Document:

exv10w1

 

Exhibit 10.1

HearUSA, INC.

CONVERTIBLE SUBORDINATED NOTES

CONVERSION AGREEMENT

     THIS CONVERSION AGREEMENT is made as of the 9th day of April, 2007 (“Agreement”) by and among
HEARUSA, INC., a Delaware corporation (the “Company”) and persons named on the signature page
hereto who were investors in the Company’s December 2003 private placement pursuant to that
Purchase Agreement dated as of December 18, 2003 (the “2003 Purchase Agreement”) (each a
“Purchaser” and collectively the “Purchasers”).

Recitals

     Pursuant to the 2003 Purchase Agreement, the Purchasers purchased and the Company sold Units,
each Unit consisting of (i) $500,000 in principal amount of the Company’s 2003 Convertible
Subordinated Notes due November 2008 (the “Notes”), which Notes are convertible into shares of
common stock of the Company, par value $0.10 per share (the “Common Stock”), and (ii) a warrant
(“Warrant”) to purchase an aggregate of 142,850 shares of Common Stock;

     The persons who are executing this Agreement constitute all but one of the purchasers under
the Purchase Agreement, that person having purchased one Unit (the “Non-Participating Purchaser”);

     The parties hereto desire to facilitate the immediate conversion of the Notes and exercise of
the related Warrants irrespective of the lack of participation in this transaction by the
Non-Participating Purchaser;

     NOW THEREFORE, in consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

     1.      Warrant Exercise Price. Effective on the Closing Date (defined below), and
subject to all transactions contemplated by this Agreement being consummated as provided for in
this Agreement, the exercise price of the Warrants (the “Warrant Price”) held by the Purchasers
shall be reduced from $1.75 per share to $0.70 per share. The parties hereto expressly agree that,
notwithstanding any prior agreement to the contrary, and specifically notwithstanding Section 3(c)
of the Notes and paragraph 9(a) of the Warrant, this reduction in the Warrant Price shall not be
deemed to be an event giving rise to any further adjustment to the Warrant Price or an adjustment
to the conversion price of the Notes held by the Purchasers. The Purchasers acknowledge that the
warrant exercise price of the Non-Participating Purchaser and the holders of finder warrants issued
in connection with the 2003 transaction shall by operation of the terms of the Warrant be reduced
to $0.70 per share.

 

 

     2.      Elimination of Warrant Cashless Exercise Feature. Effective on the Closing Date
(defined below), and subject to all transactions contemplated by this Agreement being consummated
as provided for in this Agreement, the parties agree that the Warrants held by the Purchasers may
be exercised only for cash and paragraph 3(c) of the Warrants shall be of no force and effect.

     3.      Closing. On March 26, 2007, or such other date to be determined by the parties
(the “Closing Date”), at the offices of Bryan Cave LLP, 700 13th Street, N.W.,
Washington DC 20005, the following events will occur (the “Closing”):

(a)      Pre-payment of Note. The Company shall pay to the Purchasers in cash an aggregate
amount of $409,314 in principal on the Notes, plus accrued and unpaid interest up to the
date of prepayment, to each Purchaser on a pro rata basis, and shall pay to the
Non-Participating Purchaser principal and interest totaling $375,000, such that the total
principal amount outstanding on all Notes on the Closing Date will not exceed $5,500,000.
Attached as Schedule 1 is the cash payment amount payable to each of the Purchasers and to
the Non-Participating Purchaser pursuant to this paragraph 3(a). Each of the Purchasers
waives its right to receive additional principal payments as a result of the principal
pre-payment to the Non-Participating Purchaser.

(b)      Conversion of Notes. Each Purchaser, severally, shall convert all outstanding principal
amounts under its Note into Common Stock by delivering to the Company a fully executed
notice of conversion (using the form of notice attached to the Note) (“Conversion Notice”)
and each such Note shall be converted into such number of fully paid, validly issued and
non-assessable shares of Common Stock as determined by dividing the outstanding Principal
Amount being converted by the Conversion Price of $1.75. Attached as Schedule 2 is the Note
conversion schedule setting forth the name of each Purchaser and the number of shares of
Common Stock into which its Note shall be converted pursuant to the provisions of this
Agreement. At the Closing, the Company shall deliver to each of the Purchasers a
certificate or certificates, free of restrictive legend, representing the number of shares
of Common Stock being acquired upon the conversion of the Note (“Note Shares”).

(c)      Exercise of Options. Each Purchaser, severally, shall exercise all of its Warrants into
Common Stock by delivering to the Company a fully executed Warrant exercise notice (using
the form of notice attached to the Warrant) and payment in full of the Warrant Price (which
for the purposes of this Agreement shall be $0.70 multiplied by the number of shares subject
to such Warrant). Attached as Schedule 3 is the Warrant exercise schedule setting forth the
name of each Purchaser, the amount of such Purchaser’s Warrant Price and the number of
shares of Common Stock such Purchaser will purchase upon exercise of its Warrant (“Warrant
Shares”). At the Closing, the Company shall deliver to each of the Purchasers a certificate
or certificates, free of restrictive legend, representing the Warrant Shares purchased by
such Purchaser.

All actions at the Closing and all transactions occurring at the Closing shall be deemed to take
place simultaneously and no transactions shall be deemed to have been completed or any document
delivered until all such transactions have been completed and all required documents delivered.

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     4.      Conditions to Closing. The respective obligations of the Company and the
Purchasers to effect the Closing shall be subject to the satisfaction, at or prior to the Closing
Date, of the following conditions, any of which may be waived, in writing, by mutual written
instrument of the Purchasers and the Company:

(a)      AMEX Listing Application. The Company will have obtained approval of the American Stock
Exchange, if required, for an amendment to the original additional listing application
covering the Note Shares and the Warrant Shares to reflect this Agreement;

(b)      Prospectus Supplement. If required or if requested by the Purchasers in writing, the
Company shall generate and cause to be filed with the Securities and Exchange Commission a
424(b) prospectus supplement to the current base prospectus of that Form S-3 registration
statement (Registration No. 333-115399) covering resales of the Common Stock underlying the
Notes and Warrants.

(c)      Satisfactory Deliveries. Each of the agreements, instruments and other documents to be
delivered by the Company and by the Purchasers as set forth above shall be in a form and
substance reasonably satisfactory to the Company and the Purchasers.

(d)      Purchaser Investment Representations. The representations and warranties of the
Purchasers in this Agreement shall be true and correct in all material respects on and as of
the Closing Date.

     5.      Representations of the Purchasers. Each of the Purchasers hereby severally, and
not jointly, represents and warrants to the Company that:

(a)      Purchase for Own Account. The Note Shares and the Warrant Shares are being acquired by
the Purchaser for its own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof and the Purchaser has no present intention of
selling, granting any participation in or otherwise distributing the same.

(b)      Investment Experience. The Purchaser acknowledges that it can bear the economic risk
and complete loss of its investment in the shares and has such knowledge and experience in
financial or business matters and in private placement transactions of companies similar to
the Company so that it is capable of evaluating the merits and risks of the purchases
contemplated by this Agreement.

(c)      Accredited Investor. The Purchaser is an “accredited investor” as defined in Rule
501(a) of Regulation D, as amended, under the Securities Act of 1933, as amended (the “1933
Act”).

(d)      Disclosure of Information. The Purchaser has had the opportunity to ask questions and
receive answers from the Company relating to this purchase and has received documents and
other information from the Company regarding the Company and its business and financial
condition.

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     6.      Miscellaneous.

(a)      Governing Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to principles of conflicts of laws.

(b)      Successors and Assigns. This Agreement may not be assigned by the Company or any of the
Purchasers without the prior written consent of the Company, in the case of an assignment by
a Purchaser, or of all of the Purchasers, in the case of an assignment by the Company. The
terms and conditions of this Agreement shall inure to the benefit of and be binding upon the
respective permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective
assigns any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in the Purchase Agreement.

(c)      Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.

(d)      Expenses. The parties hereto shall bear their own costs and expenses in connection
herewith.

(e)      Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

(f)      Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and the balance
of this Agreement shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.

(g)      Entire Agreement. This Agreement constitutes the entire agreement among the parties
hereof with respect to the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the subject
matter hereof, provided however that the parties expressly acknowledge and agree that the
foregoing in no way alters or supersedes the terms and conditions of that Confidentiality
Agreement executed by and between the Company and each of the Purchasers.

(h)      Further Assurances. The parties shall execute and deliver all such further instruments
and documents and take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the agreements contained
herein.

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(i)      Purchasers Not a Group. Nothing contained herein or in any other document contemplated
hereby, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute any of the Purchasers as a partnership, an association, a joint venture or any
other kind of entity or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions contemplated
hereby or thereby. Each Purchaser confirms that it has independently
participated in the negotiation of the transaction contemplated hereby with the advice of
its own counsel or advisors. Each Purchaser shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of this Agreement
or out of any other document contemplated hereby, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such purpose.

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	The Company:

HEARUSA, INC.

 	 	 
	By:  	 	 	 
	Name:  	 	 	 	 
	Title:  	 	 	 	 
	 

	 	 	 
	The Purchasers:
	 	 
	 
	 	 
	 

	 	 
	Alexandra Global Master Fund 

By:

	 	Atlas Capital Master Fund, L.P.

By:

	 
	 	 
	 

	 	 
	Atlas Capital (Q.P.), L.P.

By:

	 	Kennebec Resources, Inc.

By:
	 
	 	 
	 

	 	 
	Micro Capital Fund Ltd.

By:

	 	Micro Capital Fund L.P.

By:
	 
	 	 
	 

	 	 
	Selz Family 1997 Trust

By:

	 	Selz Capital LLC

By:
	 
	 	 
	 

	 	 
	Sherleigh and Associates, Inc. Profit Sharing Plan

	 	Siar Capital

By:
	By:
	 	 

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Schedule 1

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Original	 	 	Balance On	 	 	Payment On	 	 	Payment to	 	 	Balance	 
	 	 	Note	 	 	Closing Date	 	 	Closing Date	 	 	Flyline	 	 	 	 
	Alexandra Global Master Fund
	 	$	1,000,000.00	 	 	$	833,333.33	 	 	$	58,473.47	 	 	 	 	 	 	$	774,859.87	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Atlas Capital Master Fund, L.P.
	 	$	1,500,000.00	 	 	$	1,250,000.00	 	 	$	87,710.20	 	 	 	 	 	 	$	1,162,289.80	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Atlas Capital (Q.P.), L.P.
	 	$	500,000.00	 	 	$	416,666.67	 	 	$	29,236.73	 	 	 	 	 	 	$	387,429.93	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Flyline Holdings, Ltd.
	 	$	500,000.00	 	 	$	416,666.67	 	 	$	—	 	 	$	375,000	 	 	$	41,666.67	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Kennebec Resources Inc.
	 	$	500,000.00	 	 	$	416,666.67	 	 	$	29,236.73	 	 	 	 	 	 	$	387,429.93	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Micro Capital Fund Ltd
	 	$	150,000.00	 	 	$	125,000.00	 	 	$	8,771.02	 	 	 	 	 	 	$	116,228.98	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Micro Capital Fund L.P.
	 	$	350,000.00	 	 	$	291,666.67	 	 	$	20,465.71	 	 	 	 	 	 	$	271,200.95	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Selz Family 1997 Trust, Selz Capital LLC
	 	$	1,000,000.00	 	 	$	833,333.33	 	 	$	58,473.47	 	 	 	 	 	 	$	774,859.87	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Sherleigh and Associates, Inc., Profit Sharing Plan
	 	$	1,000,000.00	 	 	$	833,333.33	 	 	$	58,473.47	 	 	 	 	 	 	$	774,859.87	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Siar Capital / Jack Silver
	 	$	1,000,000.00	 	 	$	833,333.33	 	 	$	58,473.47	 	 	 	 	 	 	$	774,859.87	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	7,500,000.00	 	 	$	6,250,000.00	 	 	$	409,314.27	 	 	$	375,000.00	 	 	$	5,465,685.73	 
	 	 	 

 

 

Schedule 2

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Balance To	 	 	Number of	 	 	Number of	 
	 	 	Be Converted	 	 	Shares to Issue	 	 	Shares Remaining	 
	 	 	 	 	 	(conversion @ 1.75)	 	 	(not converted @ 0.70)	 
	Alexandra Global Master Fund
	 	$	774,859.87	 	 	 	442,777	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Atlas Capital Master Fund, L.P.
	 	$	1,162,289.80	 	 	 	664,166	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Atlas Capital (Q.P.), L.P.
	 	$	387,429.93	 	 	 	221,389	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Flyline Holdings, Ltd.
	 	$	41,666.67	 	 	 	—	 	 	 	59,524	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Kennebec Resources Inc.
	 	$	387,429.93	 	 	 	221,389	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Micro Capital Fund Ltd
	 	$	116,228.98	 	 	 	66,417	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Micro Capital Fund L.P.
	 	$	271,200.95	 	 	 	154,972	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Selz Family 1997 Trust, Selz Capital LLC
	 	$	774,859.87	 	 	 	442,777	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Sherleigh and Associates, Inc., Profit Sharing Plan
	 	$	774,859.87	 	 	 	442,777	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Siar Capital / Jack Silver
	 	$	774,859.87	 	 	 	442,777	 	 	 	—	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	5,465,685.73	 	 	 	3,099,439.47	 	 	 	59,524	 
	 	 	 

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Schedule 3

	 	 	 	 	 	 	 	 	 
	 	 	Payment	 	 	Number of	 
	 	 	To Exercise	 	 	Warrants	 
	Alexandra Global Master Fund
	 	$	199,990	 	 	$	285,700	 
	 
	 	 	 	 	 	 	 	 
	Atlas Capital Master Fund, L.P.
	 	$	299,985	 	 	$	428,550	 
	 
	 	 	 	 	 	 	 	 
	Atlas Capital (Q.P.), L.P.
	 	$	99,995	 	 	$	142,850	 
	 
	 	 	 	 	 	$	—	 
	Flyline Holdings, Ltd.
	 	$	—	 	 	$	142,850	 
	 
	 	 	 	 	 	 	 	 
	Kennebec Resources Inc.
	 	$	99,995	 	 	$	142,850	 
	 
	 	 	 	 	 	 	 	 
	Micro Capital Fund Ltd
	 	$	29,999	 	 	$	42,855	 
	 
	 	 	 	 	 	 	 	 
	Micro Capital Fund L.P.
	 	$	69,997	 	 	$	99,995	 
	 
	 	 	 	 	 	 	 	 
	Selz Family 1997 Trust, Selz Capital LLC
	 	$	199,990	 	 	$	285,700	 
	 
	 	 	 	 	 	 	 	 
	Sherleigh and Associates, Inc., Profit Sharing Plan
	 	$	199,990	 	 	$	285,700	 
	 
	 	 	 	 	 	 	 	 
	Siar Capital / Jack Silver
	 	$	199,990	 	 	$	285,700	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total Notes Warrants
	 	$	1,399,930	 	 	$	2,142,750	 
	 
	 	 	 	 	 	 	 	 
	Finder warrants
	 	$	—	 	 	$	118,000	 
	 
	 	 	 	 	 	 	 	 
	Jack Silver consulting warrants
	 	$	350,000	 	 	$	500,000	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	$	1,749,930	 	 	$	2,760,750	 
	 	 	 

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Exhibit 10.0

FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE (“First Amendment”) is dated as of May 4, 2007 and is
entered into between BRITANNIA HACIENDA VIII LLC, a Delaware limited liability company
(“Landlord”) and ALEXZA PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”),
with reference to the following facts, effective as of the first business day after the date of
mutual execution of this Amendment as set forth above (such first business day being referred to
herein as the “Phase I Expansion Commencement Date”):

Recitals

     A. Landlord and Tenant are parties to a Lease dated as of August 25, 2006 (the
“Initial Lease”), covering premises consisting of the building commonly known as 2091
Stierlin
Court (the “Initial Premises”) in the Britannia Shoreline Technology Park in Mountain
View,
California, containing approximately 65,604 square feet. The term of the Initial Lease is
scheduled to expire on March 31, 2018, subject to two 5-year renewal options as set forth in
the
Initial Lease.

     B. As of the Phase I Expansion Commencement Date and the Phase II Expansion
Commencement Date (as defined below), as applicable, Landlord and Tenant wish to add the
building commonly known as 2023 Stierlin Court, a two-story building consisting of
approximately 41,290 square feet of space, to the Premises covered by the Lease for the
remainder of the initial Term of the Lease (as extended by this Amendment) and, if applicable,
for any renewal term duly elected by Tenant under the Lease. The second floor of the
2023 Stierlin Court building is presently vacant; the first floor of the 2023 Stierlin Court
building is presently occupied by an existing tenant (the “Existing Tenant”) pursuant to a
lease which is scheduled to expire on April 30, 2008, so Tenant’s occupancy of the Expansion
Premises will occur on a phased basis as more particularly set forth in this Amendment.

     C. In connection with the addition of the Expansion Premises to the Initial Premises
pursuant to this Amendment, Landlord and Tenant also wish to modify certain provisions of the
Initial Lease and certain of their respective rights and obligations thereunder, all subject
to and as
more particularly set forth in this Amendment. As of the date of mutual execution of this
Amendment by the parties, this Amendment modifies and amends the Initial Lease and
supersedes any inconsistent provisions of the Initial Lease with respect to the matters
covered by
this Amendment.

     D. For purposes of this Amendment and of the Initial Lease as modified by this
Amendment, the term “Phase I Expansion Premises” shall mean the second floor of
the
2023 Stierlin Court building, together with the exclusive right to use the elevator and stairways
accessing the second floor of the building and the non-exclusive right to use those portions of the
first floor of the building designated by Landlord from time to time as building common areas
available for shared, non-exclusive use by the first-floor tenant and the second-floor tenant (such
designated shared areas being referred to herein as the “Building Common Areas”); the term
“Phase II Expansion Premises” shall mean the first floor of the 2023 Stierlin Court
building, including the Building Common Areas, but excluding the elevator and stairways accessing
the

 

 

second floor of the building; the term “Expansion Premises” shall mean the entire 2023
Stierlin Court building, consisting collectively of the Phase I Expansion Premises and the Phase II
Expansion Premises; the term “Premises” shall mean and include both the Initial Premises
and the Expansion Premises; the term “Lease” shall mean the Initial Lease as modified by
this Amendment; and the term “Building” shall be construed to include both the 2091
Stierlin Court building and the 2023 Stierlin Court building, and as so construed shall be
substantially equivalent to the term “Premises,” except that if the context clearly requires that
the term “Building” be applied to a single building, then such term shall be construed to apply
separately and severally to the 2091 Stierlin Court building and the 2023 Stierlin Court building,
as the context may reasonably require. The location of the Expansion Premises within the Center is
depicted on Exhibit A attached hereto and incorporated herein by this reference; the Phase
I Expansion Premises are depicted on Exhibit B attached hereto and incorporated herein by
this reference; and the Phase II Expansion Premises, including the Building Common Areas on the
first floor of the 2023 Stierlin Court building, are depicted on Exhibit C attached hereto
and incorporated herein by this reference. Capitalized terms used in this Amendment as defined
terms but not specifically defined in this Amendment shall have the meanings assigned to such terms
in the Initial Lease.

Agreement

     NOW, THEREFORE, in consideration of the mutual agreements contained in this Amendment and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows, effective upon their mutual execution of this
Amendment or as otherwise expressly provided herein:

     1. Phase I Expansion Premises Included in Premises; Minimum Monthly Rent;
Operating Cost Share; Utilities.

          (a) As of the Phase I Expansion Commencement Date, (i) the Phase I
Expansion Premises are added to the Initial Premises and shall constitute part of the Premises
under the Lease for all purposes, except as otherwise expressly provided herein, and (ii)
Tenant
shall have access to the Phase I Expansion Premises for all of the purposes described in
Section 2.2 of the Initial Lease, subject to all of the terms and conditions set forth in such
Section 2.2, with the Phase I Expansion Commencement Date being deemed to be the “Early
Access Date” (as defined in such Section 2.2) with respect to the Phase I Expansion Premises.

          (b) The Phase I Expansion Premises were fully constructed prior to the date of
this Amendment, have been measured by Landlord’s Architect and, applying the measurement
formula customarily used by Landlord to measure square footage of buildings in the Center,
have
been determined to contain 21,956 square feet (including an allocable portion of the Building
Common Areas), which measurement is final and binding on the parties, is hereby accepted by
the parties for all purposes under this Amendment and under the Lease, and is not subject to
remeasurement or adjustment.

          (c) Prior to January 1, 2008 (the “Phase I Expansion Rent Commencement
Date”), Tenant shall have no obligation to pay monthly minimum rental for the Phase I
Expansion Premises. Effective as of the Phase I Expansion Rent Commencement Date, the

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monthly minimum rental payable by Tenant pursuant to Section 3.1 (a) of the Lease for the
Expansion Premises (consisting at that point solely of the Phase I Expansion Premises), and the
combined monthly minimum rental payable by Tenant for the Expansion Premises and the Initial
Premises, shall be as set forth in Schedule 1 attached hereto and incorporated herein by
this reference.

          (d) The square footage used in Schedule 1 in calculating the monthly
minimum rental applicable to the Phase I Expansion Premises for periods prior to July 1, 2008
(and, if applicable, in calculating Tenant’s Operating Cost Share for periods prior to January
1,
2008 pursuant to the final sentence of subparagraph (e) below), in being less than the entire
square footage of the Phase I Expansion Premises, is not meant to imply any limitation on
Tenant’s right or ability to have access to and to use the entire Phase I Expansion Premises
during such months, and shall not affect in any way the calculation of Tenant’s Operating Cost
Share under the Lease (which shall include the entire square footage of the Expansion
Premises,
beginning on the Phase I Expansion Rent Commencement Date), except as otherwise expressly
provided in the final sentence of subparagraph (e) below. Such reduced square footage in
Schedule 1 (and in subparagraph (e), if applicable) merely represents a method of
implementing
an economic agreement between the parties with respect to the calculation of Tenant’s monthly
minimum rental obligation for the Phase I Expansion Premises during the period prior to July
1,
2008 (and, if applicable, Tenant’s Operating Cost Share obligation during the period prior to
January 1,2008).

          (e) Effective as of the Phase I Expansion Rent Commencement Date,
Tenant’s Operating Cost Share under the Lease (i) in the case of Operating Expenses that are
reasonably allocable solely to the 2023 Stierlin Court building shall be fifty-three and
eighteen
hundredths percent (53.18%), based on a square footage of 21,956 square feet for the Phase I
Expansion Premises and on a square footage of 41,290 square feet for the entire 2023 Stierlin
Court building; and (ii) in the case of Operating Expenses that are determined and allocated
on a
Center-wide basis, shall be increased from 9.03% to 12.05%, based on an aggregate square
footage of 87,560 square feet for the Initial Premises and the Phase I Expansion Premises and
on
an aggregate area of 726,508 square feet for all of the buildings presently located in the
Center.
Notwithstanding the foregoing provisions, if Tenant is actually conducting business operations
in
the Phase I Expansion Premises prior to the Phase I Expansion Rent Commencement Date (as
opposed to merely performing the pre-operational activities contemplated in the Initial Lease
for
the early access period), then from the date Tenant commences such actual business operations
until the Phase I Rent Commencement Date, Tenant shall be responsible for payment of
Operating Expenses allocable to 10,978 square feet of the Phase I Expansion Premises, and
accordingly Tenant’s Operating Cost Share during that limited period shall be deemed to be
equal to (x) in the case of Operating Expenses that are reasonably allocable solely to the
2023
Stierlin Court building, twenty-six and fifty-nine hundredths percent (26.59%) and (y) in the
case
of Operating Expenses that are determined and allocated on a Center-wide basis, 10.54%.

          (f) From and after the Phase I Expansion Commencement Date (including
during Tenant’s early access period with respect to the Phase I Expansion Premises), Tenant
shall be responsible for payment of all costs for utilities and services supplied to the Phase
I
Expansion Premises. To the extent any such utilities or services to the Phase I Expansion

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     Premises are not separately metered, Landlord shall make a reasonable allocation thereof
as contemplated in Section 6.1 of the Lease.

     2. Phase II Expansion Premises Included in Premises; Minimum Monthly Rent;
Operating Cost Share; Utilities.

          (a) Landlord shall tender possession of the Phase II Expansion Premises to
Tenant as soon as (i) the Existing Tenant’s lease has expired, (ii) the Existing Tenant has
vacated
and surrendered the Phase II Expansion Premises and obtained any applicable governmental
signoffs or releases with respect to the activities conducted by the Existing Tenant therein,
and
(iii) Landlord has completed any work in the Phase II Expansion Premises which Landlord
determines it is necessary or desirable to complete prior to tender of the Phase II Expansion
Premises to Tenant. The date on which Landlord tenders such possession to Tenant is referred
to
herein as the “Phase II Expansion Commencement Date,” The parties presently
contemplate that
the Phase II Expansion Commencement Date will occur on or about June 1, 2008.

          (b) As of the Phase II Expansion Commencement Date, (i) the Phase II
Expansion Premises are added to the Initial Premises and shall constitute part of the Premises
under the Lease for all purposes, except as otherwise expressly provided herein, and (ii)
Tenant
shall have access to the Phase II Expansion Premises for all of the purposes described in
Section 2.2 of the Initial Lease, subject to all of the terms and conditions set forth in such
Section 2.2, with the Phase II Expansion Commencement Date being deemed to be the “Early
Access Date” (as defined in such Section 2.2) with respect to the Phase II Expansion Premises.

          (c) The Phase II Expansion Premises were fully constructed prior to the date
of this Amendment, have been measured by Landlord’s Architect and, applying the measurement
formula customarily used by Landlord to measure square footage of buildings in the Center,
have
been determined to contain 19,334 square feet (including an allocable portion of the Building
Common Areas), which measurement is final and binding on the parties, is hereby accepted by
the parties for all purposes under this Amendment and under the Lease, and is not subject to
remeasurement or adjustment.

          (d) Prior to the later to occur of (i) September 1, 2008 or (ii) two (2) months
after the Phase II Expansion Commencement Date (the later of such dates being referred to
herein as the “Phase II Expansion Rent Commencement Date”), Tenant shall have no
obligation
to pay monthly minimum rental for the Phase II Expansion Premises. Effective as of the Phase
II
Expansion Rent Commencement Date, the monthly minimum rental payable by Tenant pursuant
to Section 3.1 (a) of the Lease for the Expansion Premises, and the combined monthly minimum
rental payable by Tenant for the Expansion Premises and the Initial Premises, shall be as set
forth in Schedule 1 attached hereto and incorporated herein by this reference.

          (e) Effective as of the Phase II Expansion Rent Commencement Date,
Tenant’s Operating Cost Share under the Lease (i) in the case of Operating Expenses that are
reasonably allocable solely to the 2023 Stierlin Court building shall be one hundred percent
(100%), and (ii) in the case of Operating Expenses that are determined and allocated on a
Center-
wide basis, shall be increased from 12.05% to 14.71%, based on an aggregate square footage of

-4-

 

106,894 square feet for the Initial Premises and the Expansion Premises and on an aggregate
area of 726,508 square feet for all of the buildings presently located in the Center.

          (f) From and after the Phase II Expansion Commencement Date (including during Tenant’s
Early Access Period with respect to the Phase II Expansion Premises), Tenant shall be responsible
for payment of all costs for utilities and services supplied to the entire Expansion Premises.

     3. Maintenance, Repairs and Services.

          (a) During the period from the Phase I Expansion Commencement Date to the
Phase II Expansion Commencement Date, while Tenant is occupying only a portion of the
Expansion Premises, Landlord shall provide the following additional or supplemental
maintenance, repairs and services to the Expansion Premises: (i) Landlord’s repair and
maintenance obligations under Section 8.1 of the Initial Lease shall be expanded to include
repair and maintenance of the Building Common Areas, the elevators serving the building, and
the mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the
building in general; (ii) Landlord shall make HVAC service available to the Phase I Expansion
Premises from the existing HVAC system during normal business hours, at no extra charge to
Tenant, and shall also make after-hours HVAC service available to the Phase I Expansion
Premises, upon request by Tenant, for an additional charge calculated on the basis of a
commercially reasonable rate specified by Landlord from time to time; and (iii) Landlord shall
provide night janitorial service each weekday night for the Phase I Expansion Premises and the
other tenant spaces in the building. The cost of all work performed by Landlord under this
Paragraph 3(a) may, in Landlord’s discretion, either (x) be treated as an Operating Expense
allocable entirely to the building in which the Expansion Premises are located or (y) be
charged
back by Landlord for direct reimbursement by the tenant(s) to whose premises the applicable
work or service relates, in which event such reimbursement shall be paid to Landlord within
twenty (20) days after Tenant’s receipt of Landlord’s written statement identifying the
requested
reimbursement and providing reasonable supporting information for the nature and cost of the
work for which reimbursement is requested. The cost provisions of the preceding sentence shall
not apply, however, to the extent the applicable work by Landlord is required due to any of
the
factors itemized in clauses (i) through (v) of Section 8.1 of the Lease.

          (b) From and after the Phase II Expansion Commencement Date, the
provisions of the Initial Lease relating to allocation of maintenance and repair
responsibilities
between the parties and relating to provision of services (if any) by Landlord shall apply to
the
entire Expansion Premises in the same manner as theretofore applicable to the Initial
Premises,
and Landlord shall no longer be required to provide the additional or supplemental
maintenance,
repairs and services provided for in subparagraph (a) above.

     4. Term; Renewal Option.

          (a) The Termination Date for the initial Term of the Lease, which has previously been
established as March 31, 2018, remains unaffected by this Amendment and shall apply to the
Expansion Premises as well as to the Initial Premises.

-5-

 

          (b) Tenant shall continue to have the options set forth in Section 2.6 of the Lease to
extend the Term of the Lease, at a minimum rental determined pursuant to Section 3.1(b) of the
Lease, and otherwise upon all the terms and provisions applicable to the initial Term of the Lease,
and such options shall apply to the entire Premises.

     5. Condition of Expansion Premises. Tenant is accepting the Expansion Premises
“as is,” in their presently existing condition, except as otherwise expressly set forth in this
Amendment, and acknowledges that the provisions of the Workletter (Exhibit B to the Lease)
do not apply to the Expansion Premises and that Landlord has no obligation to make any improvements
to the Expansion Premises or to provide any improvement allowance to Tenant in connection with this
Amendment, except as follows:

          (a) Landlord shall perform Landlord’s Work (as defined in Section 2.3(a) of
the Lease) with respect to each phase of the Expansion Premises on or before the applicable
Expansion Commencement Date for such phase, or as soon thereafter as practicable (but in all
events prior to the Expansion Rent Commencement Date for the applicable phase). Thereafter,
the repair and maintenance obligations of the respective parties with respect to such phase of
the
Expansion Premises shall be governed by the applicable provisions of the Lease (as modified by
this Amendment). Notwithstanding the foregoing provisions, the provisions of the Initial Lease
as they apply to Landlord’s Work in the Expansion Premises are modified to provide that Tenant
shall have until thirty (30) days after the Phase I Expansion Commencement Date, in the case
of
the Phase I Expansion Premises, and until thirty (30) days after the Phase II Expansion
Commencement Date, in the case of the Phase II Expansion Premises, to ascertain that all
systems covered by Landlord’s Work which serve the applicable phase of the Expansion
Premises were in good working condition as of such phase’s respective Expansion
Commencement Date.

          (b) Landlord shall provide Tenant with a tenant improvement allowance of
One Million Thirty-Two Thousand Two Hundred Fifty Dollars ($1,032,250) (the “Expansion
Premises TI Allowance”), which Expansion Premises TI Allowance is equivalent to a rate
of $25
per rentable square foot in the Expansion Premises, for construction of tenant improvements in
the Expansion Premises. Terms and conditions relating to the Expansion Premises TI Allowance
to the construction of any alterations and improvements which Tenant elects to construct or
install in the Expansion Premises with such Expansion Premises TI Allowances shall be the same
as those set forth in the Initial Lease and in the Workletter with respect to the Tenant
Improvement Allowance and the construction of alterations, additions, improvements and
Tenant’s Work thereunder, subject to the following modifications and clarifications:

               (i) The Expansion Premises TI Allowance may be used in either phase of the Expansion
Premises, without any minimum or maximum limit on the amount allocable to one phase or the other.
In addition, any portion of the Expansion Premises TI Allowance which is not used by Tenant in the
course of Tenant’s initial build-out of the Expansion Premises may, in Tenant’s discretion, be
applied to alterations or improvements in the Initial Premises (subject, however, to all applicable
restrictions under the Initial Lease and Workletter with respect to the kinds of improvements
eligible for application of funds from the Tenant Improvement Allowance).

-6-

 

               (ii) Any portion of the Expansion Premises TI Allowances which has not been claimed or
drawn by Tenant by June 30, 2009 shall expire and shall no longer be available to Tenant
thereafter. The cost of any refurbishments, Alterations or improvements made by Tenant which are
not eligible for expenditure of Expansion Premises TI Allowance funds, and any amount by which the
cost of refurbishments, Alterations and improvements made by Tenant exceeds the available Expansion
Premises TI Allowance, shall be Tenant’s sole cost and expense. The Expansion Premises TI Allowance
is provided as part of the basic consideration to Tenant under this Amendment and will not result
in any rental adjustment or additional rent beyond the minimum monthly rent expressly provided in
the Lease as modified by Paragraphs 1 and 2 hereof and Schedule 1 attached hereto.

     6. Security Deposit. Landlord acknowledges that Tenant is not required to provide
any additional security deposit under the Lease with respect to the Expansion Premises.

     7. Brokers. Landlord agrees to pay a brokerage commission in connection with the
consummation of this Amendment (a) to Landlord’s broker, CB Richard Ellis, Inc. and (b) to
Tenant’s broker, CRESA Partners, each in accordance with a separate written agreement. Each
party respectively (i) represents and warrants that no other broker participated in the
consummation of this Amendment and (ii) agrees to indemnify, defend and hold the other party
harmless against any liability, cost or expense, including (but not limited to) reasonable
attorneys’ fees, arising out of any claims for brokerage commissions or other similar
compensation in connection with any conversations, prior negotiations, agreements or other
dealings by the indemnifying party with any other broker in connection with this Amendment.

     8. Entire Agreement. This Amendment constitutes the entire agreement between
Landlord and Tenant regarding the subject matter hereof and supersedes all prior
negotiations,
discussions, terms sheets, understandings and agreements, whether oral or written, between
the
parties with respect to such subject matter (other than the Lease itself, as expressly
amended
hereby).

     9. Execution and Delivery. This Amendment may be executed in one or more
counterparts and by separate parties on separate counterparts, effective when each party has
executed at least one such counterpart or separate counterpart, but each such counterpart
shall
constitute an original and all such counterparts together shall constitute one and the same
instrument.

     10. Full Force and Effect. Except as expressly set forth herein, the Lease has not
been modified or amended and remains in full force and effect.

[signature page follows]

-7-

 

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date first set
forth above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	“Landlord”
	 	 	 	“Tenant”
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	BRITANNIA HACIENDA VIII LLC,	 	 	 	ALEXZA PHARMACEUTICALS, INC.,	 	 
	a Delaware limited liability company	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Slough Estates USA Inc., Its Operations Manager and Member	 	 	 	By:	 		 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 	August J. Moretti	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	CFO	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	By:	 	
 	 	 
	 

	 	Jonathan M. Bergschneider
	 	 	 	 	 	Name:
	 	Thomas B. King	 	 
	 

	 	Senior Vice President
	 	 	 	 	 	Title:
	 	CEO	 	 

The undersigned entities, being all of the fee owners (as tenants in common) of the Center
and the Property, hereby acknowledge, confirm and agree that: (i) they approve and accept the terms
of the foregoing Amendment; (ii) Britannia Hacienda VIII LLC is authorized to enter into the
Amendment and to perform all of the obligations of Landlord thereunder; and (iii) in the event they
or any of them succeed to the right, title and interest of Landlord under the Lease, in
consideration of and conditional upon attorment by Tenant or by any permitted assignee of Tenant’s
interest under the Lease as contemplated in the final sentence of Section 15.1 of the Lease, they
will not disturb the rights or occupancy of Tenant or of such permitted assignee, as applicable, so
long as Tenant or such permitted assignee, as applicable, is not in material default under the
Lease beyond any applicable cure periods (for which purposes the occurrence and continuance of any
event of default under Section 14.1 of the Lease shall be deemed to be “material”).

	 	 	 	 	 
	Slough CDEC II, LLC, a Delaware limited liability company

 	 	 
	By:  	 	 	 
	 	Jonathan M. Bergschneider, Secretary  	 	 
	 	 	 	 
	 
	Slough CDEC III, LLC, a Delaware limited liability company

 	 	 
	By:  	 	 	 
	 	Jonathan M. Bergschneider, Secretary 	 	 
	 	 	 	 
	 
	Slough CDEC IV, LLC, a Delaware limited liability company

 	 	 
	By:  	 	 	 
	 	Jonathan M. Bergschneider, Secretary 	 	 
	 	 	 	 

-8-

 

	 	 	 	 	 

Schedule 1

Monthly minimum rental during the initial Term of the Lease (see Paragraphs 1(c) and 2(d) of
Amendment and Section 3.1 (a) of Initial Lease):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Initial	 	 	Expansion	 	 	 	 	 	 	 	 	 	 	 
	 	 	Premises	 	 	Premises	 	 	 	 	 	 	Expansion	 	 	 	 
	 	 	Monthly	 	 	Monthly	 	 	Expansion	 	 	Premises	 	 	Total	 
	 	 	Minimum	 	 	Minimum	 	 	Premises	 	 	Monthly	 	 	Monthly	 
	 	 	Rent Per	 	 	Rental	 	 	Square	 	 	Minimum	 	 	Minimum	 
	Period	 	Initial Lease	 	 	Rate	 	 	Feet	 	 	Rent	 	 	Rent	 
	04/01/07-12/31/07
	 	$	105,000.00	 	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 	 	$	105,000.00	 
	01/01/08-03/31/08
	 	$	105,000.00	 	 	$2.50 psf	 	10,978 sf*	 	$	27,445.00	 	 	$	132,445.00	 
	04/01/08-06/30/08
	 	$	150,000.00	 	 	$2.50 psf	 	10,978 sf*	 	$	27,445.00	 	 	$	177,445.00	 
	07/01/08-08/31/08
	 	$	150,000.00	 	 	$2.50 psf	 	21,956 sf	 	$	54,890.00	 	 	$	204,890.00	 
	09/01/08-12/31/08
	 	$	150,000.00	 	 	$2.50 psf	 	41,290 sf	 	$	103,225.00	 	 	$	253,225.00	 
	01/01/09-03/31/09
	 	$	150,000.00	 	 	$2.58 psf	 	41,290 sf	 	$	106,528.20	 	 	$	256,528.20	 
	04/01/09-12/31/09
	 	$	201,404.28	 	 	$2.58 psf	 	41,290 sf	 	$	106,528.20	 	 	$	307,932.48	 
	01/01/10-03/31/10
	 	$	201,404.28	 	 	$2.66 psf	 	41,290 sf	 	$	109,831.40	 	 	$	311,235.68	 
	04/01/10-12/31/10
	 	$	207,446.41	 	 	$2.66 psf	 	41,290 sf	 	$	109,831.40	 	 	$	317,277.81	 
	01/01/11-03/31/11
	 	$	207,446.41	 	 	$2.74 psf	 	41,290 sf	 	$	113,134.60	 	 	$	320,581.01	 
	04/01/11-12/31/11
	 	$	213,669.80	 	 	$2.74 psf	 	41,290 sf	 	$	113,134.60	 	 	$	326,804.40	 
	01/01/12-03/31/12
	 	$	213,669.80	 	 	$2.82 psf	 	41,290 sf	 	$	116,437.80	 	 	$	330,107.60	 
	04/01/12-12/31/12
	 	$	220,079.89	 	 	$2.82 psf	 	41,290 sf	 	$	116,437.80	 	 	$	336,517.69	 
	01/01/13-03/31/13
	 	$	220,079.89	 	 	$2.90 psf	 	41,290 sf	 	$	119,741.00	 	 	$	339,820.89	 
	04/01/13-12/31/13
	 	$	226,682.29	 	 	$2.90 psf	 	41,290 sf	 	$	119,741.00	 	 	$	346,423.29	 
	01/01/14-03/31/14
	 	$	226,682.29	 	 	$2.99 psf	 	41,290 sf	 	$	123,457.10	 	 	$	350,139.39	 
	04/01/14-12/31/14
	 	$	233,482.76	 	 	$2.99 psf	 	41,290 sf	 	$	123,457.10	 	 	$	356,939.86	 
	01/01/15-03/31/15
	 	$	233,482.76	 	 	$3.08 psf	 	41,290 sf	 	$	127,173.20	 	 	$	360,655.96	 
	04/01/15-12/31/15
	 	$	240,487.24	 	 	$3.08 psf	 	41,290 sf	 	$	127,173.20	 	 	$	367,660.44	 
	01/01/16-03/31/16
	 	$	240,487.24	 	 	$3.17 psf	 	41,290 sf	 	$	130,889.30	 	 	$	371,376.54	 
	04/01/16-12/31/16
	 	$	247,701.86	 	 	$3.17 psf	 	41,290 sf	 	$	130,889.30	 	 	$	378,591.16	 
	01/01/17-03/31/17
	 	$	247,701.86	 	 	$3.27 psf	 	41,290 sf	 	$	135,018.30	 	 	$	382,720.16	 
	04/01/17-12/31/17
	 	$	255,132.92	 	 	$3.27 psf	 	41,290 sf	 	$	135,018.30	 	 	$	390,151.22	 
	01/01/18-03/31/18
	 	$	255,132.92	 	 	$3.37 psf	 	41,290 sf	 	$	139,147.30	 	 	$	394,280.22	 

 

			
	*	 	“Deemed” square footage solely for rent calculation purposes

 

 

Britannia Shoreline Technology Park

MOUNTAIN VIEW, CALIFORNIA

EXHIBIT A

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