, L.P.,	 	 
	 

	 	 	 	its member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Symphony GP, LLC,	 	 
	 

	 	 	 	its member	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	                                                            /s/ Mark Kessel
 	 
	 	 	Name:  	Mark Kessel 	 
	 	 	Title:  	Managing Member 	 
	 

Signature Page to Warrant Purchase Agreement

 

 

ANNEX A

CERTAIN DEFINITIONS

[See attached.]

Warrant Purchase Agreement

 

 

EXHIBIT A

FORM OF OPINION OF COOLEY GODWARD KRONISH LLP

[See attached.]

Exhibit A to the Warrant Purchase Agreement

A-1

 

EXHIBIT B

FORM OF WARRANT

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN THE SUBJECT OF
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH RESPECT TO THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF) ISSUED IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

THE WARRANT EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE WARRANT PURCHASE AGREEMENT, DATED AS OF DECEMBER 1, 2006, COPIES OF WHICH ARE ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF TRANSFER OF THIS WARRANT WILL
BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED
WITH.

ALEXZA PHARMACEUTICALS, INC.

WARRANT TO PURCHASE COMMON STOCK

			
	No. CW-_
	 	December 1, 2006

Void After December 1, 2011

     THIS CERTIFIES THAT, for value received, SYMPHONY ALLEGRO HOLDINGS LLC, with its principal
office at 7361 Calhoun Place, Suite 325, Rockville, MD 20855, or its assigns (the
“Holder”), is entitled to subscribe for and purchase at the Exercise Price (defined below)
from Alexza Pharmaceuticals, Inc., a Delaware corporation, with its principal office at 1020 East
Meadow Circle, Palo Alto, CA 94303 (the “Company”) up to two million (2,000,000) shares of
the Common Stock of the Company (the “Common Stock”), subject to adjustment as provided
herein. This Warrant is being issued pursuant to the terms of the Warrant Purchase Agreement,
dated December 1, 2006, by and among the Company and the Holder (the “Warrant Purchase
Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Warrant Purchase Agreement.

     1. DEFINITIONS. As used herein, the following terms shall have the following
respective meanings:

Exhibit B to the Warrant Purchase Agreement

B-1

 

          (a) “Exercise Period” shall mean the period commencing on December 1, 2007 and ending
on December 1, 2011, except as otherwise provided below.

          (b) “Exercise Price” shall mean $9.91 per share, subject to adjustment pursuant to
Section 6 below.

          (c) “Exercise Shares” shall mean the shares of the Company’s Common Stock issuable
upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but
not limited to adjustment pursuant to Section 6 below.

     2. EXERCISE OF WARRANT.

          2.1 Method of Exercise. The rights represented by this Warrant may be exercised in
whole or in part at any time during the Exercise Period or earlier at any time upon a Transaction
Event, by delivery of the following to the Company at its address set forth above (or at such other
address as it may designate by notice in writing to the Holder):

               (a) An executed Notice of Exercise in the form attached hereto;

               (b) Payment of the Exercise Price of the Exercise Shares purchased thereby (i) in cash or by
check or wire transfer of immediately available funds, (ii) pursuant to a Cashless Exercise, as
described below, or (iii) by a combination of (i) and (ii); and

               (c) Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall
be issued for the Exercise Shares so purchased, and shall be registered in the name of the Holder
or persons affiliated with the Holder, if the Holder so designates, within a reasonable amount of
time following receipt by the Company of all of the items designated in clauses (a),
(b) and (c) above, but in no event later than thirty (30) days after the date of
exercise pursuant to this Section 2.1. The Company shall (i) upon request of the Holder,
if available and if allowed under applicable securities laws, use commercially reasonable efforts
to deliver Exercise Shares electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions, or (ii) if requested by the Holder,
deliver to the Holder certificates evidencing the Exercise Shares. The person in whose name any
Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which delivery of the Notice of Exercise, delivery
of this Warrant and payment of the Exercise Price were made, irrespective of the date of issuance
of the shares of Common Stock, except that, if the date of such delivery and payment is a date when
the stock transfer books of the Company are closed, such person shall be deemed to have become the
holder of such shares at the close of business on the next succeeding date on which the stock
transfer books are open.

Exhibit B to the Warrant Purchase Agreement

B-2

 

          2.2 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at
any time during the Exercise Period, the Current Market Price (as defined below) of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant in whole
or part by a cashless exercise by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

	 	 	 	 	 	 	 
	 

	 	X =
	 	Y (B-A)	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	B	 	 
	 
	 	 	 	 	 	 
	Where:	 	X =	 	the number of shares of Common Stock to be issued to the Holder.
	 
	 	 	 	 	 	 
	 	 	Y=	 	the number of shares of Common Stock purchasable upon
exercise of all of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (in each case subject to
adjustment pursuant to the terms herein, including but not limited to
adjustment pursuant to Section 6 below).
	 
	 	 	 	 	 	 
	 	 	A =	 	the Exercise Price.
	 
	 	 	 	 	 	 
	 	 	B =	 	the Current Market Price of one share of Common Stock.
	 
	 	 	 	 	 	 
	 	 	“Current Market Price” means on any particular date:

               (a) if the Common Stock is traded on the Nasdaq SmallCap Market or the Nasdaq Global Market,
the average of the closing prices of the Common Stock of the Company on such market over the five
(5) trading days ending immediately prior to the applicable date of valuation (in the case of a
cashless exercise, the date of valuation will be the exercise date);

               (b) if the Common Stock is traded on any registered national stock exchange but is not traded
on the Nasdaq SmallCap Market or the Nasdaq Global Market, the average of the closing prices of the
Common Stock of the Company on such exchange over the five (5) trading days ending immediately
prior to the applicable date of valuation (in the case of a cashless exercise, the date of
valuation will be the exercise date).

               (c) if the Common Stock is traded over-the-counter, but not on the Nasdaq SmallCap Market, the
Nasdaq Global Market or a registered national stock exchange, the average of the closing bid prices
over the five (5) trading day period ending immediately prior to the applicable date of valuation
(in the case of a cashless exercise, the date of valuation will be the exercise date); and

Exhibit B to the Warrant Purchase Agreement

B-3

 

               (d) if there is no active public market for the Common Stock, the value thereof, as determined
in good faith by the Board of Directors of the Company upon due consideration of the proposed
determination thereof by the Holder.

          2.3 Partial Exercise. If this Warrant is exercised in part only, the Company shall,
upon surrender of this Warrant, execute and deliver, within ten (10) days of the date of exercise,
a new Warrant evidencing the rights of the Holder, or such other person as shall be designated in
the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable hereunder. In
no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not
distribute a Warrant exercisable for a fractional Exercise Share. Fractional Exercise Shares shall
be treated as provided in Section 5 hereof.

          2.4 Legend.

               (a) All certificates evidencing the shares to be issued to the Holder may bear the following
legends (provided that no such legend shall be borne by Exercise Shares issued following the valid
disposition of such shares pursuant to a registration statement which is effective under the
Securities Act):

     “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN ISSUED IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. SUCH SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.”

     “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS
SET FORTH IN ARTICLE VI OF THE WARRANT PURCHASE AGREEMENT, DATED AS OF DECEMBER 1, 2006, BY
AND BETWEEN THE ISSUER HEREOF AND SYMPHONY ALLEGRO HOLDINGS LLC (COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER HEREOF), INCLUDING, BUT NOT LIMITED TO, A DAILY SHARE
DISPOSITION LIMIT, WHICH IS THE GREATER OF (X) 35,000 SHARES OR (Y) 25% OF THE AVERAGE DAILY
TRADING VOLUME OF ALEXZA COMMON STOCK OVER THE COURSE OF THE PREVIOUS TWENTY-EIGHT (28) CALENDAR
DAYS (AS REPORTED ON THE NASDAQ GLOBAL MARKET OR SUCH OTHER NATIONAL EXCHANGE REPRESENTING THE
PRIMARY EXCHANGE ON WHICH ALEXZA COMMON STOCK IS LISTED) PER DAY IN RESPECT OF THE WARRANT SHARES
OF THE HOLDER HEREOF. UPON A SALE OR OTHER TRANSACTION RESULTING IN A DIVISION OF THE SHARES
REPRESENTED HEREBY, SUCH MAXIMUM DAILY DISPOSITION AMOUNT WILL BE DIVIDED PRO RATA AMONG SUBSEQUENT
HOLDERS OF THE WARRANT SHARES”.

Exhibit B to the Warrant Purchase Agreement

B-4

 

               (b) If the certificates representing shares include either or both of the legends set forth in
Section 2.4(a) hereof, the Company shall, upon a request from a Holder, or subsequent
transferee of a Holder, as soon as practicable but in no event more than thirty (30) days after
receiving such request, remove or cause to be removed (i) if the shares cease to be restricted
securities, the securities law portion of the legend and/or (ii) in the event of a sale of the
shares subject to issuance following the transfer of the shares in compliance with the transfer
restrictions, the transfer restriction portion of the legend, from certificates representing the
shares delivered by a Holder (or a subsequent transferee).

          2.5 Charges, Taxes and Expenses. Issuance of the Exercise Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of any electronic or paper certificate, all of which taxes and expenses shall be
paid by the Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided, however, that in the
event Exercise Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto. Notwithstanding anything to
the contrary in this Section 2.5, all issue or transfer tax or other incidental expenses imposed by
a Governmental Authority outside the United States shall be 100% borne by the Holder.

     3. COVENANTS OF THE COMPANY.

          3.1 Covenants as to Exercise Shares. The Company covenants and agrees that all
Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized and validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.
The Company further covenants and agrees that the Company will at all times during the Exercise
Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any
time during the Exercise Period the number of authorized but unissued shares of Common Stock shall
not be sufficient to permit exercise of this Warrant, the Company will take such corporate action
as may, in the opinion of counsel, be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.

          3.2 No Impairment. Except and to the extent as waived or consented to by the Holder
in accordance with Section 10 hereof, the Company will not, by amendment of its Certificate
of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith carry out of all the provisions of this Warrant
and take all such action

Exhibit B to the Warrant Purchase Agreement

B-5

 

as may be necessary or appropriate in order to protect the exercise rights of the Holder
against such impairment.

          3.3 Notices of Record Date. If at any time:

               (a) the Company shall take a record of the holders of Common Stock for the purpose of
entitling them to receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right (other than with respect to any equity or
equity equivalent security issued pursuant to a rights plan adopted by the Company’s Board of
Directors);

               (b) there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the Company,
or any sale, transfer or other disposition of all or substantially all the property, assets or
business of the Company; or

               (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in any one or more of such cases, the Company shall use commercially reasonable efforts to
give to the Holder, provided that such action is available and permitted under the
applicable securities laws, at least ten (10) days’ prior written notice of the record date for
such dividend, distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, recapitalization, consolidation, merger, sale, transfer,
disposition, dissolution, liquidation or winding up of the Company. Any notice provided hereunder
shall specify the date on which the holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and the then current estimated date
for the closing of the transaction contemplated by any proposed reorganization, reclassification,
recapitalization, consolidation, merger, sale, transfer, disposition, dissolution, liquidation or
winding up of the Company.

     4. REPRESENTATIONS OF HOLDER.

          4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants
that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and
not with a present view toward the public sale or public distribution of said Warrant or Exercise
Shares or any part thereof and has no intention of selling or distributing said Warrant or Exercise
Shares or any arrangement or understanding with any other persons regarding the sale or
distribution of said Warrant or the Exercise Shares, except as would not result in a violation of
the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) the Warrant except in accordance with the provisions of Article VI of the Warrant
Purchase Agreement and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of)

Exhibit B to the Warrant Purchase Agreement

B-6

 

the Exercise Shares except in accordance with the provisions of Article VI of the
Warrant Purchase Agreement or pursuant to and in accordance with the Securities Act.

          4.2 Securities Are Not Registered.

               (a) The Holder understands that the offer and sale of neither the Warrant nor the Exercise
Shares has been registered under the Securities Act.

               (b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption from such
registration is available. The Holder recognizes that the Company has no obligation to register
the Warrant or, except as provided in the Warrant Purchase Agreement and the Registration Rights
Agreement, the Exercise Shares, or to comply with any exemption from such registration.

               (c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant
to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among
other things, the availability of certain current public information about the Company and the
expiration of the required holding period under Rule 144.

          4.3 Disposition of Warrant and Exercise Shares.

               (a) The Holder further agrees not to make any disposition of all or any part of the Warrant or
Exercise Shares in any event unless and until one of the following occurs:

                    (i) The Company shall have received a letter secured by the Holder from the SEC stating that
no action will be recommended to the Commission with respect to the proposed disposition;

                    (ii) There is then in effect a registration statement under the Securities Act covering the
Exercise Shares and such disposition is made in accordance with said registration statement; or

                    (iii) The Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, for the Holder to the effect that such disposition will not require
registration of such Warrant or Exercise Shares under the Securities Act or any applicable state
securities laws; provided, that so long as the Holder provides the Company with a representation
letter in customary form with respect to such Rule 144 disposition, no opinion shall be required
for any disposition made or to be made in accordance with the provisions of Rule 144.

     5. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this
Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including
fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining
whether the exercise would result in the issuance of any fractional share. If, after aggregation,
the exercise would result in the issuance of

Exhibit B to the Warrant Purchase Agreement

B-7

 

a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the
Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from
multiplying the then Current Market Price (as of the applicable exercise date) of an Exercise Share
by such fraction.

     6. CERTAIN EVENTS.

          6.1 Dividends, Subdivisions, Combinations and Reclassifications. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject
to adjustment from time to time upon the happening of any of the following. In case the Company
shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock
to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company which it would
have owned or have been entitled to receive had such Warrant been exercised in advance thereof.
Upon each such adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the
number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price
per Warrant Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such event retroactive to
the record date, if any, for such event.

          6.2 Corporate Transactions. In the event that the Company enters into a merger or
acquisition in which the surviving or resulting “parent” entity is an entity other than the
Company, then the Holder shall either exercise the Warrant or surrender the Warrant in exchange for
a new warrant exercisable in return for shares or common stock of the Surviving Entity (as defined
in the Warrant Purchase Agreement) (the “Replacement Warrant”), provided that:

               (i) in accordance with Section 7.08 of the Warrant Purchase Agreement, if the
consideration for a merger or acquisition consists of a combination of cash and stock of the
Surviving Entity, then the Replacement Warrant issued to the Holder shall be solely for common
stock of the Surviving Entity at an exchange ratio reflecting the total consideration paid by the
Surviving Entity at the time of such change in control as if the total consideration (including
cash) for each share of the Common Stock was instead paid only in common stock of the Surviving
Entity at the time of such change of control (as illustrated on Exhibit C to the Warrant
Purchase Agreement), and the holders of the Replacement Warrants shall have the registration

Exhibit B to the Warrant Purchase Agreement

B-8

 

rights for stock issuable upon exercise of the Replacement Warrants as provided under the
Registration Rights Agreement; or

               (ii) in accordance with Section 7.08 of the Warrant Purchase Agreement, if prior to
the end of the Term (as defined in the Warrant Purchase Agreement), a merger or acquisition shall
occur and the consideration for such merger or acquisition shall be paid entirely in cash, then the
Holder of this Warrant shall then have the option to irrevocably elect within fifteen (15) Business
Days of the public announcement of the merger or acquisition by written notice of election to the
Company, either (A) to retain the Warrant and the right to exercise the Warrant then outstanding
for Exercise Shares in accordance with the terms of this Warrant, which exercise shall occur no
later than immediately prior to the closing of such merger or acquisition, or (B) to surrender the
Warrant to the Company in consideration of a cash payment for each share of the Common Stock
subject to purchase under this Warrant in an amount equal to 40% of the per share cash
consideration to be received by a holder of one share of the Common Stock to be tendered in the
merger or acquisition, provided that the aggregate total cash payments to all holders of
outstanding Warrants shall not exceed $10,000,000 (the “Warrant Surrender Price”). The
Warrant Surrender Price shall be paid upon the surrender of the Warrants promptly following the
closing of the all cash merger or acquisition. Any failure by the Holder to deliver a written
notice of election to the Company pursuant to this Section 6.3(ii) shall be deemed an
election of clause (B) of this Section 6.2(ii).

Following a merger or acquisition involving consideration of cash and stock in which the Surviving
Entity is other than the Company, reference to the Common Stock shall instead be deemed a reference
to the common stock of the Surviving Entity. For purposes of Section 6.2(i), “common stock
of the Surviving Entity” shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable for any such stock, either immediately
or upon the arrival of a specified date or the occurrence of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing provisions of this
Section 6.2 shall similarly apply to successive reorganizations, reclassifications,
mergers, acquisitions, consolidations or disposition of assets.

          6.3 Adjustment of Exercise Price. The form of this Warrant need not be changed
because of any adjustment in the number, class, and kind of shares subject to this Warrant. The
Company shall promptly provide a certificate from its principal accounting officer notifying the
Holder in writing of any adjustment in the Exercise Price and/or the total number, class, and kind
of shares (and other securities or property) issuable upon exercise of this Warrant, which
certificate shall specify the Exercise Price and number, class and kind of shares (and other
securities or property) under this Warrant after giving effect to such adjustment and shall set
forth a brief statement of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

Exhibit B to the Warrant Purchase Agreement

B-9

 

     7. NO STOCKHOLDER RIGHTS. Except to the extent specified in Section 6, this
Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. Upon the exercise of this Warrant in accordance with Section
2, the Exercise Shares so purchased shall be and be deemed to be issued to such Holder as the
record owner of such shares as of the close of business on the date of such exercise.

     8. TRANSFER OF WARRANT. Subject to applicable laws, the restriction on transfer set
forth on the first page of this Warrant and the provisions of Article VI of the Warrant
Purchase Agreement, this Warrant and all rights hereunder are transferable by the Holder, in person
or by duly authorized attorney, upon delivery of this Warrant, the Assignment Form attached hereto
and funds sufficient to pay any transfer taxes (in accordance with Section 2.5 hereof) payable upon
the making of such transfer, to any transferee designated by Holder. The transferee will sign and
deliver to the Company an investment letter in a form that is commercially reasonable, customary
for use in similar transactions and reasonably satisfactory to the Company. Upon such delivery
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of
this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Exercise Shares without having a new
Warrant issued.

     9. 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.

     10. MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the Company and the
Holder.

     11. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when
sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, (c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Company at the address listed on the signature page and to
the Holder at the addresses on the Company records, or at such other address as the Company or
Holder may designate by ten days’ advance written notice to the other party hereto.

Exhibit B to the Warrant Purchase Agreement

B-10

 

     12. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of
and agreement to all of the terms and conditions contained herein.

     13. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder
shall be governed by the laws of the State of New York without regard to the principles of conflict
of laws. The Company and, by accepting this Warrant, the Holder, each irrevocably submits and
consents to the exclusive jurisdiction of the courts of the State of New York located in New York
County and the United States District Court for the Southern District of New York for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the
transactions contemplated hereby. The Company and, by accepting this Warrant, the Holder, each
irrevocably waives any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY
ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.

     14. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.

     15. SUCCESSORS AND ASSIGNS. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of the Holder.

     16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.

     17. REGISTRATION RIGHTS. The holder of this Warrant and of the Exercise Shares shall
be entitled to the registration rights and other applicable rights with respect to the Exercise
Shares as and to the extent set forth in the Warrant Purchase Agreement and the Registration Rights
Agreement.

     18. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.

[Signature Page Follows]

Exhibit B to the Warrant Purchase Agreement

B-11

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officer as of December 1, 2006.

	 	 	 	 	 
	 	 	ALEXZA PHARMACEUTICALS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Address:
	 	1020 East Meadow Circle
	 

	 	 	 	Palo Alto, CA 94303
	 

	 	 	 	Attn: August J. Moretti
	 

	 	 	 	Facsimile: (650) 687-3999
	 
	 	 	 	 
	 

	 	W/copy to:
	 	Cooley Godward Kronish LLP
	 

	 	 	 	Five Palo Alto Square
	 

	 	 	 	3000 El Camino Real
	 

	 	 	 	Palo Alto, CA 94306-2155
	 

	 	 	 	Attn: Barbara A. Kosacz, Esq.
	 

	 	 	 	Facsimile: (650) 849-7400

Exhibit B to the Warrant Purchase Agreement

B-12

 

NOTICE OF EXERCISE

TO: ALEXZA PHARMACEUTICALS, INC.

     (1) The undersigned hereby elects to (check one box only):

          o purchase                                 shares of the Common Stock of Alexza Pharmaceuticals, Inc. (the
“Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of
the exercise price in full for such shares.

          o
purchase the number of shares of Common Stock of the Company by cashless exercise pursuant
to the terms of the Warrant as shall be issuable upon cashless exercise of the portion of the
Warrant relating to                      shares.

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

 

(Name)

 

 

(Address)

     (3) If the Warrant is not being exercised in full, please issue a certificate representing a
new Warrant evidencing the right of the Holder to purchase the balance of the Exercise Shares
purchasable under the Warrant, such certificate to be registered in the name of the undersigned or
in such other name as is specified below:

 

(Name)

 

 

(Address)

     (4) The undersigned represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned not with a view to, or for resale in connection with,
the distribution thereof in violation of the Securities Act of 1933, as amended (the
“Securities Act”) and that the undersigned has no present intention of distributing or
reselling such shares in violation of the Securities Act; (ii) the undersigned is aware of the
Company’s business affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision regarding its investment in the
Company; (iii) the undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned is capable of
evaluating the merits and risks of this investment and protecting the undersigned’s own interests;
(iv) the

Exhibit B to the Warrant Purchase Agreement

B-13

 

undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant
must be held indefinitely unless subsequently registered under the Securities Act or an exemption
from such registration is available, and (v) the undersigned agrees not to make any disposition of
all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with said registration statement, or the undersigned has provided
the Company with an opinion of counsel satisfactory to the Company, stating that such registration
is not required.

	 	 	 
	 

	 	 
	(Date)

	 	(Signature)
	 
	 	 
	 

	 	 
	 

	 	(Print Name)

Exhibit B to the Warrant Purchase Agreement

B-14

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, subject to compliance with
Section 4.3 hereof, execute this form and supply required
information. Do not use this form to purchase shares.)

          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned
to

	 	 	 
	Name:
	 	 
	 	 	 
	(Please Print)

	 
	 	 
	Address:
	 	 
	 	 	 
	(Please Print)

Dated: ____________________, 20__

	 	 	 	 	 
	Holder’s
	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Holder’s
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 

NOTE: The signature to this Assignment Form 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.

Exhibit B to the Warrant Purchase Agreement

B-15

 

EXHIBIT C

WARRANT CONVERSION EXAMPLE

               In the event that Alexza is the target of a merger or acquisition in which the share purchase
price paid by the acquiror is paid in cash or a mixture of cash and stock, the outstanding Warrants
are to be exchanged for Replacement Warrants of the Surviving Entity such that the holders of
Warrants shall receive additional Replacement Warrants in lieu of the cash portion of the share
purchase price, as set out in the following example:

	 	•	 	A holder hereunder holds Warrants exercisable for 100,000 shares of Alexza Common Stock
at an exercise price of $10.00 per share, and the share purchase price paid by the
acquiror is $15.00 per share of Alexza Common Stock, with $5.00 to be paid in cash and
$10.00 to be paid in shares of the common stock of the Surviving Entity (“New
Stock”), based on a price of $100.00 per share of New Stock.
	 
	 	•	 	The Warrants of the holder, exercisable for 100,000 shares of Alexza Common Stock,
shall be converted as follows:

	 	(1)	 	The New Stock portion of the purchase price ($10.00 / share, or a ratio of
New Stock to Alexza Common Stock of 10 to 1) shall yield Replacement Warrants
exercisable for 10,000 shares of New Stock; and
	 
	 	(2)	 	The cash portion of the purchase price ($5.00 / share, or $500,000 total)
shall, at the New Stock price of $100 /share, yield Replacement Warrants exercisable
for 5,000 shares of New Stock ($500,000 / $100 = 5,000).

	 	•	 	Therefore, in such a scenario, a holder of Warrants exercisable for 100,000 shares of
Alexza Common Stock would receive Replacement Warrants exercisable for 15,000 shares of
New Stock at an exercise price of $66.67 per share ($10.00 / $15.00 = 0.67 x $100.00 =
$66.67).

Exhibit C to the Warrant Purchase Agreement

C-1exv10w28

 

Exhibit 10.28

WARRANT

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN THE SUBJECT OF
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH RESPECT TO THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF) ISSUED IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

THE WARRANT EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE WARRANT PURCHASE AGREEMENT, DATED AS OF DECEMBER 1, 2006, COPIES OF WHICH ARE ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF TRANSFER OF THIS WARRANT WILL
BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED
WITH.

ALEXZA PHARMACEUTICALS, INC.

WARRANT TO PURCHASE COMMON STOCK

			
	No. SA-001
	 	December 1, 2006

Void After December 1, 2011

     THIS CERTIFIES THAT, for value received, SYMPHONY ALLEGRO HOLDINGS LLC, with its principal
office at 7361 Calhoun Place, Suite 325, Rockville, MD 20855, or its assigns (the
“Holder”), is entitled to subscribe for and purchase at the Exercise Price (defined below)
from Alexza Pharmaceuticals, Inc., a Delaware corporation, with its principal office at 1020 East
Meadow Circle, Palo Alto, CA 94303 (the “Company”) up to two million (2,000,000) shares of
the Common Stock of the Company (the “Common Stock”), subject to adjustment as provided
herein. This Warrant is being issued pursuant to the terms of the Warrant Purchase Agreement,
dated December 1, 2006, by and among the Company and the Holder (the “Warrant Purchase
Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Warrant Purchase Agreement.

     1. DEFINITIONS. As used herein, the following terms shall have the following
respective meanings:

 

 

          (a) “Exercise Period” shall mean the period commencing on December 1, 2007 and ending
on December 1, 2011, except as otherwise provided below.

          (b) “Exercise Price” shall mean $9.91 per share, subject to adjustment pursuant to
Section 6 below.

          (c) “Exercise Shares” shall mean the shares of the Company’s Common Stock issuable
upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but
not limited to adjustment pursuant to Section 6 below.

     2. EXERCISE OF WARRANT.

          2.1 Method of Exercise. The rights represented by this Warrant may be exercised in
whole or in part at any time during the Exercise Period or earlier at any time upon a Transaction
Event, by delivery of the following to the Company at its address set forth above (or at such other
address as it may designate by notice in writing to the Holder):

               (a) An executed Notice of Exercise in the form attached hereto;

               (b) Payment of the Exercise Price of the Exercise Shares purchased thereby (i) in cash or by
check or wire transfer of immediately available funds, (ii) pursuant to a Cashless Exercise, as
described below, or (iii) by a combination of (i) and (ii); and

               (c) Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall
be issued for the Exercise Shares so purchased, and shall be registered in the name of the Holder
or persons affiliated with the Holder, if the Holder so designates, within a reasonable amount of
time following receipt by the Company of all of the items designated in clauses (a),
(b) and (c) above, but in no event later than thirty (30) days after the date of
exercise pursuant to this Section 2.1. The Company shall (i) upon request of the Holder,
if available and if allowed under applicable securities laws, use commercially reasonable efforts
to deliver Exercise Shares electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions, or (ii) if requested by the Holder,
deliver to the Holder certificates evidencing the Exercise Shares. The person in whose name any
Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which delivery of the Notice of Exercise, delivery
of this Warrant and payment of the Exercise Price were made, irrespective of the date of issuance
of the shares of Common Stock, except that, if the date of such delivery and payment is a date when
the stock transfer books of the Company are closed, such person shall be deemed to have become the
holder of such shares at the close of business on the next succeeding date on which the stock
transfer books are open.

 

 

                           2.2 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at
any time during the Exercise Period, the Current Market Price (as defined below) of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant in whole
or part by a cashless exercise by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

	 	 	 	 	 	 	 
	 

	 	X =
	 	Y (B-A)
 

B
	 	 
	 
	 	 	 	 	 	 
	Where:	 	X =	 	the number of shares of Common Stock to be issued to the Holder.
	 
	 	 	 	 	 	 
	 	 	Y =	 	the number of shares of Common Stock purchasable upon
exercise of all of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (in each case subject to
adjustment pursuant to the terms herein, including but not limited to
adjustment pursuant to Section 6 below).
	 
	 	 	 	 	 	 
	 	 	A =	 	the Exercise Price.
	 
	 	 	 	 	 	 
	 	 	B =	 	the Current Market Price of one share of Common Stock.
	 
	 	 	 	 	 	 
	 	 	“Current Market Price” means on any particular date:

                              (a) if the Common Stock is traded on the Nasdaq SmallCap Market or the Nasdaq Global Market,
the average of the closing prices of the Common Stock of the Company on such market over the five
(5) trading days ending immediately prior to the applicable date of valuation (in the case of a
cashless exercise, the date of valuation will be the exercise date);

                              (b) if the Common Stock is traded on any registered national stock exchange but is not traded
on the Nasdaq SmallCap Market or the Nasdaq Global Market, the average of the closing prices of the
Common Stock of the Company on such exchange over the five (5) trading days ending immediately
prior to the applicable date of valuation (in the case of a cashless exercise, the date of
valuation will be the exercise date).

                              (c) if the Common Stock is traded over-the-counter, but not on the Nasdaq SmallCap Market, the
Nasdaq Global Market or a registered national stock exchange, the average of the closing bid prices
over the five (5) trading day period ending immediately prior to the applicable date of valuation
(in the case of a cashless exercise, the date of valuation will be the exercise date); and

 

 

               (d) if there is no active public market for the Common Stock, the value thereof, as determined
in good faith by the Board of Directors of the Company upon due consideration of the proposed
determination thereof by the Holder.

          2.3 Partial Exercise. If this Warrant is exercised in part only, the Company shall,
upon surrender of this Warrant, execute and deliver, within ten (10) days of the date of exercise,
a new Warrant evidencing the rights of the Holder, or such other person as shall be designated in
the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable hereunder. In
no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not
distribute a Warrant exercisable for a fractional Exercise Share. Fractional Exercise Shares shall
be treated as provided in Section 5 hereof.

          2.4 Legend.

               (a) All certificates evidencing the shares to be issued to the Holder may bear the following
legends (provided that no such legend shall be borne by Exercise Shares issued following the valid
disposition of such shares pursuant to a registration statement which is effective under the
Securities Act):

     “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN ISSUED IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. SUCH SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.”

     “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS
SET FORTH IN ARTICLE VI OF THE WARRANT PURCHASE AGREEMENT, DATED AS OF DECEMBER 1, 2006, BY
AND BETWEEN THE ISSUER HEREOF AND SYMPHONY ALLEGRO HOLDINGS LLC (COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER HEREOF), INCLUDING, BUT NOT LIMITED TO, A DAILY SHARE
DISPOSITION LIMIT, WHICH IS THE GREATER OF (X) 35,000 SHARES OR (Y) 25% OF THE AVERAGE DAILY
TRADING VOLUME OF ALEXZA COMMON STOCK OVER THE COURSE OF THE PREVIOUS TWENTY-EIGHT (28) CALENDAR
DAYS (AS REPORTED ON THE NASDAQ GLOBAL MARKET OR SUCH OTHER NATIONAL EXCHANGE REPRESENTING THE
PRIMARY EXCHANGE ON WHICH ALEXZA COMMON STOCK IS LISTED) PER DAY IN RESPECT OF THE WARRANT SHARES
OF THE HOLDER HEREOF. UPON A SALE OR OTHER TRANSACTION RESULTING IN A DIVISION OF THE SHARES
REPRESENTED HEREBY, SUCH MAXIMUM DAILY DISPOSITION AMOUNT WILL BE DIVIDED PRO RATA AMONG SUBSEQUENT
HOLDERS OF THE WARRANT SHARES”.

 

 

               (b) If the certificates representing shares include either or both of the legends set forth in
Section 2.4(a) hereof, the Company shall, upon a request from a Holder, or subsequent
transferee of a Holder, as soon as practicable but in no event more than thirty (30) days after
receiving such request, remove or cause to be removed (i) if the shares cease to be restricted
securities, the securities law portion of the legend and/or (ii) in the event of a sale of the
shares subject to issuance following the transfer of the shares in compliance with the transfer
restrictions, the transfer restriction portion of the legend, from certificates representing the
shares delivered by a Holder (or a subsequent transferee).

          2.5 Charges, Taxes and Expenses. Issuance of the Exercise Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of any electronic or paper certificate, all of which taxes and expenses shall be
paid by the Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided, however, that in the
event Exercise Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto. Notwithstanding anything to
the contrary in this Section 2.5, all issue or transfer tax or other incidental expenses imposed by
a Governmental Authority outside the United States shall be 100% borne by the Holder.

     3. COVENANTS OF THE COMPANY.

          3.1 Covenants as to Exercise Shares. The Company covenants and agrees that all
Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized and validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.
The Company further covenants and agrees that the Company will at all times during the Exercise
Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any
time during the Exercise Period the number of authorized but unissued shares of Common Stock shall
not be sufficient to permit exercise of this Warrant, the Company will take such corporate action
as may, in the opinion of counsel, be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.

          3.2 No Impairment. Except and to the extent as waived or consented to by the Holder
in accordance with Section 10 hereof, the Company will not, by amendment of its Certificate
of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith carry out of all the provisions of this Warrant
and take all such action

 

 

as may be necessary or appropriate in order to protect the exercise rights of the Holder
against such impairment.

          3.3 Notices of Record Date. If at any time:

               (a) the Company shall take a record of the holders of Common Stock for the purpose of
entitling them to receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right (other than with respect to any equity or
equity equivalent security issued pursuant to a rights plan adopted by the Company’s Board of
Directors);

               (b) there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the Company,
or any sale, transfer or other disposition of all or substantially all the property, assets or
business of the Company; or

               (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in any one or more of such cases, the Company shall use commercially reasonable efforts to
give to the Holder, provided that such action is available and permitted under the
applicable securities laws, at least ten (10) days’ prior written notice of the record date for
such dividend, distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, recapitalization, consolidation, merger, sale, transfer,
disposition, dissolution, liquidation or winding up of the Company. Any notice provided hereunder
shall specify the date on which the holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and the then current estimated date
for the closing of the transaction contemplated by any proposed reorganization, reclassification,
recapitalization, consolidation, merger, sale, transfer, disposition, dissolution, liquidation or
winding up of the Company.

     4. REPRESENTATIONS OF HOLDER.

          4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants
that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and
not with a present view toward the public sale or public distribution of said Warrant or Exercise
Shares or any part thereof and has no intention of selling or distributing said Warrant or Exercise
Shares or any arrangement or understanding with any other persons regarding the sale or
distribution of said Warrant or the Exercise Shares, except as would not result in a violation of
the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) the Warrant except in accordance with the provisions of Article VI of the Warrant
Purchase Agreement and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of)

 

 

the Exercise Shares except in accordance with the provisions of Article VI of the
Warrant Purchase Agreement or pursuant to and in accordance with the Securities Act.

          4.2 Securities Are Not Registered.

               (a) The Holder understands that the offer and sale of neither the Warrant nor the Exercise
Shares has been registered under the Securities Act.

               (b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption from such
registration is available. The Holder recognizes that the Company has no obligation to register
the Warrant or, except as provided in the Warrant Purchase Agreement and the Registration Rights
Agreement, the Exercise Shares, or to comply with any exemption from such registration.

               (c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant
to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among
other things, the availability of certain current public information about the Company and the
expiration of the required holding period under Rule 144.

          4.3 Disposition of Warrant and Exercise Shares.

               (a) The Holder further agrees not to make any disposition of all or any part of the Warrant or
Exercise Shares in any event unless and until one of the following occurs:

                    (i) The Company shall have received a letter secured by the Holder from the SEC stating that
no action will be recommended to the Commission with respect to the proposed disposition;

                    (ii) There is then in effect a registration statement under the Securities Act covering the
Exercise Shares and such disposition is made in accordance with said registration statement; or

                    (iii) The Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, for the Holder to the effect that such disposition will not require
registration of such Warrant or Exercise Shares under the Securities Act or any applicable state
securities laws; provided, that so long as the Holder provides the Company with a representation
letter in customary form with respect to such Rule 144 disposition, no opinion shall be required
for any disposition made or to be made in accordance with the provisions of Rule 144.

     5. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this
Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including
fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining
whether the exercise would result in the issuance of any fractional share. If, after aggregation,
the exercise would result in the issuance of

 

 

a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the
Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from
multiplying the then Current Market Price (as of the applicable exercise date) of an Exercise Share
by such fraction.

     6. CERTAIN EVENTS.

          6.1 Dividends, Subdivisions, Combinations and Reclassifications. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject
to adjustment from time to time upon the happening of any of the following. In case the Company
shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock
to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company which it would
have owned or have been entitled to receive had such Warrant been exercised in advance thereof.
Upon each such adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the
number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price
per Warrant Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such event retroactive to
the record date, if any, for such event.

          6.2 Corporate Transactions. In the event that the Company enters into a merger or
acquisition in which the surviving or resulting “parent” entity is an entity other than the
Company, then the Holder shall either exercise the Warrant or surrender the Warrant in exchange for
a new warrant exercisable in return for shares or common stock of the Surviving Entity (as defined
in the Warrant Purchase Agreement) (the “Replacement Warrant”), provided that:

               (i) in accordance with Section 7.08 of the Warrant Purchase Agreement, if the
consideration for a merger or acquisition consists of a combination of cash and stock of the
Surviving Entity, then the Replacement Warrant issued to the Holder shall be solely for common
stock of the Surviving Entity at an exchange ratio reflecting the total consideration paid by the
Surviving Entity at the time of such change in control as if the total consideration (including
cash) for each share of the Common Stock was instead paid only in common stock of the Surviving
Entity at the time of such change of control (as illustrated on Exhibit C to the Warrant
Purchase Agreement), and the holders of the Replacement Warrants shall have the registration

 

 

rights for stock issuable upon exercise of the Replacement Warrants as provided under the
Registration Rights Agreement; or

               (ii) in accordance with Section 7.08 of the Warrant Purchase Agreement, if prior to
the end of the Term (as defined in the Warrant Purchase Agreement), a merger or acquisition shall
occur and the consideration for such merger or acquisition shall be paid entirely in cash, then the
Holder of this Warrant shall then have the option to irrevocably elect within fifteen (15) Business
Days of the public announcement of the merger or acquisition by written notice of election to the
Company, either (A) to retain the Warrant and the right to exercise the Warrant then outstanding
for Exercise Shares in accordance with the terms of this Warrant, which exercise shall occur no
later than immediately prior to the closing of such merger or acquisition, or (B) to surrender the
Warrant to the Company in consideration of a cash payment for each share of the Common Stock
subject to purchase under this Warrant in an amount equal to 40% of the per share cash
consideration to be received by a holder of one share of the Common Stock to be tendered in the
merger or acquisition, provided that the aggregate total cash payments to all holders of
outstanding Warrants shall not exceed $10,000,000 (the “Warrant Surrender Price”). The
Warrant Surrender Price shall be paid upon the surrender of the Warrants promptly following the
closing of the all cash merger or acquisition. Any failure by the Holder to deliver a written
notice of election to the Company pursuant to this Section 6.3(ii) shall be deemed an
election of clause (B) of this Section 6.2(ii).

Following a merger or acquisition involving consideration of cash and stock in which the Surviving
Entity is other than the Company, reference to the Common Stock shall instead be deemed a reference
to the common stock of the Surviving Entity. For purposes of Section 6.2(i), “common stock
of the Surviving Entity” shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable for any such stock, either immediately
or upon the arrival of a specified date or the occurrence of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing provisions of this
Section 6.2 shall similarly apply to successive reorganizations, reclassifications,
mergers, acquisitions, consolidations or disposition of assets.

          6.3 Adjustment of Exercise Price. The form of this Warrant need not be changed
because of any adjustment in the number, class, and kind of shares subject to this Warrant. The
Company shall promptly provide a certificate from its principal accounting officer notifying the
Holder in writing of any adjustment in the Exercise Price and/or the total number, class, and kind
of shares (and other securities or property) issuable upon exercise of this Warrant, which
certificate shall specify the Exercise Price and number, class and kind of shares (and other
securities or property) under this Warrant after giving effect to such adjustment and shall set
forth a brief statement of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

 

 

     7. NO STOCKHOLDER RIGHTS. Except to the extent specified in Section 6, this
Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. Upon the exercise of this Warrant in accordance with Section
2, the Exercise Shares so purchased shall be and be deemed to be issued to such Holder as the
record owner of such shares as of the close of business on the date of such exercise.

     8. TRANSFER OF WARRANT. Subject to applicable laws, the restriction on transfer set
forth on the first page of this Warrant and the provisions of Article VI of the Warrant
Purchase Agreement, this Warrant and all rights hereunder are transferable by the Holder, in person
or by duly authorized attorney, upon delivery of this Warrant, the Assignment Form attached hereto
and funds sufficient to pay any transfer taxes (in accordance with Section 2.5 hereof) payable upon
the making of such transfer, to any transferee designated by Holder. The transferee will sign and
deliver to the Company an investment letter in a form that is commercially reasonable, customary
for use in similar transactions and reasonably satisfactory to the Company. Upon such delivery
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of
this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Exercise Shares without having a new
Warrant issued.

     9. 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.

     10. MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the Company and the
Holder.

     11. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when
sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, (c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Company at the address listed on the signature page and to
the Holder at the addresses on the Company records, or at such other address as the Company or
Holder may designate by ten days’ advance written notice to the other party hereto.

 

 

     12. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of
and agreement to all of the terms and conditions contained herein.

     13. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder
shall be governed by the laws of the State of New York without regard to the principles of conflict
of laws. The Company and, by accepting this Warrant, the Holder, each irrevocably submits and
consents to the exclusive jurisdiction of the courts of the State of New York located in New York
County and the United States District Court for the Southern District of New York for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the
transactions contemplated hereby. The Company and, by accepting this Warrant, the Holder, each
irrevocably waives any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY
ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.

     14. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.

     15. SUCCESSORS AND ASSIGNS. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of the Holder.

     16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.

     17. REGISTRATION RIGHTS. The holder of this Warrant and of the Exercise Shares shall
be entitled to the registration rights and other applicable rights with respect to the Exercise
Shares as and to the extent set forth in the Warrant Purchase Agreement and the Registration Rights
Agreement.

     18. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.

[Signature Page Follows]

 

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officer as of December 1, 2006.

	 	 	 	 	 	 	 
	 	 	ALEXZA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas B. King
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas B. King	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President and CEO	 	 

	 	 	 	 	 
	 

	 	Address:
	 	1020 East Meadow Circle
	 

	 	 	 	Palo Alto, CA 94303
	 

	 	 	 	Attn: August J. Moretti
	 

	 	 	 	Facsimile: (650) 687-3999
	 
	 	 	 	 
	 

	 	W/copy to:
	 	Cooley Godward Kronish LLP
	 

	 	 	 	Five Palo Alto Square
	 

	 	 	 	3000 El Camino Real
	 

	 	 	 	Palo Alto, CA 94306-2155
	 

	 	 	 	Attn: Barbara A. Kosacz, Esq.
	 

	 	 	 	Facsimile: (650) 849-7400

 

 

NOTICE OF EXERCISE

TO: ALEXZA PHARMACEUTICALS, INC.

     (1) The undersigned hereby elects to (check one box only):

          o purchase                      shares of the Common Stock of Alexza Pharmaceuticals, Inc. (the
“Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of
the exercise price in full for such shares.

          o purchase the number of shares of Common Stock of the Company by cashless exercise pursuant
to the terms of the Warrant as shall be issuable upon cashless exercise of the portion of the
Warrant relating to                      shares.

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

 

(Name)

 

 

(Address)

     (3) If the Warrant is not being exercised in full, please issue a certificate representing a
new Warrant evidencing the right of the Holder to purchase the balance of the Exercise Shares
purchasable under the Warrant, such certificate to be registered in the name of the undersigned or
in such other name as is specified below:

 

(Name)

 

 

(Address)

     (4) The undersigned represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned not with a view to, or for resale in connection with,
the distribution thereof in violation of the Securities Act of 1933, as amended (the
“Securities Act”) and that the undersigned has no present intention of distributing or
reselling such shares in violation of the Securities Act; (ii) the undersigned is aware of the
Company’s business affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision regarding its investment in the
Company; (iii) the undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned is capable of
evaluating the merits and risks of this investment and protecting the undersigned’s own interests;
(iv) the

 

 

undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant
must be held indefinitely unless subsequently registered under the Securities Act or an exemption
from such registration is available, and (v) the undersigned agrees not to make any disposition of
all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with said registration statement, or the undersigned has provided
the Company with an opinion of counsel satisfactory to the Company, stating that such registration
is not required.

	 	 	 
	 

	 	 
	(Date)

	 	(Signature)
	 
	 	 
	 

	 	 
	 

	 	(Print Name)

 

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, subject to compliance with
Section 4.3 hereof, execute this form and supply required
information. Do not use this form to purchase shares.)

          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned
to

	 	 	 
	Name:
	 	 
	 

	 	 
	(Please Print)

	Address:
	 	 
	 

	 	 
	(Please Print)

Dated: ____________________, 20__

	 	 	 	 	 
	Holder’s
	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Holder’s
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 

NOTE: The signature to this Assignment Form 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]