Document:

exv10w39

 

Exhibit 10.39

STOCK AND WARRANT PURCHASE AGREEMENT

     THIS STOCK AND WARRANT PURCHASE AGREEMENT is dated March 26, 2008 (this “Agreement”), by and
between the undersigned (the “Purchaser”) and Alexza Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), whereby the parties hereby agree as follows:

     SECTION 1. PURCHASE AND SALE OF INITIAL SHARES AND WARRANT

          1.1 Issuance of Initial Shares and Warrant. Subject to the terms and conditions set
forth in this Agreement, and in reliance upon the Company’s and the Purchaser’s representations set
forth below, on the Closing Date, the Purchaser shall buy and the Company shall sell 1,250,000
shares of the Company’s Common Stock (“Initial Shares”) at a purchase price of $8.00 per share for
a total subscription amount equal to $10,000,000. At the Closing, the Purchaser shall also (i) pay
to the Company an amount equal to $0.0001 multiplied by the number of Additional Shares (as defined
below) that may be issued by the Company to the Purchaser pursuant to Section 5.1 of this Agreement
(the “Additional Share Consideration”) and (ii) receive a warrant, in substantially the form of
Exhibit A attached hereto (the “Warrant”), to purchase up to a number of shares of the
Company’s Common Stock (the “Warrant Shares”) equal to the number obtained by dividing $3,000,000
by the Warrant Exercise Price (as defined in the Warrant). The Initial Shares, the Warrant, the
Warrant Shares and the Additional Shares (collectively, the “Securities”) have been registered on a
registration statement on Form S-3, File No. 333-141739 (the “Registration Statement”), which has
been declared effective by the Securities and Exchange Commission (“SEC”), and remains effective as
of the date hereof. A final Prospectus Supplement will be delivered as required by law.

          1.2 Closing and Closing Date. The closing of the transactions contemplated by Section
1.1 (the “Closing”) shall take place at 10:00 a.m., Pacific Daylight Time, on the first business
day following the date on which the last to be fulfilled or waived of the conditions set forth in
Section 6 and Section 7 hereof pertaining to the Closing shall have been fulfilled or waived in
accordance with this Agreement, or on such earlier date as may be mutually agreed by the Company
and the Purchaser (the “Closing Date”), at the offices of Cooley Godward Kronish llp, 380
Interlocken Crescent, Suite 900, Broomfield, Colorado 80021, or such other location as the
Purchaser and the Company shall mutually select.

     SECTION 2. PURCHASER REPRESENTATIONS AND WARRANTIES

     The Purchaser hereby represents and warrants as of the date hereof to the Company as follows:

          2.1 The Purchaser is a corporation or other legal entity duly organized, validly existing and
in good standing under the jurisdiction of its incorporation.

 

 

          2.2 The Purchaser has the requisite corporate (or other entity) power and authority to enter
into and perform this Agreement and to purchase the Securities in accordance with the terms hereof.
The purchase by the Purchaser of the Securities hereunder has been duly authorized by all
necessary action on the part of the Purchaser. Each of the Transaction Documents has been (or upon
delivery will be) duly executed by the Purchaser and is, or when delivered in accordance with the
terms hereof, will constitute, the valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, except as enforceability may be limited by
applicable (i) bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, or (ii) laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

          2.3 The Purchaser is purchasing the Securities for its own account as principal, and not with
a view towards distribution of such securities.

          2.4 The Purchaser is not a registered broker-dealer.

          2.5 There are no claims for brokerage commissions or finder’s fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any arrangement made by or
on behalf of the Purchaser and the Purchaser agrees to indemnify and hold the Company harmless
against any costs or damages incurred as a result of any such claim.

     SECTION 3. WIRE INSTRUCTIONS

     On the Closing Date, the Purchaser shall wire the amount set forth in Section 1.1 to the
Company to the account set forth below.

Company Wire Transfer Instructions:

Bank Address

State Street Bank

1200 Crown Colony

Quincy, MA 02169

          Via FED WIRE SYSTEM

State Street Bank

ABA # XXXXX

Account # XXXXX

For Final Credit to Alexza Corp. DE1805

Attn: Jim Hall

          Via SWIFT SYSTEM: (CASH EQUIVALENTS)

BIC SBOSUS3N

CHIPS Identifier: CH334291

State Street Bank FX Custody Account # XXXXX Fiduciary Investor

Services Account XXXXX

Corp. DE1805

2

 

   Upon receipt of such amount the Company shall promptly cause its transfer agent to transmit
the Initial Shares electronically to the Purchaser by crediting the account set forth below through
the Deposit Withdrawal Agent Commission system and shall deliver the Warrant to the Purchaser
within 5 business days of the Closing Date. The Purchaser’s DWAC Instructions are as set forth on
the Purchaser’s signature pages attached hereto under the heading “DWAC Instructions.”

     SECTION 4. COMPANY REPRESENTATIONS AND WARRANTIES

   The Company hereby represents and warrants as of the date hereof to the Purchaser as follows:

          4.1 Organization and Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

          4.2 Authorization; Enforcement; No Conflicts. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions contemplated by each of the
Transaction Documents (as defined below) and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of the Company and no further consent or action is required by the
Company, its Board of Directors or its stockholders. Each of the Transaction Documents has been
(or upon delivery will be) duly executed by the Company and is, or when delivered in accordance
with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may be limited by
applicable (i) bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, or (ii) laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of
the Company’s certificate of incorporation, bylaws or other organizational or charter documents as
of the date of execution of this Agreement, or (ii) subject to obtaining the Required Approvals (as
defined below), conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company is bound or affected;

3

 

except in the case of each of clauses (ii) and (iii), such as could not, individually or in
the aggregate: (i) adversely affect the legality, validity or enforceability of this Agreement, the
Warrant, and any other documents or agreements executed in connection with the transactions
contemplated hereunder (the “Transaction Documents”), (ii) have or result in a material adverse
effect on the results of operations, assets, business operations or financial condition of the
Company, taken as a whole, or (iii) adversely impair the Company’s ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a
“Material Adverse Effect”).

          4.3 Filings, Consents and Approvals; Issuance of Securities. The Company is not
required to obtain any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than (i) the filing of a Form 8-K disclosing the transaction
contemplated hereby, (ii) the filing with the SEC of the prospectus supplement required by the
Registration Statement pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
“1933 Act”) (the “Prospectus Supplement”) supplementing the base prospectus forming part of the
Registration Statement (the “Prospectus”), (iii) the application(s) to The Nasdaq Global Market
(the “Principal Market”) for the listing of the Securities for trading thereon in the time and
manner required thereby, and (iv) applicable Blue Sky filings (collectively, the “Required
Approvals”). “Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind. The Securities that
are being purchased hereunder are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens. The Company has reserved from its duly authorized
capital stock a sufficient number of shares of Common Stock to enable it (i) to comply with its
obligations to issue the Additional Shares under Section 5.1 of this Agreement, and (ii) to comply
with its exercise obligations under the Warrant. The issuance of the Securities have been
registered by the Company under the 1933 Act under the Registration Statement, subject to the
filing of the Prospectus Supplement. The Registration Statement is effective and available for the
issuance of the Securities thereunder and the Company has not received any notice that the SEC has
issued or intends to issue a stop-order with respect to the Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or has threatened in writing to do so. The “Plan of Distribution”
section under the Registration Statement permits the issuance and sale of the Securities hereunder.
Upon receipt of the Securities, the Purchaser will have good and marketable title to such
Securities. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or
designated, nor will the Company take any action

4

 

or steps that would cause the offering of the Securities to be integrated with other
offerings. Except as disclosed in the SEC Reports (as defined below), the Company has not, in the
12 months preceding the date hereof, received notice from the Principal Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of the Principal Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Principal Market and no stockholder approval is
required for the Company to fulfill its obligations under the Transaction Documents. The Common
Stock is currently listed on the Principal Market.

          4.4 SEC Reports; Financial Statements. The Company has filed all reports required to
be filed by it under the 1933 Act and the Securities Exchange Act of 1934, as amended (the “1934
Act”), including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the
date hereof (the foregoing materials being collectively referred to herein as the “SEC Reports”) on
a timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the 1933 Act and the 1934 Act
and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Registration Statement and any
prospectus included therein, including the Prospectus and the Prospectus Supplement, complied in
all material respects with the requirements of the 1933 Act and the 1934 Act and the rules and
regulations of the SEC promulgated thereunder, and none of such Registration Statement or any such
prospectus, including the Prospectus and the Prospectus Supplement, contain or contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the case of any prospectus in the light of
the circumstances under which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

          4.5 Capitalization. The capitalization of the Company as of December 31, 2007 is as
set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007,
as filed with the SEC on March 17, 2008. Except as disclosed on Schedule 4.5, the Company
has not issued any capital stock since its most recently filed periodic report under the 1934 Act,
other than pursuant to the exercise of employee

5

 

stock options under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s stock incentive plan and pursuant to the conversion or
exercise of outstanding common stock equivalents. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents, which right has not been waived prior to the date
hereof. Except as set forth in the SEC Reports or the Prospectus Supplement, there are no
outstanding options, warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for,
or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or
may become bound to issue additional shares of Common Stock or common stock equivalents. Except as
set forth in the SEC Reports or the Prospectus Supplement, the issue and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchaser) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in material compliance with all federal and state securities laws
and requirements of the Trading Market, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set
forth in the SEC Reports or the Prospectus Supplement, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

          4.6 Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC Reports: (i) there has
been no event, occurrence or development that, individually or in the aggregate, has had or that
could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in
filings made with the SEC, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company stock option
and purchase plans. “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144. “Rule 144” means Rule 144 promulgated by the SEC
pursuant to the 1933 Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

6

 

          4.7 Litigation. Except as disclosed in the SEC Reports, there are no legal actions,
suits, arbitrations or other legal, administrative or governmental proceedings or investigations
pending or, to the Company’s knowledge, threatened against the Company or its properties, assets or
business, that, if adversely determined, would, individually or in the aggregate, affect the
execution and delivery of this Agreement or the performance by the Company of its obligations under
the Transaction Documents, or have a Material Adverse Effect. The Company is not subject to or in
default with respect to any judgment, order or decree of any court or any governmental agency or
instrumentality, which default would have a Material Adverse Effect.

          4.8 Compliance. Neither the Company nor any subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company under), nor has the Company or any subsidiary
received notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii)
is in violation of any statute, rule or regulation of any governmental authority or the Trading
Market, including without limitation all foreign, federal, state and local laws applicable to its
business, except in each case as would not have a Material Adverse Effect.

          4.9 Sarbanes-Oxley; Internal Accounting Controls. To its knowledge, the Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to
it as of the Closing Date. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as defined in the 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company, including its subsidiaries,
is made known to the certifying officers by others within those entities, particularly during the
period in which the Company’s most recently filed periodic report under the 1934 Act, as the case
may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of
the Company’s disclosure controls and procedures as of a date prior to the filing date of the most
recently filed periodic report under the 1934 Act (such date, the “Evaluation Date”). The Company
presented in its most recently filed periodic report under the 1934 Act the conclusions of the
certifying officers about the effectiveness of the Company’s disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been
no changes in the Company’s internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the

7

 

1934 Act) that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.

          4.10 Application of Takeover Protections. The Company and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to
the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without limitation the Company’s
issuance of the Securities and the Purchaser’s ownership of the Securities.

          4.11 Disclosure. All disclosure provided to the Purchaser regarding the Company, its
business and the transactions contemplated hereby furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct with respect to such
representations and warranties and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company acknowledges and agrees that
the Purchaser is not making nor has it made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 2 hereof.

          4.12 Intellectual Property. The Company possesses such right, title and interest in
and to, patents, patent rights, trade secrets, inventions, know-how, trademarks, trade names,
copyrights, service marks and other proprietary rights (“Intellectual Property”) material to the
conduct of the Company’s business except Intellectual Property the failure to possess of which
would not have a Material Adverse Effect. The Company has not received any notice of infringement,
misappropriation of conflict from any third party as to such that has not been resolved or disposed
of, which infringement, misappropriation of conflict would if adversely decided individually or in
the aggregate have a Material Adverse Effect. The Company has not infringed, misappropriated, or
otherwise conflicted with Intellectual Property of any third parties, which infringement,
misappropriation or conflict would individually or in the aggregate have a Material Adverse Effect.

          4.13 Permits. The Company has made all filings, applications and submissions required
by, and possesses all approvals, licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities (including, without limitation, the
U.S. Food and Drug Administration of the Department of Health and Human Services (the “FDA”), and
any other foreign, federal, state or local government or regulatory authorities performing
functions similar to those performed by the FDA) necessary for the ownership or lease of its
properties or to conduct its businesses (collectively, “Permits”), except for such Permits the
failure of which to possess, obtain or make the same would not reasonably be expected to have a
Material

8

 

Adverse Effect; and the Company has not received any written notice of proceedings relating to
the limitation, revocation, cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, and has no reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course.

          4.14 Clinical Studies. The clinical, pre-clinical and other studies and tests
conducted by or on behalf of or sponsored by the Company were and, if still pending, are being
conducted in accordance in all material respects with all statutes, laws, rules and regulations, as
applicable (including, without limitation, those administered by the FDA or by any foreign,
federal, state or local governmental or regulatory authority performing functions similar to those
performed by the FDA) except as would not have a Material Adverse Effect. The Company has not
received any notices or other correspondence from the FDA or any other foreign, federal, state or
local governmental or regulatory authority performing functions similar to those performed by the
FDA with respect to any ongoing clinical or pre-clinical studies or tests requiring the termination
or suspension of such studies or tests, except as would not have a Material Adverse Effect.

     SECTION 5. COVENANTS OF THE PARTIES

          5.1 Issuance of Additional Shares. In the event that (i) the Pricing Adjustment Point
(as defined below) is not triggered, or (ii) a binding agreement to acquire substantially all of
the assets or a majority of the outstanding voting securities of the Company (through merger,
acquisition, consolidation or otherwise) in which the aggregate purchase price is less than $8.00
per share (such price to be adjusted for stock splits, stock dividends and the like) is entered
into prior to the earlier of (a) the triggering of a Pricing Adjustment Point or (b) the end of the
Pricing Period, then the Company shall issue to the Purchaser 135,041 additional shares of Common
Stock of the Company (the “Additional Shares”). Such issuance of the Additional Shares shall occur
within 5 business days of the end of the Pricing Period. If the Company is not required to issue
the Additional Shares pursuant to this Section 5.1, the Company shall, within 5 business days of
the end of the Pricing Period, return to the Purchaser the Additional Share Consideration that was
paid by the Purchaser at the Closing. For purposes of this Section 5.1, (i) the “Pricing
Adjustment Point” shall be triggered if during the Pricing Period (as defined below) an Average
Closing Price (as defined below) over any period of 45 consecutive Trading Days (as defined below)
equals or exceeds $8.00 per share (such price to be adjusted for stock splits, stock dividends and
the like), (ii) the “Average Closing Price” for any applicable period shall mean the average of the
closing prices of the Company’s Common Stock on the Principal Market during such period, (iii) a
"Trading Day” shall mean each Monday through Friday, other than any day on which securities are not
traded on the Principal Market, and (iv) the “Pricing Period” shall mean the period beginning on
the Closing Date and ending on December 31, 2008.

          5.2 Maintenance of Registration Statement Effectiveness. Until such time as the
Initial Shares, the Additional Shares, if any, and the Warrant Shares may be sold pursuant to Rule
144 (or its successor rule) of the 1933 Act or any other rule or

9

 

regulation of the SEC that may permit the Purchaser to sell such Securities to the public
without registration, the Company shall use commercially reasonable efforts to maintain the
effectiveness of the Registration Statement so long as the Company has an obligation to issue the
Additional Shares under Section 5.1 of this Agreement and so long as the Warrant is outstanding.

          5.3 Reservation of Additional Shares and Warrant Shares. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep available at all times,
free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of (i)
enabling the Company to issue the Additional Shares pursuant to Section 5.1, and (ii) enabling the
Company to issue the Warrant Shares pursuant to any exercise of the Warrant.

          5.4 Operations in Singapore.

               (a) The Company intends to invest $10,000,000 over the next five years to support its
operations in Singapore. A draft business plan for the Company’s lower housing assembly
manufacturing strategy is in the form delivered herewith (the “Business Plan”). The Company will
review and update the Business Plan periodically, provided that any amendments to the Business Plan
shall require the approval of the Purchaser, such approval not to be unreasonably withheld.

               (b) Subject to Section 5.4(c), if the Company, including its Affiliates or a joint venture of
which the Company is stockholder or member, does not achieve the milestones set forth in
Exhibit B hereto (each a “Milestone”, and collectively, the “Milestones”), the Warrant will
become exercisable. The exercisability of the Warrant shall be Purchaser’s sole and exclusive
remedy for the failure to achieve any of the Milestones.

               (c) If the Company, including its Affiliates or a joint venture of which the Company is
stockholder or member, fails to achieve any Milestone, the Company shall have forty five (45) days
after the Company’s receipt of a Cure Notice (as defined on
Exhibit B) from Purchaser to cure such
failure before the Warrant becomes exercisable; provided that, with respect to any
Milestone, the Company may request the consent of Purchaser for the modification of such Milestone,
or modification of the timing for the performance of such Milestone, and Purchaser agrees that it
will not unreasonably withhold consent to such modification.

               (d) If the Warrant has not yet become exercisable and the Company terminates operations in
Singapore or transfers all, or substantially all, of its Singapore operations outside of Singapore,
without the prior written consent of the Purchaser, then the Warrant will become exercisable. The
exercisability of the Warrant shall be Purchaser’s sole and exclusive remedy for such termination
or transfer.

          5.5 Disclosure of Transactions and Other Material Information. The Company shall,
prior to the opening of the Principal Market on the Closing Date, (i) issue a press release
reasonably acceptable to the Purchaser disclosing the transactions

10

 

contemplated hereby, and (ii) file a Current Report on Form 8-K with the SEC (the “8-K
Filing”) describing the transactions contemplated by the Transaction Documents and including this
Agreement and the Warrant as an exhibit thereto, in the form required by the 1934 Act. Thereafter,
the Company shall timely file any filings and notices required by the SEC with respect to the
transactions contemplated by the Transaction Documents.

          5.6 Confidentiality. The Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as described in Section 5.5,
the Purchaser will maintain the confidentiality of the terms and existence of the transaction
contemplated hereunder. The Purchaser hereby acknowledges (i) that it is bound by that certain
Confidentiality Agreement, dated as of October 31, 2007 by and between the Company and the
Purchaser (the “Confidentiality Agreement”), and (ii) that it is aware (and that its officers,
directors, employees, partners, attorneys, advisors, accountants, agents or representatives have
been advised) that the United States securities laws prohibit any person who has material
non-public information about a company from purchasing or selling securities of such company, or
from communicating such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such securities.

     SECTION 6. PURCHASER’S CLOSING CONDITIONS

     The obligation of the Purchaser to purchase the Initial Shares and the Warrant on the Closing
Date, as provided in Section 1.1 hereof, shall be subject to the performance by the Company of its
agreements theretofore to be performed hereunder and to the satisfaction (or waiver), prior thereto
or concurrently therewith, of the following further conditions:

          6.1 Representations and Warranties. The representations and warranties of the Company
contained in Section 4 of this Agreement shall be true on and as of the Closing Date in all
material respects (except for such representations and warranties that are qualified as to
materiality, which shall be true in all respects) as though such representations and warranties
were made at and as of such date.

          6.2 Compliance with Agreement. The Company shall have performed and complied in all
material respects with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Company prior to or on the Closing Date.

          6.3 Injunction. There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as herein provided.

          6.4 Stop Orders No stop order or suspension of trading shall been imposed by the
Principal Market, the SEC or any other governmental regulatory body with respect to public trading
in the Common Stock.

11

 

          6.5 Listing of the Common Stock. In connection with the issuance of the Securities
and the transactions contemplated hereby, the Company shall have submitted to the Principal Market
a “Notification Form: Listing of Additional Shares” as well as any necessary supporting
documentation.

          6.6 Officer’s Certificate. The Purchaser shall have received a certificate, dated the
Closing Date, signed by a duly authorized executive officer of the Company, certifying that the
conditions specified in the foregoing Sections 6.1, 6.2, 6.3 and 6.4 hereof have been fulfilled.

          6.7 Secretary’s Certificate. The Purchaser shall have received a certificate, dated
the Closing Date, of the Secretary of the Company attaching: (i) a true and complete copy of the
certificate of incorporation of the Company, with all amendments thereto; (ii) true and complete
copies of the Company’s bylaws, as amended, in effect as of such date; (iii) a certificate from the
Secretary of State of the State of Delaware as to the good standing of the Company; (iv)
certificates of good standing from the appropriate officials of the jurisdictions in each state in
which the Company is qualified to do business as a foreign corporation; and (iv) resolutions of the
Board of Directors of the Company authorizing the execution and delivery of this Agreement, the
Transaction Documents, and the transactions contemplated hereby and thereby.

          6.8 Singapore Operations Letter of Intent. The Singapore Operations Letter of Intent
shall have been executed and delivered by the parties thereto.

          6.9 Legal Opinion. Counsel to the Company shall deliver a legal opinion in
substantially the form attached hereto as Exhibit C.

     SECTION 7. COMPANY’S CLOSING CONDITIONS

     The obligation of the Company to issue and deliver the Initial Shares and the Warrant on the
Closing Date as provided in Section 1.1 hereof, shall be subject to the performance by the
Purchaser of its agreements theretofore to be performed hereunder and to the satisfaction (or
waiver), prior thereto or concurrently therewith, of the following further conditions:

          7.1 Representations and Warranties. The representations and warranties of the
Purchaser contained in Section 2 of this Agreement shall be true in all material respects on and as
of the Closing Date (except for such representations and warranties that are qualified as to
materiality, which shall be true in all respects) as though such representations and warranties
were made at and as of such date.

          7.2 Compliance with Agreement. The Purchaser shall have performed and complied in all
material respects with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by them prior to or on the Closing Date.

          7.3 Purchaser’s Certificate. The Company shall have received a certificate from the
Purchaser, dated the Closing Date, signed by a duly authorized

12

 

representative of the Purchaser, certifying that the conditions specified in the foregoing
Sections 7.1 and 7.2 hereof have been fulfilled.

          7.4 Injunction. There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as herein provided.

          7.5 Approval of Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Company. The Company shall have received
copies of all documents or other evidence which it may have reasonably requested in connection
therewith in form and substance reasonably satisfactory to the Company.

     SECTION 8. MISCELLANEOUS

          8.1 Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of California, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of California or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of California. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the federal Northern District of California for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          8.2 Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature or signature in PDF format shall be considered due
execution and shall be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile or PDF, as applicable, signature.

13

 

          8.3 Entire Agreement; Amendments. This Agreement supersedes all other prior and
contemporaneous oral or written agreements, discussions, understandings and correspondence between
the Purchaser, the Company, their affiliates and Persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the instruments referenced herein and the
Confidentiality Agreement contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. Neither this Agreement nor any provisions hereof may be amended other
than by an instrument in writing signed by the Company and the Purchaser. No provision hereof may
be waived other than by an instrument in writing signed by the party against whom enforcement is
sought.

          8.4 Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

          If to the Company:

Alexza Pharmaceuticals, Inc.

2091 Stierlin Court

Mountain View, California

Telephone Number: (650) 944-7000

Fax: (650) 944-7988

Attention: August Moretti

          With a copy to:

Cooley Godward Kronish LLP

380 Interlocken Crescent, Suite 900

Broomfield, Colorado 80021

Telephone Number: (720) 566-4000

Fax: (720) 566-4099

Attention: James C.T. Linfield, Esq.

                Brent D. Fassett, Esq.

If to the Purchaser, to its address and facsimile number set forth on the signature
page.

or to such other address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party 5 days prior to the
effectiveness of such change. Written confirmation of receipt (A) given

14

 

by the recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

          8.5 Expenses. Each party shall pay all costs and expenses that it incurs with respect
to the negotiation, execution, delivery and performance of the Transaction Documents; provided,
however, that the Company shall reimburse the reasonable fees of and expenses of the Purchaser, not
to exceed $100,000.

          8.6 Successors and Assigns. The Company shall not assign this Agreement or any rights
or obligations hereunder (including by merger or consolidation) without the prior written consent
of the Purchaser. The Purchaser shall not assign this Agreement or any rights or obligations
hereunder (including by merger or consolidation) without the prior written consent of the Company.

          8.7 No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

          8.8 Survival. The representations, warranties, agreements and covenants of the
Company and the Purchaser contained herein shall survive the delivery and exercise of Securities,
as applicable.

          8.9 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

********************

15

 

     IN WITNESS WHEREOF, the parties hereto have caused this Stock and Warrant Purchase Agreement
to be duly executed by their respective authorized signatories as of the date first indicated
above.

ALEXZA PHARMACEUTICALS, INC.

				
	By:	 	/s/ Thomas B. King 

		 	Name: Thomas B. King

Title: President and Chief Executive Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

[PURCHASER SIGNATURE PAGES TO ALEXZA PHARMACEUTICALS, INC. STOCK 

AND WARRANT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Stock and Warrant Purchase Agreement to
be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: BIOMEDICAL SCIENCES INVESTMENT FUND PTE LTD

	 	 	 	 	 	 	 	 	 
	Signature of Authorized Signatory of Purchaser:	 	/s/ Chu Swee Yeok	 	 
	 

	 	 	 	 	 	 

	 	 
	Name of Authorized Signatory:	 	Chu Swee Yeok 	 	 	 	 
	 	 	 	 	 	 	 
	Title of Authorized Signatory:	 	Director 	 	 	 	 
	 	 	 	 	 	 	 
	Email Address of Purchaser:	 	sweeyeok@bio1capital.com 	 	 	 	 
	 	 	 	 	 	 	 

Address for Notice of Purchaser:

Biomedical Sciences Investment Fund Pte Ltd

20 Biopolis Way

#09-01 Centros

Singapore 138668

DWAC Instructions:

Morgan Stanley

555 California Street, Suite 1400

San Francisco, CA 94104

Main contact : Ted Buckley ted.buckley@morganstanley.com

Tel: 1-415-576-2150

Fax: 1-415-576-2637

Morgan Stanley

Account
number : XXXX

Account name : Biomedical Sciences Investment Fund Pte Ltd

Morgan Stanley DTC # : 050

 

 

Exhibit A

Common Stock Warrant

 

 

Exhibit B

Milestones

1. The Company shall establish a subsidiary in Singapore within four weeks of Closing.

2. The Company shall hire a President of its Singapore subsidiary within four weeks of Closing.

3. The Company, or its Affiliates or a joint venture of which the Company is stockholder or member,
will accomplish the following activities in the time periods described:

	 	 	 	 	 	 	 	 	 
	Year	 	Q1	 	Q2	 	Q3	 	Q4
	2008

	 	 	 	 	 	Initiate
recruitment of
General Manager for
Singapore
Operations
	 	Create
facilities/infrastructure plan for
Singapore
Operations
	2009

	 	Hire General
Manager for
Singapore
Operations
	 	Complete quality
assurance policy
and procedures
	 	Initiate
application
specific integrated
circuit development
activities and
design of automated
assembly equipment
	 	Complete transition
plan of manual
lower housing
assembly (LHA) from
Valtronic
	2010

	 	Install printed
circuit board
assembly (PCBA)
process and test
equipment
	 	Install LHA
automated assembly
and test equipment
	 	Complete PCBA
manufacturing
process and test
equipment
	 	Complete transition
from manual LHA
manufacturing
process to
automated LHA
manufacturing
process

The satisfaction of the milestones set forth in this Section 3 shall be determined in good faith by
the Company; provided that the Holder shall have 20 days from the end of the applicable
period to dispute in writing such determination if the Holder believes in good faith that the
applicable milestone has not been satisfied (the “Dispute Notice”). If the Holder delivers a
Dispute Notice to the Company, the Holder and Company shall negotiate in good faith to resolve the
dispute. If the dispute cannot be resolved within 14 days from the receipt by the Company of the
Dispute Notice, then the parties shall appoint a mutually agreeable arbitrator. If the parties
cannot agree upon an arbitrator, an arbitrator shall be appointed from the International Panel
members from the United States of America by the Singapore International Arbitration Centre. The
arbitrator shall determine whether the applicable milestone has been satisfied and such arbitration
shall be binding on both parties and administered by the Singapore International Arbitration Centre
in accordance with the UNCITRAL Arbitration Rules. If it is determined pursuant to the above
procedures that an applicable milestone has not been satisfied, the Holder may deliver to the
Company a notice of such failure (the “Cure Notice”) within 20 days after such final determination.

 

 

Exhibit C

Form of Opinion

     1. The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware with requisite corporate power to own or lease, as
the case may be, and operate its properties, to conduct its business as described in the Prospectus
and to execute and deliver the Purchase Agreement and the Warrant and to perform its obligations
thereunder.

     2. The Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of California.

     3. Each of the Purchase Agreement and the Warrant has been duly and validly authorized,
executed and delivered by the Company and each such agreement constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting creditors’ rights, and subject to general equity
principles and to limitations on availability of equitable relief, including specific performance.

     4. The Initial Shares, the Additional Shares and the Warrant Shares have been duly authorized
and, when sold and issued in accordance with the Registration Statement, the related Prospectus and
Prospectus Supplement, and paid for by the Investor pursuant to the Purchase Agreement or the
Warrant, as applicable, will be validly issued, fully paid and nonassessable.

     5. The holders of outstanding shares of capital stock of the Company are not entitled to
preemptive rights arising under the Company’s Certificate of Incorporation or Bylaws or under the
DGCL.

     6. The Registration Statement has become effective under the Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings for that purpose
have been instituted or overtly threatened. Any required filing of the Prospectus, and any
supplement thereto, pursuant to Rule 424(b) under the Act, has been made in the manner and within
the time period required by Rule 424(b).

     7. No consent, approval, authorization or filing with or order of any U.S. Federal or Colorado
court or governmental agency or body in the United States having jurisdiction over the Company is
required for the consummation by the Company of the transactions contemplated by the Purchase
Agreement and the Warrant to be performed as of the date hereof, except such as have been obtained
under the Act and except such as may be required (i) under the blue sky laws of any jurisdiction in
connection with the purchase of the Initial Shares, the Additional Shares, the Warrant and the
Warrant Shares by the Investor, or (ii) under the bylaws, rules and regulations of the Nasdaq
National Market.

     8. The execution and delivery by the Company of the Purchase Agreement and the Warrant and the
performance of its obligations thereunder as of the date hereof, will not result in (i) a violation
of the charter or bylaws of the Company, (ii) a material breach of or default under the terms of
any Material Agreement; or (iii) to our knowledge, a violation of any statute, law, rule, or
regulation which, in our experience is typically applicable to transactions of the nature
contemplated by the Purchase Agreement and the Warrant and is applicable to the Company, or any
order, writ, judgment, injunction, decree, or award that has been entered against the Company and
of which we are aware, in each case the breach or violation of which would materially and adversely
affect the Company.

     9. To our knowledge, there is no action, proceeding or investigation pending or overtly
threatened against the Company before any court or administrative agency that questions the
validity of the Purchase Agreement or the Warrant or that could reasonably be expected to result,
either individually or in the aggregate, in a material adverse effect on the Company and its
subsidiaries taken as a whole that has not been disclosed in the SEC Reports.exv10w40

 

Exhibit 10.40

EXHIBIT A

COMMON STOCK PURCHASE WARRANT

ALEXZA PHARMACEUTICALS, INC.

     THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
Biomedical Sciences Investment Fund Pte Ltd (the “Holder”), is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set forth, at any time
during the Exercise Period (as defined below), to subscribe for and purchase from Alexza
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), up to a number of shares of Common
Stock, par value $0.0001 per share, of the Company (the “Common Stock”) as provided for in Section
2(c) (the “Warrant Shares”). The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).

     Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Stock and Warrant Purchase Agreement (the
“Purchase Agreement”), dated March 26, 2008, by and between the Company and the Holder.

     Section 2. Exercise.

          a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times during the Exercise Period by delivery to
the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or
such other office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the Company);
provided, however, within 5 Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the
Company shall have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank.

          b) Exercise Price. The exercise price of the Common Stock under this Warrant shall be
$8.00 (such price to be adjusted for stock splits, stock dividends and the like) per share;
provided, however, that if (i) the Pricing Adjustment Point is not triggered, or
(ii) a binding agreement to acquire substantially all of the assets or a majority of the
outstanding voting securities of the Company (through merger, acquisition, consolidation or
otherwise) in which the aggregate purchase price is less than $8.00 (such price to be adjusted for
stock splits, stock dividends and the like) per share is entered into prior to the earlier of (a)
the triggering of a Pricing Adjustment Point or (b) the end of the Pricing Period (a “Pricing
Change in Control Event”), then the exercise price of the Common Stock under this Warrant shall be
$7.22 (such price to be adjusted for stock splits, stock dividends and the like) per share (the
“Exercise Price”); provided, further that if this Warrant is exercised prior to
December 31, 2008 other than in connection with a Pricing Change in Control Event the Exercise
Price shall be $8.00 (such

1

 

price to be adjusted for stock splits, stock dividends and the like) per share. The Exercise
Price shall be subject to adjustment pursuant to Section 3 hereof.

          c) Number of Warrant Shares. The number of shares of Common Stock that the Holder may
purchase by exercising this Warrant shall equal the number of whole shares of Common Stock equal to
$3,000,000 divided by the Exercise Price determined pursuant to Section 2(b).

          d) Exercise Period. This Warrant shall not become exercisable unless and until an
Exercise Trigger Event (as defined below) occurs. If an Exercise Trigger Event occurs, this
Warrant shall be exercisable for the period commencing on the date of the Exercise Trigger Event
and ending on the close of business on the fifth year anniversary of the date hereof (the “Exercise
Period”). For purposes of this Warrant, “Exercise Trigger Event” shall mean each of the following
events:

               i. The failure by the Company, including any of its Affiliates or a joint venture of which the
Company is stockholder or member, to achieve a milestone set forth on Exhibit A hereto
(each a “Milestone”, and collectively, the “Milestones”); provided, however, that
the Company shall have forty five (45) days after the date on which the Company receives a Cure
Notice (as defined on Exhibit A) to cure any alleged failure before any such failure shall be
deemed an Exercise Trigger Event; and provided further that with respect to any
Milestone, the Company may request the written consent of the Holder for the modification of such
Milestone, or the modification of the timing for the performance of such Milestone, and the Holder
hereby agrees that it will not unreasonably withhold consent to such modification; and

               ii. The termination by the Company of its operations in Singapore or the transfer of all, or
substantially all, of the Company’s Singapore operations outside of Singapore without the prior
written consent of the Holder.

          e) Cashless Exercise. This Warrant may also be exercised during the Exercise Period
by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B)*(X)] by (A),
where:

          (A) = the VWAP on the Trading Day immediately preceding the date of such election;

          (B) = the Exercise Price of this Warrant, as adjusted; and

          (X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with
the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

     For purposes of this Section 2(e), “VWAP” shall mean the daily volume weighted average price
of the Company on the Principal Market as reported by Bloomberg Financial L.P. using the AQR
function.

2

 

          f) Mechanics of Exercise.

               i. Authorization of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

               ii. Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system and such
system is available for transmitting such certificates, or otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise within 5 Trading Days from the delivery
to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the
aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be
deemed to have been exercised on the date the aggregate Exercise Price is received by the Company.
The Warrant Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised by payment to the Company of the
aggregate Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(f)(vi) prior to the issuance of such shares, have been paid.

               iii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

               iv. Rescission Rights. If the Company fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing the Warrant Shares pursuant to Section
2(f)(ii) by the date that is two business days after the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.

               v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay
a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price.

               vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant 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 such 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

3

 

certificates for Warrant 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.

     Section 3. Certain Adjustments; Early Termination.

          a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger
number of shares, (C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

          b) Early Termination. If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, the Company shall provide to the Holder twenty (20) days advance
written notice of such Fundamental Transaction, and this Warrant shall terminate unless exercised
(if exercisable) prior to the date such Fundamental Transaction.

          c) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.

          d) Notice to Holders.

               i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to
this Section 3, the Company shall promptly mail to the Holder a notice

4

 

setting forth the Exercise Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

               ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend
(or any other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it
shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided, that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. If this Warrant is otherwise exercisable, the Holder
shall be entitled to exercise this Warrant during the 20-day period commencing on the date of such
notice to the effective date of the event triggering such notice.

     Section 4. Transfer of Warrant.

          a) Transferability. This Warrant shall not be transferable in whole or in part.

          b) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.

     Section 5. Miscellaneous.

          a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of
a cashless exercise), the Warrant Shares so purchased shall be and be

5

 

deemed to be issued to the Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.

          b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the
case of the Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver
a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.

          c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.

          d) Authorized Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.

          e) Jurisdiction. This Warrant and all rights, obligations and liabilities hereunder
shall be governed by the laws of the State of California. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

          f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws. The Holder hereby acknowledges and agrees that if the Registration
Statement is not effective at the time this Warrant is exercised, the Holder shall only be
permitted to exercise this Warrant by means of a “cashless exercise” pursuant to Section 2(e).

          g) Nonwaiver. No course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies.

          h) Notices. Any notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

          i) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder

6

 

for the purchase price of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

          j) 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 Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant Shares.

          k) Amendment. This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the Holder.

          l) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein and to all of the
representations and warranties contained herein.

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

          n) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.

********************

7

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.

Dated: March 27, 2008

	 	 	 	 	 	 	 
	 	 	ALEXZA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Thomas B. King	 	 
	 

	 	 	 	 

Name: Thomas B. King
	 	 
	 

	 	 	 	Title: President and Chief
Executive Officer	 	 

 

 

Exhibit A

Milestones

1. The Company shall establish a subsidiary in Singapore within four weeks of Closing.

2. The Company shall hire a President of its Singapore subsidiary within four weeks of Closing.

3. The Company, or its Affiliates or a joint venture of which the Company is stockholder or member,
will accomplish the following activities in the time periods described:

	 	 	 	 	 	 	 	 	 
	Year	 	Q1	 	Q2	 	Q3	 	Q4
	2008

	 	 	 	 	 	Initiate
recruitment of
General Manager for
Singapore
Operations
	 	Create
facilities/infrastructure plan for
Singapore
Operations
	2009

	 	Hire General
Manager for
Singapore
Operations
	 	Complete quality
assurance policy
and procedures
	 	Initiate
application
specific integrated
circuit development
activities and
design of automated
assembly equipment
	 	Complete transition
plan of manual
lower housing
assembly (LHA) from
Valtronic
	2010

	 	Install printed
circuit board
assembly (PCBA)
process and test
equipment
	 	Install LHA
automated assembly
and test equipment
	 	Complete PCBA
manufacturing
process and test
equipment
	 	Complete transition
from manual LHA
manufacturing
process to
automated LHA
manufacturing
process

The satisfaction of the milestones set forth in this Section 3 shall be determined in good faith by
the Company; provided that the Holder shall have 20 days from the end of the applicable
period to dispute in writing such determination if the Holder believes in good faith that the
applicable milestone has not been satisfied (the “Dispute Notice”). If the Holder delivers a
Dispute Notice to the Company, the Holder and Company shall negotiate in good faith to resolve the
dispute. If the dispute cannot be resolved within 14 days from the receipt by the Company of the
Dispute Notice, then the parties shall appoint a mutually agreeable arbitrator. If the parties
cannot agree upon an arbitrator, an arbitrator shall be appointed from the International Panel
members from the United States of America by the Singapore International Arbitration Centre. The
arbitrator shall determine whether the applicable milestone has been satisfied and such arbitration
shall be binding on both parties and administered by the Singapore International Arbitration Centre
in accordance with the UNCITRAL Arbitration Rules. If it is determined pursuant to the above
procedures that an applicable milestone has not been satisfied, the Holder may deliver to the
Company a notice of such failure (the “Cure Notice”) within 20 days after such final determination.

 

 

NOTICE OF EXERCISE

			
	TO:	 	ALEXZA PHARMACEUTICALS, INC.

          (1) The undersigned hereby elects to purchase                      Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

          (2) Payment shall take the form of (check applicable box):

o    in lawful money of the United States; or

o    the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in Section 2(e), to exercise
this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in
Section 2(e).

          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

	 	 	 	 	 
	 

	 	 

	 	 

The Warrant Shares shall be delivered to the following:

	 	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

          (4) Accredited Investor. The undersigned represents that the aforesaid shares are
being acquired for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has no present
intention of distributing or reselling such shares, all except as in compliance with applicable
securities laws. The undersigned further represents that it is an “accredited investor” as defined
in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

	 	 	 	 	 	 	 	 	 
	Name of Investing Entity: 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature of Authorized Signatory of Investing Entity:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	Name of Authorized Signatory: 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Title of Authorized Signatory: 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]