EXHIBIT 10.11

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH
PORTIONS. ASTERISKS DENOTE OMISSIONS.

EXCLUSIVE LICENSE AGREEMENT

This Agreement is made effective the 22nd day of December 2006 (the “Effective
Date”), by and between Nuada, LLC, a North Carolina limited liability company
having an address at 406 Blackwell Street, Suite 200, Durham, NC 27701
(“Nuada”), and DARA BioSciences, Inc., a Delaware corporation having an address
at 4505 Falls of Neuse Road, Suite 125, Raleigh, NC 27609 (“DARA”). Nuada and
DARA may be referred to herein individually as a “Party” or together, as the
“Parties”.

In consideration of the mutual covenants and agreements set forth below, the
parties covenant and agree as follows.

1. Definitions.

For the purpose of this Agreement, the following definitions shall apply.

“Affiliate” means any Person that, directly or indirectly, controls, is
controlled by or is under common control with a Party for so long as such
control exists. For purposes of this definition, the term “control” means the
decision-making authority as to such Person, through ownership of equity,
membership interests or contract. Such control will be presumed to exist where a
Person owns more than fifty percent (50%) of the equity entitled to vote
regarding composition of the board of directors or other body entitled to direct
the affairs of the entity.

“API” means therapeutically active pharmaceutical ingredient.

“Combination Product” means any Product that is a pharmaceutical preparation for
human use incorporating two or more APIs, at least one of which is not a
Licensed API.

“Control” means, with respect to any Licensed Patent or Licensed Know-How,
possession of the right, whether directly or indirectly, and whether by
ownership, license or otherwise, to assign, or grant a license, sublicense or
other right to or under, such Licensed Patent or Licensed Know-How as provided
for herein without violating the terms of any agreement or other arrangement
with any Third Party.

“Exploitation” means to make, have made, import, use, sell, offer for sale, or
otherwise dispose of, including any and all discovery, research, development,
registration, modification, enhancement, improvement, manufacture, storage,
formulation, exportation, transportation, distribution, promotion and marketing
activities related thereto.

“First Commercial Sale” means the first shipment of commercial quantities of any
Product sold to a Third Party by a Party, its Affiliate or Sublicensee in any
country after receipt of Marketing Authorization Approval for such Product in
such country. Sales for test marketing, sampling and promotional uses, clinical
trial or research purposes, compassionate uses, or to an Affiliate or
Sublicensee for resale will not be considered to constitute a First Commercial
Sale.

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“Governmental Authority” means any court, tribunal, arbitrator, agency,
legislative body, commission, official or other instrumentality of (i) any
government of any country, (ii) a federal, state, provincial, county, city or
other political subdivision thereof, or (iii) any supranational body, including
but not limited to, the United States Food and Drug Administration and the
European Agency for the Evaluation of Medicinal Products.

“Laws” means all laws, statutes, rules, regulations (including but not limited
to, current Good Manufacturing Practice regulations as specified in 21 C.F.R. §§
210 and 211; Investigational New Drug Application regulations at 21 C.F.R, §
312; NDA regulations at 21 C.F.R. § 314; relevant provisions of the Federal
Food, Drug and Cosmetic Act, and other laws and regulations enforced by the
FDA), ordinances and other pronouncements having the binding effect of law of
any Governmental Authority.

“Licensed API” means an API which is the subject of Valid Claims in the Licensed
Patents.

“Licensed Know-How” means all inventions, discoveries, improvements,
information, formulations, methods, processes, materials, data, drawings,
sketches, designs, testing and test results, records and Regulatory
Documentation relating to the Licensed Patents.

“Licensed Patents” means those patents and patent applications listed on Exhibit
A attached hereto, including United States provisional applications and foreign
priority applications and any continuations, continuations-in-part, divisionals,
registrations, confirmations, revalidations, reissues, Patent Cooperation Treaty
(PCT) applications, utility models, design patents, petty patents as well as all
related extensions, restorations of terms and/or reissues and foreign
counterparts of the foregoing (including extensions granted under the US Drug
Price Competition and Patent Term Restoration Act 1984 and the EC Supplementary
Protection Certificate Regulation (Council Regulation (EEC) No. 1768/92), any
legislation, amending, replacing or implementing the foregoing, and any similar
or equivalent extension under any applicable Law), and all other intellectual
property related to the application or patent including supplementary protection
certificates or any other such right; in each case, to the extent the same has
not been held, by a court or Governmental Authority of competent jurisdiction,
to be invalid or unenforceable in a decision from which no appeal can be taken.

“Marketing Authorization Approval” means all approvals, licenses, registrations
or authorizations required by or from a Governmental Authority for sale and
marketing of a product in its jurisdiction, including any applicable pricing,
final labeling and reimbursement approvals of such Governmental Authority.

“Net Sales” means the total gross amounts invoiced for sales of a Product by
DARA or any of its Affiliates or Sublicensees less, to the extent included in
the gross invoice amount, the following: (a) reasonable and customary trade,
quantity, or cash discounts, rebates, retroactive price reductions, credits, or
other allowances actually allowed or granted from the billed amount and taken;
(b) tariffs, duties, and sales, customs, excise, use, value added, consumption,
or similar taxes (provided that, to the extent any of the foregoing paid with
respect to the sale of a Product are recovered by DARA, such amounts shall be
included in Net Sales during the calendar quarter in which they are recovered);
(c) allowances, rebates, credits and refunds for returned, damaged, recalled, or
defective products; and (d) shipping, freight, and insurance costs.

 

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A “sale” will include any transfer or other disposition for consideration, and
Net Sales will include the fair market value of all consideration received by
DARA, its Affiliates or Sublicensees in respect of any sale of a Product,
whether such consideration is in cash payment, in kind, set off or in any other
form, subject to the deductions in (a) through (d) above; provided, however,
that sales of Products for clinical trials, test marketing, promotional
purposes, sampling purposes, or research purposes, or compassionate uses shall
not constitute Net Sales for purposes of this Agreement; provided further,
however, that, notwithstanding the foregoing, any such sales for clinical trials
made following Market Authorization Approval for a Product in a manner and at a
price substantially equivalent to those of such Product when sold for purely
commercial purposes (e.g. sale at full price for use in Phase IV clinical
studies) shall not be excluded from Net Sales. Amounts received by DARA or its
Affiliates or Sublicensees for the sale of Products among DARA and its
Affiliates and Sublicensees for resale shall not be included in the computation
of Net Sales hereunder.

“Person” means any natural person, corporation, general partnership, limited
partnership, limited liability company, joint venture, proprietorship or other
de jure entity organized under the Laws of any jurisdiction.

“Phase I Clinical Trial(s)” means, with respect to the United States, the first
phase of human clinical trials, typically including clinical trials conducted in
relatively small numbers of healthy volunteers or patients with the condition to
obtain information on, typically, a Product’s safety, tolerability,
pharmacological activity, pharmacokinetics, drug metabolism and mechanism of
action, as more fully defined in 21 C.F.R. § 312.21(a), as may be amended, and,
with respect to any other country or jurisdiction, the equivalent of such a
clinical trial in such other country or jurisdiction.

“Phase II Clinical Trial(s)” means, with respect to the United States,
well-controlled clinical trials in human subjects, including clinical trials
conducted in patients with the condition, and typically designed to evaluate
clinical activity (including but not limited to, pertinent pharmacodynamic
effects or biomarker responses) and safety for a Product for one or more
indications, as well as to obtain an indication of the dosage regimen required,
as more fully defined in 21 C.F.R. § 312.21(b), as may be amended, and, with
respect to any other country or jurisdiction, the equivalent of such a clinical
trial in such other country or jurisdiction.

“Phase III Clinical Trial(s)” means, with respect to the United States,
large-scale, pivotal, clinical trials conducted in a sufficient number of human
patients whose primary objective is typically to obtain a definitive evaluation
of the therapeutic efficacy and safety of a Product in patients for the
particular indication in question that is needed to evaluate the overall
risk-benefit profile of such Product and to provide an adequate basis for
obtaining requisite regulatory approval(s) and product labeling, as more fully
defined in 21 C.F.R. § 312.21(c), as may be amended, and, with respect to any
other country or jurisdiction, the equivalent of such a clinical trial in such
other country or jurisdiction.

 

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“Product” means a product, the manufacture, use, sale, offer for sale, or import
of which would, but for the licenses granted hereunder, infringe a Valid Claim
of a Licensed Patent or that incorporates Licensed Know-How.

“Regulatory Authority” shall mean any applicable Government Authorities
regulating or otherwise exercising authority with respect to the Exploitation of
a Product.

“Sublicensee” shall mean any sublicensee of DARA or an Affiliate thereof with
respect to any of the rights granted under this Agreement.

“Third Party” means a Person who is not a Party or an Affiliate of a Party.

“Term” means the period from the Effective Date until termination in accordance
with Section 7 of this Agreement or, if later, the later of (i) expiration or
termination of the last Valid Claim of a patent right within the Licensed
Patents or (ii) the twentieth (20th) anniversary of this Agreement.

“Valid Claim” means any claim pending in a patent application or in an unexpired
patent that has not been held unenforceable, unpatentable or invalid by a
decision of a court or other Governmental Authority of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and that has not
been admitted to be invalid or unenforceable through reissue or disclaimer.

2. Grant.

2.1 License. Subject to the terms of this Agreement, effective as of the
Effective Date, Nuada grants to DARA a worldwide exclusive license, with rights
of sublicense, under the Licensed Patents to Exploit Products and a worldwide
nonexclusive license, with rights of sublicense under the Licensed Know-How to
Exploit Products.

2.2 Sublicenses. DARA may grant sublicenses to Third Parties and its Affiliates
with respect to the rights licensed hereunder without Nuada’s prior written
consent, provided that such sublicenses are consistent with the relevant terms
of this Agreement.

3. Diligence.

3.1 Within 180 days of the Effective Date, DARA shall provide to Nuada a copy of
DARA’s initial plan for the Exploitation of Products, which is subject to change
or update at any time by DARA in its sole discretion.

3.2 DARA shall, during the Term, use commercially reasonable efforts to
diligently pursue the Exploitation of at least one Product under the licenses
granted hereunder. The activities of DARA’s Affiliates and their Sublicensees
shall be deemed the activities of DARA for purposes of satisfying this
Section 3.2.

3.3 DARA shall, during the Term, submit annual progress reports to Nuada for
each year within 90 days after the end of such year. The progress reports will
discuss in reasonable

 

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detail the progress and results, as well as ongoing plans, with respect to the
Exploitation of the Products. Nuada shall also have the right to meet with
DARA’s senior business, scientific and technical personnel to discuss such
information at a mutually acceptable time and place.

4. Consideration. In consideration for the license of the Licensed Patents and
the Licensed Know-How hereunder, DARA agrees to pay Nuada the following amounts.

4.1 License Fee. DARA shall pay Nuada [***] on the Effective Date.

4.2 Milestone Fees. DARA shall pay the amounts detailed below within 120 days of
the achievement of the corresponding milestones.

 

Milestone

   Milestone Fee  

The dosing of the first patient in the first Phase I Clinical Trial conducted by
or on behalf of DARA or its Affiliates or Sublicensees with respect to a
Product.

   [ ***]

The receipt of final results of the first Phase II Clinical Trial conducted by
or on behalf of DARA or its Affiliates or Sublicensees with respect to a
Product, which results would permit the commencement of a Phase III Clinical
Trial.

   [ ***]

The receipt of final results of the first Phase III Clinical Trial conducted by
or on behalf of DARA or its Affiliates or Sublicensees with respect to a
Product, which results would permit the submission of a new drug application to
the Federal Drug Administration.

   [ ***]

Marketing Authorization Approval in the first Major Market (defined below) for
the sale of a Product.

   [ ***]

Marketing Authorization Approval in the second Major Market for the sale of a
Product.

   [ ***]

“Major Market” shall mean any of the United States, Japan or any country that is
a member of the European Union.

Each milestone payment above shall only be made once under this Agreement upon
the initial accomplishment of the relevant milestone by the first Product to
achieve it, regardless of the number of Products or indications with respect
thereto satisfying such milestone.

4.3 Running Royalties.

4.3.1 DARA shall pay Nuada, within 45 days following the end of each calendar
quarter, (i) [***] of Net Sales of all Products in countries in

 

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which there is a Valid Claim of a Patent claiming the use, sale, or manufacture
of Products, until the aggregate of such Net Sales in all countries equals
[***], after which the royalty rate on any subsequent Net Sales in excess of
[***] in the same calendar year will increase to [***], and (ii) [***] of Net
Sales of all Products in countries in which there is not a Valid Claim of a
Patent claiming the use, sale, or manufacture of such Products.

4.3.2 Notwithstanding anything to the contrary in this Agreement, all royalties
payable under this Section 4.3 shall be paid on a country-by-country basis from
the date of First Commercial Sale of a Product in a particular country.

4.4 Duration of Royalty Payments. All royalty obligations under this Agreement
with respect to a particular Product shall expire at the end of the Term. Upon
the expiration of all royalty obligations under this Agreement, the licenses
granted to DARA by Nuada under this Agreement will become non-exclusive,
perpetual, irrevocable, fully-paid, and royalty-free.

4.5 Bundling. In the event that a Product is included as a “bundle” of products
or services, DARA may discount Net Sales of such Product for purposes of
calculating royalties due under this Agreement by no more than the average
percentage discount of all products subject to reimbursement by managed health
care organizations, health insurers, and government agencies in a manner similar
to that of the Product (“Comparable Products”) in a particular “bundle,”
calculated as [1-(A/B)] x 100, where “A” equals the total discounted price of
the portion of a particular “bundle” consisting of such products, and “B” equals
the sum of the undiscounted bona fide list prices of each unit of every such
product in such “bundle”. DARA will provide to Nuada, to the extent reasonably
available or ascertainable, documentation establishing such average discount
with respect to each “bundle”. If DARA cannot so establish the average discount
of a “bundle,” Net Sales for the “bundled” Product will be based on (i) the
median selling price of the Product alone during the applicable calendar
quarter, if the Product is sold in a non-“bundled” form during such calendar
quarter, or, if such Product is not sold in a non-“bundled” form during such
calendar quarter, (ii) the undiscounted list price of the Product in the
“bundle”. If a Product in a “bundle” is not sold separately, and/or no bona fide
list price exists for such Product or the other Comparable Products included in
the “bundle,” then the Parties will negotiate in good faith, based on a
commercially reasonable determination of the relative values and/or imputed
prices of the “bundled” product’s constituent products and Product, and imputed
discounts provided with respect thereto, an alternative determination of Net
Sales with respect to the Product included in such “bundled” product consistent
with the intent of this Section 4.5.

4.6 Combination Products. In the event a Product is sold which is a Combination
Product, for purposes of determining payments due under Section 4.3, Net Sales
of Combination Products shall be calculated by multiplying the Net Sales of the
Combination Product by the fraction A/(A+B), in which A is the Gross Selling
Price (as defined below) of the Product when such Product is sold in substantial
quantities containing a Licensed API as the sole API during the applicable
accounting period in which the Net Sales of the Product were calculated, and B
is the Gross Selling Price of products incorporating solely the other APIs
contained in the Combination Product sold separately in substantial quantities
during the applicable accounting

 

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period. In the event that no separate sale of either the Product containing a
Licensed API as the sole API or products incorporating solely the other APIs of
the Combination Product are made during the accounting period in which the Net
Sales were calculated, or if the Gross Selling Price for a product solely
incorporating a particular API cannot be determined for the applicable
accounting period, Net Sales allocable to the Product and Combination Product
shall be determined by mutual agreement reached in good faith by the Parties
prior to the end of the accounting period in question based on a reasonably
equitable method of determining same that takes into account variations in
potency, the relative contribution of each API in the Combination Product, and
relative value to the end user of each API. For purposes of this Section, “Gross
Selling Price” shall mean the gross price at which a product incorporating such
API as the sole API is sold to a Third Party, before discounts, deductions,
credits, taxes or allowances.

4.7 Third Party Royalties. In the event that:

(a) a Product is deemed by a final, unappealable decision of a court of
competent jurisdiction to infringe a claim of a patent(s) owned or controlled by
a Third Party in any given country and such infringement is directly related to
the manufacture, use, practice, or sale of the Licensed Patents, and DARA, an
Affiliate thereof, or any Sublicensee licenses such patent(s) in settlement of
such claims (“Infringement License”), or

(b) DARA, an Affiliate thereof, or any Sublicensee determines, in its reasonable
discretion, including (1) consultation with its patent counsel and (2) the
provision to Nuada of a reasonable opportunity to discuss such determination,
that it is commercially, reasonably necessary to obtain a license to practice
any Third Party’s rights in any given country in order to avoid, with respect to
the Exploitation of a Product, (i) infringement or misappropriation of such
Third Party’s rights or (ii) infringement- or misappropriation-related
litigation with respect to such Third Party rights, provided that, in either
case, such possible infringement or misappropriation is directly related to the
manufacture, use, practice, or sale of the Licensed Patents (such license, a
“Necessary License”), and, provided further, that DARA or its Affiliate or any
Sublicensee provides Nuada a reasonable opportunity to discuss and evaluate the
necessity of such license,

then DARA may deduct up to one hundred percent (100%) of any fees, milestones or
royalties paid by DARA, an Affiliate thereof, or any Sublicensee to Third
Parties for Infringement Licenses and Necessary Licenses (or such amounts paid
by DARA, an Affiliate thereof, or any Sublicensee in settlement of any related
infringement action) from the amounts otherwise due but not yet paid to Nuada
pursuant to Sections 4.2 and 4.3 hereof; provided, however, that,
notwithstanding the foregoing, (i) the total amount due to Nuada under this
Agreement with respect to any particular calendar quarter shall not be reduced
by more than fifty percent (50%) as a result of any adjustments under this
Section 4.7 and (ii) any amounts not deducted in a calendar quarter as a result
of the application of (a) and/or (b) above shall be carried forward for
deduction in the subsequent calendar quarter(s), subject to such fifty percent
(50%) limitation in each case.

4.8 Compulsory Licenses. Should a compulsory license be granted to a Third Party
under the applicable Laws of any country under the Licensed Patents, or with
respect to

 

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Products, DARA shall notify Nuada, including any material information concerning
such compulsory license, prior to the grant of such compulsory license and the
running royalty rate payable hereunder for sales of Products in such country
will be adjusted, if necessary, to match any lower royalty rate granted to such
Third Party for such country with respect to the sales of such Products,
provided that during such periods such Third Parties sell or offer for sale
under the compulsory license articles that compete with the Products then
marketed and sold by DARA, its Affiliates, or Sublicensees in that country.

4.9 Tax Withholding. In addition, in the event any of the payments made by DARA
pursuant to this Section 4 become subject to withholding taxes under the Laws of
any jurisdiction, such amounts payable to Nuada shall be reduced by the amount
of taxes deducted and withheld, and DARA shall pay the amounts of such taxes to
the proper Governmental Authority in a timely manner and promptly transmit to
Nuada an official tax certificate or other evidence of such tax obligations
together with proof of payment from the relevant Governmental Authority of all
amounts deducted and withheld sufficient to enable Nuada to claim such payment
of taxes. Any such withholding taxes required under applicable Law to be paid or
withheld shall be an expense of, and borne solely by, Nuada. DARA will provide
Nuada with reasonable assistance, as requested by Nuada, at Nuada’s expense, to
enable Nuada to recover such taxes as permitted by Law.

4.10 Net Sales Report. Within 45 days following the end of each calendar quarter
following the First Commercial Sale, DARA will submit to Nuada a written report
setting forth Net Sales (including the detailed computation thereof) on a
country-by-country basis and Product-by-Product basis during such calendar
quarter and calendar year-to-date, total royalty and milestone payments due to
Nuada, relevant sales and pricing data in support of royalties paid on Product
sold as a “bundle” and Combination Products, and relevant information as
necessary to support any reduction in royalties paid resulting from the
application of Section 4 hereof.

4.11 Payment Terms. All sums due to Nuada will be payable in United States
dollars. Except as otherwise set forth herein with respect to royalties and
milestones, all other payments due hereunder will be paid within thirty
(30) days following receipt of an invoice requesting such payment.

4.12 Financial Records: Audits. DARA will keep at its corporate headquarters,
accurate and complete records of milestones achieved and Net Sales reasonably
sufficient to determine the amounts due to Nuada under this Agreement. Such
records will be retained by DARA for at least the three (3) calendar years
following the end of the calendar year during which such Net Sales or milestones
were achieved. During normal business hours and with reasonable advance written
notice to DARA, such records will be made available for inspection, copying,
review and audit, at the request of Nuada, by an independent certified public
accountant appointed by Nuada and reasonably acceptable to DARA for the purpose
of verifying the accuracy of accounting reports and payments pursuant to this
Agreement. Such auditor will be required to enter into a confidentiality
agreement with DARA prior to performing the audit. The final report of the
auditor, including methodology and supporting documentation, will be transmitted
to both Parties. Such audits may not be performed by Nuada more than once per
calendar year, All costs and expenses incurred in performing any such audit will
be paid by

 

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Nuada unless the audit discloses at least a five percent (5%) shortfall in
payments made with respect to the audited time period(s), in which case DARA
will bear the costs and expenses of the audit. Nuada will be entitled to recover
any shortfall in payments as determined by such audit.

5. Certain Warranties.

5.1 Mutual Representations and Warranties. DARA and Nuada each represents and
warrants to the other, with respect to itself and not the other Party, as of the
Effective Date that:

(a) Such Party (i) is a company duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization; (ii) has the
requisite power and authority and the legal right to conduct its business as now
conducted and hereafter contemplated to be conducted; and (iii) has obtained all
necessary licenses, permits, consents, or approvals from or by, and has made all
necessary notices to, all Governmental Authorities having jurisdiction over such
Party, required for entering into and performing this Agreement;

(b) The execution, delivery and performance of this Agreement by such Party
(i) are within the corporate or limited liability company power of such Party;
(ii) have been duly authorized by all necessary or proper corporate or limited
liability company action; (iii) do not conflict with any provision of the
organizational documents of such Party; (iv) do not, to such Party’s knowledge,
violate any Law or any order or decree of any court or Governmental Authority;
and (v) do not violate or conflict with any terms of any indenture, mortgage,
deed of trust, lease, loan, agreement or other instrument to which such Party is
a party, or by which such Party is bound; and

(c) This Agreement has been duly executed and delivered by such Party and
constitutes a legal, valid and binding obligation of such Party, enforceable
against such Party in accordance with its terms.

5.2 Nuada Representations and Warranties. Nuada hereby represents, warrants and
covenants that:

(a) Nuada Controls all of the rights, title and interest in and to the Licensed
Patents and Licensed Know-How as necessary to enter into and grant the licenses
contemplated by this Agreement;

(b) Nuada does not have any present knowledge from which it would reasonably
conclude that the Licensed Patents are invalid or that the Exploitation of any
technology claimed therein would infringe patent rights of Third Parties;

(c) Nuada has not omitted to furnish DARA with any material information
requested by DARA, or intentionally concealed from DARA, any material
information in its possession concerning the Licensed Patents, the Licensed
Know-How, or the subject matter of the transactions contemplated by this
Agreement which would be material to DARA’s decision to enter into this
Agreement and to undertake the commitments and obligations set forth herein;

 

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(d) Neither Nuada nor any of its Affiliates is a party to or otherwise bound by
any oral or written contract or agreement that will result in any Person
obtaining any interest in, or that would give to any Person any right to assert
any claim in or with respect to, any rights granted to DARA under this Agreement
or anticipated to be the subject of the licenses contemplated hereby;

(e) Nuada has not, and during the Term of the Agreement will not, grant any
right to any Third Party relating to the Licensed Patents or the Licensed
Know-How that conflicts with the rights or obligations of DARA hereunder;

(f) During the Term, Nuada shall not, without the prior written consent of DARA,
encumber the Licensed Patents or the Licensed Know-How with liens, mortgages,
security interests or another similar interest that would give the holder the
right to convert the interest into ownership, unless the encumbrance is
expressly subject to DARA’s rights under this Agreement and the license
agreements contemplated hereby;

(g) Nuada has furnished, or will furnish promptly after the Effective Date, to
DARA all tangible manifestations of the Licensed Know-How which Nuada Controls
as of the Effective Date;

(h) Nuada has taken reasonable measures, using its good faith business judgment,
to protect the confidentiality of the Licensed Know-How; and

(i) With respect to the Licensed Patents:

(1) No Licensed Patent is the subject of any pending interference, opposition,
cancellation or other protest proceeding;

(2) Nuada has no knowledge of any claim pending, threatened or previously made
in writing alleging infringement or misappropriation by Nuada of any patent,
trade secret or other intellectual property right of any Third Party; and

(3) Nuada is not aware of any Third Party activities which would constitute
misappropriation or infringement of any of the Licensed Patents.

5.3 Disclaimer of Warranty. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
SECTION 5, NEITHER PARTY MAKES AND EACH PARTY EXPRESSLY DISCLAIMS, WAIVES,
RELEASES AND RENOUNCES ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND ALL WARRANTIES ARISING FROM ANY COURSE OF DEALING OR PERFORMANCE OR USAGE OF
TRADE.

 

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6. Patents.

6.1 Prosecution and Maintenance of Patents. DARA shall, as between the Parties,
bear the cost of all future patent expenses associated with the preparation,
filing, prosecuting, issuance, and maintenance of patents and patent
applications included in the Licensed Patents following the Effective Date. The
Parties acknowledge and agree that the foregoing obligation shall include, but
not be limited to, the costs and expenses associated with the Licensed Patents
due in December for filings in Australia, Canada, India, Japan, the United
States and the European Union. Such filings, prosecution, and maintenance shall
be by counsel of DARA’s choosing, under the primary control and direction of
DARA, and shall be in the name of Nuada. DARA shall keep Nuada advised as to
such filing, prosecution, issuance, and maintenance by forwarding to Nuada
copies of all material official correspondence (including, but not limited to,
applications, office actions, responses, etc.) relating thereto. Nuada shall
have the right to comment and advise DARA as to the conduct of such filing,
prosecution, and maintenance, provided, however, that DARA shall have the right
to make the final decisions for all matters associated with such filing,
prosecution, and maintenance. In the event that DARA elects not to maintain or
prosecute any patent or patent application within the Licensed Patents, (i) DARA
shall give Nuada sixty (60) days prior written notice of such election and
(ii) Nuada will thereafter have the right, but not the obligation, upon written
notice to DARA during such sixty (60) day period, at Nuada’s sole expense, to
prosecute and/or maintain such patents or patent applications, in light of the
commercial interests of both parties, in the name of Nuada.

6.2 Indemnification.

6.2.1 Indemnification Claims. If (a) a claim is brought by a Third Party
alleging patent infringement by DARA, its Affiliates, or their Sublicensees with
respect to the development, manufacture, use, sale, offer for sale or
importation of Products, (b) a civil action is brought by a Third Party arising
out of or relating to the practice of the Licensed Patents, or (c) any Third
Party challenges the validity of any claims of any Licensed Patent, each Party
will give prompt written notice to the other Party of such claim (collectively,
an “Indemnification Claim”). DARA will, at its sole cost and expense, (i) defend
such Indemnification Claim, (ii) assume all costs, expenses, damages and other
obligations for payments incurred in connection with such Indemnification Claim,
and (iii) indemnify and hold harmless Nuada and its managers, members,
Affiliates, successors and assigns from and against any and all damages, losses,
liabilities and costs relating to or arising out of such Indemnification Claim.
DARA shall be free to enter into a settlement, consent judgment, or other
voluntary disposition of such Indemnification Claim, provided that any
settlement, consent judgment or other voluntary disposition of such
Indemnification shall (x) contain a full and unconditional release of Nuada and
its managers, members, Affiliates, successors and assigns, (y) not subject Nuada
to any liability or obligation and (z) not admit fault or wrongdoing on the part
of Nuada. Nuada agrees to cooperate with DARA, at DARA’s expense, in any
reasonable manner deemed by DARA to be necessary in defending any such
Indemnification Claim. DARA shall reimburse Nuada for any reasonable out of
pocket expenses incurred in providing such assistance. Any recovery or damages
received by DARA in any action or settlement under this Section 6.2.1 with
respect to the rights licensed under this Agreement shall be used first to
reimburse the Parties for unreimbursed reasonable, documented expenses incurred
in connection with such action, and the

 

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remainder shall be deemed Net Sales subject to royalties under Section 4.3.
Notwithstanding the foregoing, either Party, at its expense, shall have the
right to be represented by counsel of its choice in any such proceeding
controlled by the other Party.

6.2.2 Infringement of Patents. In the event that DARA or Nuada becomes aware of
actual or threatened infringement of any Licensed Patent during the Term, that
Party will promptly notify the other Party in writing, which notice shall
include any known material details concerning such infringement or
misappropriation. With respect to any alleged actual or threatened infringement
of the Licensed Patents, DARA shall have the first and primary right, but not
the obligation, to, in its sole discretion, to initiate, prosecute, and control
any action or legal proceedings, and/or enter into a settlement, including any
declaratory judgment action, on its behalf or in Nuada’s name, if necessary,
with respect to such alleged infringement or misappropriation. If, within twelve
(12) months of the notice above, DARA (i) shall have been unsuccessful in
persuading the alleged infringer or misappropriator to desist, (ii) shall not
have brought and shall not be diligently prosecuting an infringement or
misappropriation action, or (iii) has not entered into settlement discussions
with respect to such infringement or misappropriation, or if DARA notifies Nuada
that it has decided not to undertake any of the foregoing against any such
alleged infringer or misappropriator, then Nuada shall then have the right, but
not the obligation, to bring suit to enforce the Licensed Patents, or to seek
relief with respect to such misappropriation, at its own expense. In any such
litigation brought by DARA, DARA shall have the right to, if and as reasonably
necessary or useful in such action, use and sue in Nuada’s name, and Nuada shall
cooperate reasonably, as requested by DARA and at DARA’s expense (which expense
shall be reasonable and documented). The Party pursuing or controlling any
action against an alleged infringer or misappropriator pursuant to the foregoing
(the “Controlling Party”) shall be free to enter into a settlement, consent
judgment, or other voluntary disposition of any such action, provided, however,
that (i) the Controlling Party shall consult with the other Party (the
“Secondary Party”) prior to entering into any settlement thereof and (ii) any
settlement, consent judgment or other voluntary disposition of such actions
which (1) materially limits the scope, validity, or enforceability of any
Licensed Patent (if Nuada is the Secondary Party), (2) subjects the Secondary
Party to any non-indemnified liability or obligation, or (3) admits fault or
wrongdoing on the part of Secondary Party, must be approved in writing by
Secondary Party, such approval not to be unreasonably withheld. Secondary Party
shall provide the Controlling Party notice of its approval or denial of such
approval within ten (10) business days of any request for such approval by the
Controlling Party, provided that (i) in the event Secondary Party wishes to deny
such approval, such notice shall include a written description of Secondary
Party’s reasonable objections to the proposed settlement, consent judgment, or
other voluntary disposition and (ii) Secondary Party shall be deemed to have
approved such proposed settlement, consent judgment, or other voluntary
disposition in the event it fails to provide such notice within such ten
(10) business day period. Any recovery or damages received by the Controlling
Party with respect to the infringement or misappropriation of DARA’s rights
under the Licensed Patents shall be used first to reimburse the Parties for
unreimbursed reasonable, documented expenses incurred in connection with such
action, and the remainder shall be deemed Net Sales and subject to the payment
of royalties to Nuada under Section 4.3 above. Notwithstanding the foregoing,
the Secondary Party, at its expense, shall have the right to be represented by
counsel of its choice in any such proceeding.

 

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6.3 Assistance. For purposes of this Section 6, the Party not bringing suit or
defending any suit will, at the expense of the other Party, execute such legal
papers or take such actions necessary for the prosecution or defense of such
suit as may be reasonably requested by the Party bringing suit or defending any
suit.

7. Term and Termination.

7.1 Term. Unless otherwise mutually agreed to by the Parties or earlier
terminated as provided herein, this Agreement will commence on the Effective
Date and will end upon expiration of the Term. Except in the event of
termination under Section 7.2, the licenses granted by Nuada to DARA pursuant to
Section 2 will be considered fully-paid and will become perpetual, irrevocable,
and non-exclusive upon expiration of the Term.

7.2 Termination for Material Breach. Either Party may, without prejudice to any
other remedies available to it at law or in equity, terminate this Agreement in
the event that the other Party materially breaches in the performance of its
obligations under this Agreement; provided that, if such breach can be cured,
the breaching Party will have thirty (30) days after receipt of written notice
thereof from the non-breaching Party to cure such breach. Any such termination
will become effective at the end of such 30-day period unless the breaching
Party has cured any such breach prior to the expiration of such 30-day period.
Notwithstanding the foregoing, in the event of a breach by DARA of the
provisions of Section 3.2, such breach shall be considered to be a material
breach for purposes of this Section 7.2, and DARA’s right to cure any such
breach shall be limited only to its first breach of Section 3.2, and DARA shall
not have the right to cure any subsequent breach of the provisions of
Section 3.2.

7.3 Effects of Termination.

73.1 Effect of Termination for Material Breach.

(a) Material Breach by DARA. In the event this Agreement is terminated by Nuada
pursuant to Section 7.2 for material breach by DARA, all licenses granted by
Nuada to DARA or its Affiliates under this Agreement will terminate, subject to
Section 7.3.2, provided that, notwithstanding the foregoing, DARA and its
Affiliates shall have the privilege, subject to the payment of royalties as
required under Section 4, of (i) completing the manufacture of any Products in
the process of manufacture as of the effective date of such termination (the
“Termination Date”), (ii) selling such Products and all finished Products in
DARA’s or its Affiliates’ possession or under their control as of the
Termination Date for a period of one year following the Termination Date upon
commercially reasonable conditions, and (iii) completing performance of all
contracts entered into with Third Parties prior to the Termination Date for the
marketing, sale, or manufacture of Products for a period of one year following
the Termination Date.

(b) Material Breach by Nuada. In the event this Agreement is terminated by DARA
pursuant to Section 7.2 for material breach by Nuada all licenses granted by
Nuada to DARA or its Affiliates under this Agreement prior to termination will
survive, subject to DARA’s continued obligation to pay milestones and royalties
to Nuada hereunder.

 

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7.3.2 Sublicenses. If this Agreement is terminated by Nuada for DARA’s breach,
pursuant to Section 7.2, all sublicenses granted to Third Parties regarding the
intellectual property rights licensed to DARA by Nuada hereunder prior to such
termination shall survive and be automatically assigned to, and enforceable by,
Nuada upon such termination, subject to the payment of any future amounts due
thereunder to Nuada, in order to permit such Sublicensees’ continued quiet
enjoyment of their rights thereunder in accordance with the terms thereof;
provided, however, that such assignment shall not subject Nuada to any
obligations or liabilities in excess of those imposed by this Agreement.

7.4 Accrued Rights; Surviving Obligations. Except as provided elsewhere,
termination or expiration of this Agreement for any reason will be without
prejudice to any rights that will have accrued to the benefit of any Party prior
to such termination or expiration. Such termination or expiration will not
relieve any Party from obligations which are expressly or by implication
intended to survive termination or expiration of this Agreement, including but
not limited to, definitions, rights to payment, and Sections 6.2, 6.3, 7, 8, 9,
and 10 and will not affect or prejudice any provision of this Agreement which is
expressly or by implication provided to come into effect on, or continue in
effect after, such termination or expiration.

8. Confidential Information.

8.1 Definition. “Confidential Information” means confidential or proprietary
information, data or know-how, whether provided in written, oral, visual or
other form, provided by one Party (the “Disclosing Party”) to the other Party
(the “Receiving Party”) in connection with this Agreement, including but not
limited to, the terms of this Agreement and information relating to the
Disclosing Party’s existing or proposed research, development efforts, patent
applications, business or products. Confidential Information will not include
any such information that: (i) is already known to the Receiving Party (other
than under an obligation of confidentiality) at the time of disclosure (as
evidenced by written records of the Receiving Party); (ii) is or becomes
generally available to the public other than through any act or omission of the
Receiving Party; (iii) is disclosed to the Receiving Party without obligation of
confidentiality by a Third Party who had the legal right to disclose such
information; or (iv) is independently discovered or developed by or on behalf of
the Receiving Party without the use or benefit of the Confidential Information
of the Disclosing Party (as evidenced by written records of the Receiving
Party).

8.2 Confidentiality. The Receiving Party will keep in confidence all
Confidential Information of the Disclosing Party with the same degree of care it
employs to maintain the confidentiality of its own Confidential Information, but
no less than a reasonable degree of care. The Receiving Party will not use such
Confidential Information for any purpose other than in performance of or
exercise of its rights under this Agreement or disclose the same to any other
Person other than to such of its employees, agent, or subcontractors who have a
need to know such Confidential Information to implement the terms of or exercise
of its rights under this Agreement. A Receiving Party will advise any employee,
agent or subcontractor who receives Confidential Information of such
obligations, and the Receiving Party will ensure that all such agents, employees
and subcontractors comply with such obligations as if they had been a Party

 

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hereto. The Receiving Party will be liable for breach of this Section 8 by any
of its employees, agents or subcontractors. Notwithstanding the foregoing,
nothing in this Section 8 shall limit or preclude DARA’s use or disclosure of
Nuada’s Confidential Information in its reasonable efforts to Exploit the
Licensed Patents.

8.3 Permitted Disclosure and Use. The Receiving Party will have the right to
disclose Confidential Information if, in the reasonable opinion of the Receiving
Party’s legal counsel, such disclosure is required by Law or the rules of any
stock exchange, provided that, to the extent reasonably practicable, the
Receiving Party gives adequate prior notice of such disclosure to the Disclosing
Party to permit the Disclosing Party to intervene and to request protective
orders or other confidential treatment. The Receiving Party will cooperate
reasonably with any such efforts by the Disclosing Party.

8.4 Confidentiality of this Agreement. The terms of this Agreement will be
deemed Confidential Information of each Party. Either Party may disclose the
terms of this Agreement (i) if, in the opinion of its counsel, such disclosure
is required by Law, provided that such Party will seek appropriate
confidentiality of those portions of the Agreement for which confidential
treatment or a protective order is typically permitted by the relevant
Governmental Authority or (ii) as necessary in connection with any financing,
merger, strategic partnership, or other similar transaction, subject to the
execution of confidentiality agreement with the Third Party.

8.5 Return. Upon termination of this Agreement, the Receiving Party will return
or destroy all documents or other media containing Confidential Information of
the Disclosing Party.

8.6 Remedies. Money damages will not be an adequate remedy if this Section 8 is
breached and, therefore, either Party may, in addition to any other legal or
equitable remedies, seek an injunction or other equitable relief against such
breach or threatened breach without the necessity of posting any bond or surety.

8.7 Survival. This Section 8 will survive the expiration or termination of this
Agreement for a period of ten (10) years.

9. Indemnification; Limitation of Liability.

9.1 Indemnification by DARA. Subject to Sections 9.3 and 9.4, DARA will defend,
indemnify and hold harmless Nuada and its Affiliates and each of their officers,
directors, shareholders, employees, successors and assigns from and against all
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, losses, taxes, liens, diminutions in value, costs, expenses and
fees (including reasonable attorneys’ fees and expenses, and the costs of
investigation incurred in defending against or settling any such matter and any
amounts paid in settlement thereof) (collectively, “Losses”) arising out of
claims made by Third Parties, to the extent arising out of (i) DARA’s negligence
or willful misconduct in performing any of its obligations or exercising its
rights under this Agreement, (ii) breach by DARA of any of its representations,
warranties, covenants,

 

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or agreements under this Agreement or (iii) the Exploitation of Products by
DARA, its Affiliates, agents, subcontractors or Sublicensees, except to the
extent resulting from the negligence or willful misconduct, breach of this
Agreement, or failure to comply with applicable Laws by Nuada or its Affiliates,
sublicensees, officers, directors, employees, contractors, agents, other
representatives, successors, or assigns.

9.2 Indemnification by Nuada. Subject to Sections 9.3 and 9.4, Nuada will
defend, indemnify and hold harmless DARA and its Affiliates and each of their
officers, directors, shareholders, employees, successors and assigns from and
against all Losses arising out of claims made by Third Parties, to the extent
arising out of (i) Nuada’s negligence or willful misconduct in performing any of
its obligations or exercising its rights under this Agreement or (ii) breach by
Nuada of any of its representations, warranties, covenants or agreements under
this Agreement, except to the extent resulting from the negligence or willful
misconduct, breach of this Agreement, or failure to comply with applicable Laws
by DARA or its Affiliates, sublicensees, officers, directors, employees,
contractors, agents, other representatives, successors, or assigns.

9.3 Procedure for Indemnification. A Party which intends to seek indemnification
under this Section 9 (such Party hereinafter referred to as the “Indemnitee”)
for a Loss in respect to a Claim by a Third Party (“Third Party Claim”), will
promptly give written notice thereof to the Party from whom indemnification is
sought (such other Party hereinafter referred to as the “Indemnitor”) within a
reasonable period of time after the assertion of such Third Party Claim;
provided, however, that the failure to provide written notice of such Third
Party Claim within a reasonable period of time will not relieve Indemnitor of
any of its obligations hereunder, except to the extent that Indemnitor is
materially prejudiced by such failure. Indemnitor may assume the complete
control of the defense, compromise or settlement of any Third Party Claim
(provided that any settlement of any Third Party Claim that (i) subjects
Indemnitee to any non-indemnified liability or (ii) admits fault or wrongdoing
on the part of Indemnitee will require the prior written consent of such
Indemnitee, provided such consent will not be unreasonably withheld), including,
at its own expense, employment of legal counsel, and at any time thereafter
Indemnitor will be entitled to exercise, on behalf of Indemnitee, any rights
which may mitigate the extent or amount of such Third Party Claim; provided,
however, that if Indemnitor will have exercised its right to assume control of
such Third Party Claim, Indemnitee (i) may, in its sole discretion and at its
own expense, employ legal counsel to represent it (in addition to the legal
counsel employed by Indemnitor) in any such matter; (ii) will, at Indemnitor’s
own expense, make available to Indemnitor those employees, officers,
contractors, and directors of Indemnitee whose assistance, testimony or presence
is necessary or appropriate to assist Indemnitor in evaluating and in defending
any such Third Party Claim; provided, however, that any such access will be
conducted in such a manner as not to interfere unreasonably with the operations
of the businesses of Indemnitee; and (iii) will otherwise fully cooperate with
Indemnitor and its legal counsel in the investigation and defense of such Third
Party Claim.

9.4 Consequential Damages. EXCEPT WITH RESPECT TO BREACHES OF SECTION 8,
BREACHES OF THE LICENSES GRANTED HEREUNDER, OR CLAIMS FOR PATENT INFRINGEMENT,
IN NO EVENT WILL EITHER PARTY OR THEIR AFFILIATES BE LIABLE FOR SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE, TREBLE

 

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OR CONSEQUENTIAL DAMAGES INCLUDING LOST PROFITS, WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER LEGAL THEORY; PROVIDED, HOWEVER, THAT, NOTWITHSTANDING THE
FOREGOING, THIS LIMITATION WILL NOT LIMIT THE INDEMNIFICATION OBLIGATION OF SUCH
PARTY IN RESPECT OF THIRD PARTY LOSSES UNDER THE PROVISIONS OF THIS SECTION 9.

9.5 Setoffs. If DARA shall be entitled to be indemnified for Losses in
accordance with this Section 9 or, as determined by a court of competent
jurisdiction, suffers damages as a result of a breach of this Agreement by
Nuada, the parties hereby agree that DARA shall set off the amount of such
Losses or damages (subject to the limitations of Section 9.4) from existing or
future amounts, if any, owed to Nuada pursuant to this Agreement, and nothing in
this Agreement shall be construed to require or permit DARA to seek
indemnification from Nuada or other legal relief prior to offsetting any such
Losses or damages from amounts owed to Nuada hereunder.

10. Miscellaneous.

10.1 Public Announcements. Except as may be expressly permitted under this
Section 10.1 or required by applicable Laws or the rules of any stock exchange,
neither Party will make any public announcement of any information regarding
this Agreement without the prior written approval of the other Party, which
approval will not be unreasonably withheld, conditioned, or delayed, provided
that, notwithstanding the foregoing, DARA shall have the right to identify Nuada
as the licensor and to disclose the terms of this Agreement to actual or
prospective investors, strategic partners, investment bankers, acquirors,
acquisition targets, and regulatory authorities, in connection with its
financing, regulatory, licensing, development, stockholder relations, and other
business activities or that it may deem to be required in any prospectus,
offering memorandum, or other document or filing prepared in connection with its
compliance obligations under applicable securities Law or other applicable Law
or regulation.

10.2 Relationship of the Parties. Neither Party will have any responsibility for
the hiring, termination or compensation of the other Party’s employees or for
any employee benefits of such employee. No employee or representative of a Party
will have any authority to bind or obligate the other Party to this Agreement in
any manner whatsoever, or to create or impose any contractual or other liability
on the other Party without such Party’s approval. For all purposes, DARA’s legal
relationship under this Agreement to Nuada will be that of independent
contractor. This Agreement is not a partnership agreement and nothing in this
Agreement will be construed to establish a relationship of partners or joint
venturers between the Parties.

10.3 Expenses. The fees and expenses of both DARA and Nuada incurred in
connection with the negotiation, preparation and execution of this Agreement
shall be paid as follows: (a) DARA shall pay the first $8,000 of such fees and
expenses, whether incurred by DARA or Nuada, (b) Nuada shall pay the next
$4,000, whether incurred by DARA or Nuada, and (c) any such amounts in excess of
$12,000 shall be paid one-half by DARA and one-half by Nuada.

10.4 Force Majeure. The occurrence of an event which materially interferes with
the ability of a Party to perform its obligations or duties hereunder which is
not within the reasonable

 

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control of the Party affected or any of its Affiliates, and which could not with
the exercise of due diligence have been avoided (“Force Majeure Event”),
including but not limited to, fire, accident, strike, riot, civil commotion, act
of God, inability to obtain raw materials, delay or errors by shipping companies
or change in law, will not excuse such Party from the performance of its
obligations or duties under this Agreement, but will merely suspend such
performance during the Force Majeure Event. The Party subject to a Force Majeure
Event will promptly notify the other Party of the occurrence and particulars of
such Force Majeure Event and will provide the other Party, from time to time,
with its estimate of the duration of such Force Majeure Event and with notice of
the termination thereof. The Party so affected will use commercially reasonable
efforts to avoid or remove such causes of nonperformance as soon as is
reasonably practicable. Upon termination of the Force Majeure Event, the
performance of any suspended obligation or duty will promptly recommence. The
Party subject to the Force Majeure Event will not be liable to the other Party
for any direct, indirect, consequential, incidental, special, punitive,
exemplary or other damages arising out of or relating to the suspension or
termination of any of its obligations or duties under this Agreement by reason
of the occurrence of a Force Majeure Event, provided such Party complies in all
material respects with its obligations under this Section 10.4.

10.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of North Carolina, excluding
that body of law known as choice of law, and shall be binding upon the parties
hereto in the United States and worldwide. All disputes with respect to this
Agreement shall be brought and heard either in the North Carolina state courts
located in Wake County, North Carolina, or the federal district court for the
Eastern District of North Carolina located in Raleigh, North Carolina. The
parties to this Agreement each consent to the in personam jurisdiction and venue
of such courts. The parties agree that service of process upon them in any such
action may be made if delivered in person, by courier service, by telegram, by
telefacsimile or by first class mail, and shall be deemed effectively given upon
receipt.

10.6 Assignment. This Agreement may not be assigned by either Party without the
prior written consent of the other Party; provided that either Party may assign
this Agreement without such consent to any of its Affiliates or to a successor
to all or substantially all of the assets or business of such Party to which
this Agreement relates, whether by merger, sale of stock, sale of assets or
other similar transaction. Any assignment in violation of this provision is void
and without effect. This Agreement will be binding upon and inure to the benefit
of the Parties hereto, their permitted successors, legal representatives and
assigns.

10.7 Notices. All demands, notices, consents, approvals, reports, requests and
other communications hereunder must be in writing, in English, and will be
deemed to have been duly given only if delivered personally, by facsimile with
confirmation of receipt, by mail (first class, postage prepaid), or by overnight
delivery using a globally-recognized carrier, to the Parties at the following
addresses:

 

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Nuada:

Nuada, LLC

c/o Intersouth Partners

406 Blackwell Street, Suite 200

Durham, NC 27701

Attn: Bob Bell

Facsimile: (919) 493-6649

DARA:

DARA BioSciences, Inc.

4505 Falls of Neuse Road, Suite 125

Raleigh, NC 27609

Attn: Richard A. Franco, Sr.

Facsimile: (919) 861-0239

or to such other address as the addressee will have last furnished in writing in
accord with this provision. Any such communication shall be deemed given
(a) when delivered, if personally delivered or sent by facsimile on a business
day, (b) on the second business day after dispatch, if sent by an
internationally recognized overnight courier, and (c) upon receipt, if sent in
any other manner.

10.8 Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect, that provision will be limited or
eliminated to the minimum extent necessary so that this Agreement will otherwise
remain in full force and effect and enforceable.

10.9 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

10.10 Waiver. No waiver of any term or condition of this Agreement will be
effective unless set forth in a written instrument that explicitly refers to
this Agreement that is duly executed by or on behalf of the waiving Party. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, will be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any prior, concurrent or future
occasion. Except as expressly set forth in this Agreement, all rights and
remedies available to a Party, whether under this Agreement or afforded by Law
or otherwise, will be cumulative and not in the alternative to any other rights
or remedies that may be available to such Party.

10.11 Entire Agreement. This Agreement (including the appendices and schedules
hereto) constitutes the entire agreement between the Parties hereto with respect
to the subject matter hereof and supersedes all previous agreements and
understandings between the Parties, whether written or oral, including but not
limited, to all proposals, negotiations, conversations, letters of intent,
memoranda of understanding or discussions, between Parties relating to the
subject matter of this Agreement and all past dealing or industry custom.

 

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10.12 Modification. This Agreement may be altered, amended or changed only by a
writing making specific reference to this Agreement and the clause to be
modified, which amendment is signed by duly authorized representatives of DARA
and Nuada.

10.13 Counterparts. This Agreement may be executed in any two counterparts, each
of which, when executed, will be deemed to be an original and both of which
together will constitute one and the same document.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Exclusive License
Agreement on the dates indicated below.

 

NUADA, LLC     DARA BIOSCIENCES, INC. By:  

/s/ Robert M. Bell

    By:  

/s/ Richard A. Franco

Name:   Robert Bell     Name:   RICHARD A. FRANCO Title:   Manager     Title:  
PRESIDENT

 

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EXHIBIT A

LICENSED PATENTS

 

Title:

  

Status

  

Serial Number

  

Filing Date

  

Inventors

Peptidase Inhibitors

   Pending    PCT/US2005/025837    July 21, 2005    Royalty, Susan