Exhibit 10.47

LEASE AGREEMENT

THIS INDENTURE OF LEASE (hereinafter referred to as the “Lease”), made and
entered into this 1st day of June, 2006, is by and between THE BOARD OF TRUSTEES
OF THE UNIVERSITY OF ALABAMA, a body corporate for its division the University
of Alabama at Birmingham (hereinafter referred to as “LANDLORD” ) and DURECT
CORPORATION (hereafter referred to as “TENANT”).

WHEREAS, the LANDLORD is participating in a program of The Office for the
Advancement of Developing Industries sponsored by the University of Alabama at
Birmingham whereby financial assistance is provided to developing industries in
advanced technology; and

WHEREAS, as part of the Program, LANDLORD is leasing commercial rental property
and is providing administrative services and management support to such
developing industries; and

WHEREAS, developing industries participating in the Program will become
candidates for “graduation” from the Program upon their achievement of any of
one of the benchmarks for graduation set forth herein; and

WHEREAS, as a participant in the above described program, the LANDLORD desires
to lease to TENANT certain space in a 68,495 square foot facility located at
2800 Milan Court, Birmingham, Alabama and known as the “OADI Technology Center”;
and

WHEREAS, the TENANT desires to lease certain space in the above described
building on the terms and conditions set forth herein;

NOW THEREFORE, for the consideration hereinafter set forth, the parties do
hereby agree as follows:

PREMISES

1. The LANDLORD hereby leases unto TENANT the following described premises
(hereinafter called “Premises”), identified as Suites 259 & 274 located on the
2nd floor of the OADI Technology Center (hereinafter called “Building”).
Attached hereto as a part hereof is a building floor plan of the Premises marked
“Exhibit A,” which has been approved by LANDLORD and TENANT. LANDLORD agrees to
provide for TENANT the space, arrangement, and facilities shown and specified in
“Exhibit A,” but LANDLORD reserves the right at any time to make alterations or
additions to, and to build additional stories on the Building and to build
adjoining the same.

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RENT

2. TENANT shall pay monthly rent to LANDLORD in accordance with the following
rent schedule:

 

LEASE YEAR

   SUITE    

TOTAL

RENT

MONTH/ANNUAL

2nd    259 ***   $ 1,500.00 / $ 18,000.00    274 ***   $ 1,700.00 / $ 20,400.00
         TOTAL      $ 3,200.00 / $ 38,400.00

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* = Office Space

** = Laboratory Space

*** = Laboratory Space with ventilation hood

(A) Rent due hereunder shall be payable in advance on or before the fifth
(5th) day of each month during the term hereof to the following address:

The OADI Technology Center

UAB Research Park at Oxmoor

2800 Milan Court # 100

Birmingham, Alabama 35211

or at such other place as LANDLORD may in writing designate from time to time,
without any prior demand therefore, and without any deduction or setoff
whatsoever. All rent checks shall be made payable to The OADI Technology Center.
TENANT agrees that a service and bookkeeping charge equal to eight percent
(8%) of the monthly rental payment shall become due and payable each and every
month that the rent has not been received in the office of the LANDLORD by the
TENTH (10th) day of the month.

(B) If the term commences other than on the first day of a calendar month, then
TENANT shall pay pro-rata rent, in advance, for the period from such
commencement date to the first day of the next following calendar month. Rent
for such period shall be determined by multiplying the monthly rent under the
preceding paragraph by a fraction, the numerator of which shall be the number of
days in such period, the denominator of which shall be the number of days in
such calendar month. TENANT shall also pay the rent as otherwise provided in
this Lease.

 

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(C) If this Lease is executed before the Premises herein become ready for
occupancy and LANDLORD cannot acquire and/or deliver possession of the herein
Leased Premises by the time the Term of this Lease is fixed herein to begin,
TENANT waives the payment of any rental until LANDLORD delivers possession to
TENANT.

(D) In addition to the above monthly rent, TENANT shall pay to LANDLORD the sums
set forth in the TENANT MANUAL for any receptionist, telephone, photocopy, mail,
etc., services, if any, used by TENANT in the operation of its business at the
Premises. With the exception of the minimum plan for receptionist charges, no
such charge shall be due unless TENANT elects to use the services offered by
LANDLORD as listed in the TENANT MANUAL. Failure by TENANT to pay for any
services used by TENANT shall constitute an Event of Default hereunder, and
shall entitle LANDLORD to exercise all rights and remedies provided to it
hereunder.

TERM

3. The term of this Lease shall be for a period commencing on June 1, 2006 (the
“Commencement Date”), and ending on February 28, 2007 (the “Termination Date”);

Provided that (i) TENANT is not then in default under this Lease, and
(ii) TENANT may terminate this Lease at its discretion upon ninety (90) days
prior written notice to the LANDLORD.

GRADUATION BENCHMARKS

4. [INTENTIONALLY OMITTED]

TENANT PROGRESS MEETINGS

5. As a public company, TENANT files quarterly (Form 10Q) and annual (Form 10-K)
filings with the Security and Exchange Commission. On a quarterly basis, TENANT
will send to LANDLORD by e-mail TENANT’s press release summarizing TENANT’s
financial results of operations for each calendar quarter and fiscal year
promptly after such results are publicly available. If after review of these,
LANDLORD has additional questions or concerns, LANDLORD shall notify TENANT and
the parties shall discuss in good faith LANDLORD’s questions and concerns.

 

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SERVICES

6.(A) Between the hours of 7:00 A.M. and 6:00 P.M., Monday through Sunday
(exclusive of national holidays observed by the University of Alabama at
Birmingham, “Exhibit B”), LANDLORD agrees to furnish to the Premises hot and
cold water at points of supply provided for general use, heated and refrigerated
air conditioning in season at reasonable temperatures and in reasonable amounts,
and electrical, and elevator services in the manner and to the extent deemed
standard by LANDLORD. LANDLORD reserves the right to furnish all such facilities
and services, at its option, on such holidays as LANDLORD chooses. LANDLORD
agrees to provide janitorial service Monday through Friday (exclusive of legal
holidays).

(B) If TENANT desires to have installed in the Premises any special facilities
or equipment requiring other than normal electric service for ordinary lighting
and minor electric appliances such as typewriters, small business and accounting
machines, and other than the normal and regular service mentioned in Paragraph
(A) LANDLORD will, if reasonably possible, furnish such additional special
facilities or equipment provided that TENANT will pay LANDLORD in advance for
the cost of providing and installing any additional wiring, equipment, meters
and safety devices, and the cost of any repairs, alternations, additions to, and
refinishing of the Premises or Building so necessitated, and provided TENANT
shall pay all additional utility charges incurred by use of said special
facilities or equipment.

(C) LANDLORD shall not be liable to TENANT in damages or otherwise for failure
to perform any of the covenants on its part under this paragraph 6, nor shall
temporary stoppages, temporary failures or interruptions of any of the services
to be supplied by LANDLORD unto TENANT under this paragraph be construed as an
eviction of TENANT, work an abatement of rent, or relieve TENANT from any
covenant or agreement, but LANDLORD agrees diligently to restore any services
obliged to be provided by it hereunder when temporary failures, stoppages, or
interruptions occur.

SECURITY

7. LANDLORD agrees to provide such security as LANDLORD deems necessary or
desirable, but LANDLORD shall in no event be liable for any theft or other loss
of property occurring in or about the Premises or Building.

ADDITIONAL EXPENDITURES

8. TENANT agrees to pay to LANDLORD as additional rent all sums provided for in
this Lease at the times and in the manner provided. If LANDLORD shall make any
expenditure for which TENANT is responsible or which TENANT should make, then,
at LANDLORD’S election, the amount thereof may be added to the installment of
rent next falling due or constitute any item of account payable on demand.

 

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GOOD ORDER AND REPAIR

9. TENANT agrees to take good care, as determined by the LANDLORD, of the
Premises and not to allow or commit any waste with respect to the Premises or
Building. Upon termination of this Lease, by lapse of time or otherwise, TENANT
will surrender the Premises to LANDLORD in as good condition as at the date of
initial possession hereunder by TENANT, ordinary wear and tear and damage by
unavoidable casualty excepted. Any damage to the Premises or Building resulting
from acts or neglect of TENANT or TENANT’S agents, employees, patrons, or
invitees, shall be repaired or replaced at TENANT’S expense. The Premises shall
not be altered, changed, nor any additions or improvements made, without the
prior written consent of LANDLORD and unless otherwise provided in writing, all
work shall be done by or under the direction of LANDLORD at TENANT’S expense,
and any alterations, physical additions or improvements, except movable office
furniture, shall at once become the property of LANDLORD upon termination of
this Lease.

ASSIGNMENT

10. TENANT shall not, without the express prior written consent of LANDLORD,
assign, mortgage, or otherwise encumber or transfer this Lease, or sublease, or
permit any other person to use or occupy, all or any part of the Premises. The
parties expressly agree that: (a) LANDLORD’S consent may be withheld for any
reason whatsoever and regardless of whether such withholding is contrary to any
prevailing commercial standards; and (b) LANDLORD’S decision regarding such
consent shall be binding on the parties, regardless of the reason or basis of
the decision. If the TENANT desires to assign or encumber this Lease or sublet
the Premises or any part thereof, the TENANT will give the LANDLORD written
notice of such desire specifying the name of the proposed assignee, mortgagee,
or sublessee and all of the terms of the proposed assignment, mortgage, or
sublease at least sixty (60) days prior to the date such assignment,
encumbrance, or sublease is proposed to be effective. The LANDLORD will have the
option for a period of thirty (30) days after receipt of such notice to:
(a) terminate this Lease as of the date specified by the TENANT as to the
portion of the Premises affected; or (b) permit the TENANT to assign, encumber,
or sublet such portion of the Premises; or (c) refuse to consent to the proposed
assignment, encumbrance, or subletting and continue this Lease in effect as to
the entire Premises. The failure by the LANDLORD to exercise any of the
foregoing options within the time provided will be deemed an exercise of option
(c) above. Notwithstanding any consent granted by the LANDLORD, the TENANT, and
each assignee, mortgagee, and sublessee will at all times remain fully liable
for the payment of Rent and for the performance of the TENANT’S obligations
hereunder. No consent granted by the LANDLORD will constitute a waiver of the
provisions of this Lease except as to the specific instance covered thereby. In
the event LANDLORD consents to such assignment, sublease, or other transfer of
all or any portion of this Lease, TENANT shall remit to LANDLORD that portion of
any payment TENANT receives from its sub-lessee, assignees, etc., which exceeds
the rent due and payable as is set forth in Paragraph 3 herein or any amendments
hereto.

COMPLIANCE

11. TENANT agrees to maintain the Premises in a clean, orderly, healthful
condition and to comply with all laws, ordinances, rules, and regulations of all
governmental agencies having jurisdiction over the Premises. TENANT will not
use, occupy, or permit the use or occupancy of

 

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the Premises for any unlawful, disreputable, or hazardous purpose, maintain or
permit the maintenance of any public or private nuisance, or do or permit any
act or thing that may disturb the quiet enjoyment of any other tenant of the
Building, or permit anything to be done that would increase the fire insurance
rate on Building or its contents.

RIGHT OF ENTRY

 

12. (A) TENANT agrees that LANDLORD’S representatives shall have the right to
enter all parts of the Premises at all reasonable hours to inspect, test, clean,
make repairs, alterations, and additions to the Building or the Premises that it
may deem necessary or desirable or to provide any service which it is obligated
to furnish tenants of the Building; provided, however, that this paragraph shall
be inoperative in the event that any federal or state law or regulation
prohibits public access to the Premises without security clearance from such
federal or state agencies.

(B) TENANT agrees to complete on an annual basis the attached questionnaire
specified as”Exhibit C”, regarding the use of chemicals, radioactive material,
biological agents, and other substances that may pose a hazard to the occupants
of the facility. TENANT shall within seven (7) working days after the mailing of
the questionnaire by the LANDLORD return to the LANDLORD the completed
questionnaire, and in the event the TENANT does not complete the questionnaire,
the LANDLORD shall have the rights to terminate this Lease Agreement
immediately. Depending on the responses of the TENANT, a more detailed
questionnaire may need to be completed, as well as, a review by committee may be
necessary before LANDLORD can accept the TENANT. The UAB Office of Occupational
Health and Safety may also conduct onsite audits from time to time to assure
itself that all operations are being conducted in a safe manner.

SURRENDER OF PREMISES

13. At the expiration of the tenancy hereby created, TENANT shall surrender the
Premises in the same condition as the Premises were in upon delivery of
possession thereto under this Lease, reasonable wear and tear excepted and
damage by unavoidable casualty excepted, and shall surrender all keys for the
Premises to LANDLORD at the place then fixed for the payment of rent and shall
inform LANDLORD of all combinations on locks, safes, and vaults, if any, in the
Premises. TENANT shall remove all its trade fixtures and any alterations or
improvements which LANDLORD requests to be removed before surrendering the
Premises as aforesaid and shall repair any damage to the Premises caused
thereby. TENANT’S obligation to observe or perform this covenant shall survive
the expiration or other termination of the term of this Lease.

 

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INDEMNITY OF LANDLORD

14. By taking possession of the Premises, the TENANT will be deemed to have
accepted the Premises as suitable for the purposes for which the same are
leased, to have accepted the Building, and, except for any matters specified in
writing to the LANDLORD, TENANT agrees to indemnify and hold LANDLORD harmless
from and against any and all liability, claims, demands, loss, or damage for
injury to, or death of, any person or persons or damage to property in any way
arising from or in connection with the occupancy or use by tenant of the
Premises or any part thereof or occasioned wholly or in part by any act of
omission of TENANT, its agents, employees, or invitees. TENANT further agrees to
indemnify and hold LANDLORD harmless from all fines, suits, claims, demands, and
actions resulting from any breach, violation, or nonperformance of any covenant
or condition hereof by TENANT or TENANT’S agents, employees, or invitees.

TAKING BY EMINENT DOMAIN

 

15. (A) Entire Premises

If the whole of the Premises hereby leased shall be taken by any authority under
the power of eminent domain, then this Lease shall terminate as of the day
possession shall be taken by such authority, and all rent shall be paid up to
that date, with a proportionate refund by LANDLORD of such rent as may have been
paid in advance.

(B) Partial Taking of Premises

If less than 20 percent of the floor area of the Premises be so taken by eminent
domain, then this Lease shall terminate only as to the part so taken from the
day possession shall be taken by such authority, and all rent shall be paid up
to that day and thereafter the rent due hereunder shall be adjusted accordingly.

(C) Substantial Taking of Premises

If more than 20 percent, but not all, of the floor area of the Premises be so
taken, then this Lease shall terminate only as to the part so taken from the day
possession shall be taken by such authority, and all rent shall be paid up to
that day; provided, however, that TENANT and LANDLORD shall each have the right
to terminate this Lease by giving written notice thereof within ten (10) days
from the date such possession is taken by said authority. In the event TENANT
elects to remain in possession, and LANDLORD does not so terminate, all of the
terms herein provided shall continue in effect except that the fixed minimum
rent shall be adjusted proportionately.

(D) Substantial Taking of Building

If more than 50 percent of the floor area of the Building be taken under the
power of eminent domain, whether or not the Premises or any part thereof be
taken, LANDLORD may, by notice in writing to TENANT delivered within thirty
(30) days after the day of surrendering possession to the authority, terminate
this Lease, and rent shall be paid or refunded, as of the date of termination.

 

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(E) Damages

All damages awarded for such taking under the power of eminent domain, whether
for the whole or a part of the Premises, shall be the property of LANDLORD,
including but not limited to such damages as shall be awarded as compensation
for diminution in value of the leasehold and to the fee of the Premises;
provided, however, that LANDLORD shall not be entitled to any award made to
TENANT for loss of business, depreciation to and cost of removal of stock and
fixtures. The term “eminent domain” shall include the exercise of any similar
governmental power and any purchase or other disposition in lieu of, or under
threat of, condemnation.

PROPERTY DAMAGE

16. LANDLORD shall not be liable to TENANT for any loss or damage to any person
or property, including the person and property of TENANT occasioned by theft,
the acts of any co-tenant, casualty, rain, water, condensation, fire, acts of
God, public enemy, injunction, riot, strike, picketing, mob action, bombing,
explosion, war, court order, latent defects, requisition or order of
governmental authority, the construction, repair, maintenance or alteration of
any part of the Premises or Building as a whole; all personal and business
property in the Leased Premises shall be and remain at TENANT’s personal risk,
and LANDLORD shall not be liable for any damages to nor loss of such personal or
business property arising from acts of negligence of any other persons; not from
the leaking of the roof, nor from the bursting, leaking, or overflowing of
water, sewer, or steam pipes, nor from the heating or plumbing fixtures; nor
from electric wires for fixtures; nor from any other cause whatsoever.

PERFORMANCE

17. Anything in this Lease to the contrary notwithstanding, LANDLORD shall not
be deemed in default with respect to the performance of any of the terms,
covenants, and conditions of this Lease to be performed by it. If any failure of
its performance shall be due to any strike, lockout, civil commotion, war,
war-like operation, invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulations or controls, inability to obtain any material
or service, act of God, or any other cause whatever (including failure of TENANT
to supply necessary data or instructions) beyond the reasonable control of
LANDLORD, or inability of LANDLORD to obtain financing satisfactory to LANDLORD,
the time for performance by LANDLORD shall be extended by the period of delay
resulting from or due to any of said causes.

OCCUPANCY OF PREMISES

 

18. (A) Premises Rendered Wholly Unfit for Occupancy

 

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In the event the Premises shall be destroyed or so damaged by fire, explosion,
earthquake, or any other cause so as to become wholly unfit for occupancy, then
the LANDLORD may, if it so elects, rebuild and put the Premises in good
condition and fit for occupancy within a reasonable time after such Premises
have become wholly unfit for occupancy, or it may give notice in writing to
TENANT terminating this Lease. If LANDLORD elects to repair or rebuild the
Premises, it shall give the TENANT notice thereof within thirty (30) days after
such injury or damage of its intention to repair or rebuild, and then LANDLORD
shall proceed with reasonable speed to repair or rebuild the Premises. TENANT
shall not be obligated to pay any rent from the time that such Premises were
rendered wholly unfit for occupancy until such Premises are again fit and ready
for occupancy.

(B) Premises Rendered Partially Unfit for Occupancy

In the event the Premises shall be destroyed or so damaged by fire, explosion,
earthquake, or any other cause so as to become partially unfit for occupancy,
LANDLORD shall forthwith cause the same to be repaired as soon as is reasonably
possible and, only while such damage is being repaired, TENANT shall be entitled
to a proportionate abatement of the monthly rent.

(C) Building Rendered Totally or Partially Unfit for Occupancy

In the event that the Building in which the Premises are situated is destroyed
or damaged from any cause to the extent (in LANDLORD’S sole judgment) of
one-third or more of the replacement cost of such Building, LANDLORD shall have
an option to terminate this Lease, whether the Premises be damaged or not; such
option to be exercised within thirty (30) days after such occurrence so damaging
the Building. Anything in this Lease to the contrary notwithstanding, a total or
substantially total destruction of the Building shall terminate this Lease.

(D) General

LANDLORD shall not be liable or responsible to TENANT for any inconvenience or
loss due to making repairs or reconstruction as aforesaid nor for any delays in
repairing or rebuilding due to strikes, acts of God, governmental regulations,
or any other causes beyond its control. Nothing herein shall be deemed to waive
or relieve TENANT from any liability for any loss or damage to LANDLORD, or
LANDLORD’S property due to negligence or willful acts of TENANT, its agents,
servants, employees, or invitees; provided, however, if LANDLORD’S fire and
extended coverage insurance policy permits, without penalty, the release of
others from liability for loss from insured casualties, such release from
liability is hereby granted to the extent that LANDLORD actually recovers for
loss under such policy.

 

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HOLDING OVER

19. If the TENANT continues to occupy the Leased Premises after the expiration
or other termination of the Lease Term, such holding over will, unless otherwise
agreed by the LANDLORD in writing, constitute a tenancy at will at a daily
rental equal to one-thirtieth (1/30th) of an amount of equal to twice the amount
of the rent payable during the last month prior to the termination of this Lease
subject to all of the other provisions set forth herein.

DEFAULT PROVISIONS

 

20. (A) The happenings of any one or more of the following events shall
constitute a default hereunder: (i) TENANT’S failure to pay any one or more said
installments of rent hereunder as and when the same becomes due; (ii) at
LANDLORD’S option, TENANT’S failure to pay the rent due hereunder within ten
(10) days of the due date therefore for two consecutive months; (iii) TENANT’S
filing of a petition in bankruptcy or a petition under the Bankruptcy Act, or
any amendment thereto by or against TENANT, or TENANT being adjudged a bankrupt;
(iv) TENANT’S making an assignment for the benefit of creditors; (v) the
appointment of a receiver of TENANT’S property; (vi) TENANT’S vacation of the
Premises or abandonment of the possession thereof, or use of the same for
purposes other than that for which the same are hereby let, or failure to use
the Premises for the purposes herein specified; or (vii) TENANT’S violation of
any of the other terms, conditions or covenants on the part of TENANT herein
contained.

(B) Upon the happening of any of the above defaults, LANDLORD may, as LANDLORD
deems appropriate: (i) annul and terminate this Lease, and thereupon re-enter
and take possession of the Premises; or (ii) re-enter and re-let the Premises
from time to time as agents of TENANT, and such re-entry and/or re-letting shall
not discharge TENANT from any liability or obligations hereunder, except that
net rents (that is, gross rents less the expense of collecting and handling, and
less commissions) collected as a result of such re-letting shall be a credit on
TENANT’S liability for rents under the terms of this Lease; (iii) perform or
cause to be performed the obligations of the TENANT under this Lease and enter
the Premises to accomplish such purpose without being liable for prosecution
therefor...or (iv) terminate this Lease and demand that tenant vacate the
premises occupied. In the event LANDLORD opts to perform the obligations of the
TENANT, TENANT hereby agrees to reimburse the LANDLORD on demand for any

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expense which the LANDLORD might incur in effecting compliance with this Lease
on behalf of the TENANT, and the TENANT further agrees the LANDLORD will not be
liable for any damage resulting to the TENANT from such action, whether caused
by the negligence of the LANDLORD or otherwise. Nothing herein, however, shall
be construed to require LANDLORD to re-enter, re-let, or perform the TENANT’S
obligations. Nor shall anything herein be construed to postpone the right of
LANDLORD to sue for rents, whether matured by acceleration or otherwise, but on
the contrary, LANDLORD is hereby given the right to demand, collect, and/or sue
therefor at any time after default.

(C) Upon default, or upon the termination of this Lease or re-entry upon the
Premises for any one or more of the causes set forth above, or upon any
termination of this Lease or re-entry upon the Premises, the rents hereunder for
the remainder of the entire rental period, and all other indebtedness, if any,
payable under the provisions hereof, shall be and become immediately due and
payable at the option of LANDLORD and without regard for whether or not
possession of the Premises shall have been surrendered to or taken by LANDLORD;
provided, however, no default on account of payment for rent shall occur until
such rent is ten (10) days in arrears, and no default for other cause shall
occur until the expiration of a period of thirty (30) days after written notice
to TENANT of any breach of any other covenant hereof without correction of such
breach.

(D) In the event of employment of an attorney by LANDLORD for collection of any
amount due hereunder or for the institution of any suit for possession of the
Premises, or for advice or services incident to the breach of any other covenant
of this Lease by TENANT or on account of bankruptcy proceedings by or against
TENANT or on account of bankruptcy proceedings by or against TENANT, or the
leasehold interest of TENANT, TENANT agrees to pay and shall be taxed with a
reasonable attorney’s fee which shall be a part of the debt evidenced and
secured by this Lease. In order further to secure the prompt payment of said
rents when the same mature, and the faithful performance by TENANT of all and
singular the terms, conditions, and covenants on the part of TENANT herein
contained and all damages and costs that LANDLORD may sustain by reason of the
violation of said terms, conditions, and covenants, or any of them, TENANT does
hereby waive any and all right to claim personal property as exempt from levy
and sale under the Constitution and Laws of the State of Alabama or any other
State.

SECURITY DEPOSIT

21. LANDLORD and TENANT acknowledge that TENANT has previously deposited with
the LANDLORD the sum of $8,000 ($4,800 for Suites 131 and 259 and $3,200 for
Suite 274) in connection with the Lease Agreement dated May 1, 2004 (“Prior
Deposit”). TENANT and LANDLORD agree that LANDLORD may hold the Prior Deposit,
without interest, as security for the payment of rent and any and all other sums
of money for which TENANT shall or may become liable to LANDLORD under this
Lease, and for the faithful performance by TENANT of all other covenants and
agreements under this Lease. The foregoing deposit shall be returned to TENANT
after the termination of this Lease and any renewal hereof, provided TENANT
shall

 

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have made all such payments and performed all such covenants and agreements.
Nothing in this paragraph shall be deemed to limit the amount of any claim,
demand, or cause of action of LANDLORD against TENANT under the provisions of
this Lease.

REMEDIES

22. TENANT agrees that all remedies herein given LANDLORD, including all those
not set forth but provided by law shall be cumulative, and the exercise of one
or more of any such remedies by LANDLORD shall not exclude the exercise of any
other lawful remedy nor shall any waiver by LANDLORD, express or implied, of any
breach of any term, covenant, or condition hereof be deemed a waiver of any
subsequent breach of the same or any other term, covenant, or condition hereof.
Acceptance of rental by LANDLORD from TENANT or any assignee, sub-tenant, or
other successor in interest to TENANT, with or without notice shall never be
construed as a waiver of any breach of any term, condition, or covenant of this
Lease. Failure of LANDLORD to declare any default upon occurrence thereof, or
delay in taking action with respect thereto, shall not waive such default, but
LANDLORD shall have the right to declare such default at any time and take such
action as may be authorized hereunder, in law or equity, or otherwise. TENANT
agrees to pay all costs and expenses that may be incurred in connection with the
enforcement of any of the provisions of this Lease.

SIGNS

 

23. TENANT agrees not to install or paint any signs, name plates, symbols,
pictures, or any other paintings or hangings within or outside the Premises or
the Building without the prior written consent of the LANDLORD.

PARKING PROVISIONS

 

24. (A) All parking facilities provided by LANDLORD shall be under the control
of LANDLORD, and TENANT agrees that TENANT, its agents, employees, and invitees
shall conform to such written parking regulations, conditions, and provisions as
may be from time to time prescribed by LANDLORD.

(B) Parking area is not to be used by TENANT at any time as a storage area for
any merchandise, goods, equipment, or any other item.

(C) TENANT shall not make any use of the Premises which will in any manner
overburden the parking which is available to the Building in which the Premises
are located.

 

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(D) LANDLORD reserves the right to decrease or otherwise alter, in any manner
which LANDLORD deems appropriate, the parking areas at any time without notice
to TENANT.

TRANSFER OF OWNERSHIP

25. LANDLORD shall have the right to sell, assign, or transfer, in whole or in
part, all of its rights and/or obligations hereunder or in the Building and/or
Premises. Such sale, assignment, or transfer may be made to a corporation,
trust, trust company, individual, or group of individuals, and howsoever made
shall be binding on TENANT in all respects and recognized by TENANT. In the
event LANDLORD transfers LANDLORD’S interest in the Building and/or Premises,
LANDLORD will thereby be released from any further obligation of any kind
whatsoever hereunder and the TENANT agrees to attorn to and look solely to the
transferee for the performance of such obligations. TENANT agrees to execute and
deliver to the designee of the LANDLORD from time to time within ten (10) days
after written request therefor all instruments that might be required by the
LANDLORD to confirm such attornment.

NOTICE

26. Notices provided for in this Lease shall be sufficiently given if sent by
registered mail, return receipt requested, postage prepaid, and addressed to
such address as the parties may designate to each other in writing from time to
time.

SUBORDINATION

27. At the option of LANDLORD, this Lease may be subordinated to the lien of any
mortgage or mortgages, or the lien resulting from any other method of financing
or refinancing, now or hereafter in force against the land and/or Building of
which the Premises are a part and to all advances heretofore made or hereafter
to be made upon the security thereof. The TENANT agrees to execute and deliver
to the LANDLORD from time to time within ten (10) days after written request by
the LANDLORD, all instruments that might be required by the LANDLORD to confirm
such subordination.

PURPOSE

28. TENANT’S operation in this location is for the purpose of pharmaceutical
research and development and TENANT shall use said Premises therefor and for no
other purpose.

 

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TITLES

29. The titles and headings in this Lease are used only to facilitate reference,
and in no way to define or limit the scope or intent of any of the provisions of
this Lease.

ENTIRE CONTRACT

30. This Lease constitutes the entire contract between the parties hereto with
respect to the Premises and this Lease covers, merges, and includes all
agreements, oral or written, between the parties hereto and made in connection
herewith, whether the same be made prior to, or contemporaneously with the
execution hereof. This Lease cannot be modified or changed by any verbal
statement, promise, or agreement by whomsoever made, and no modification,
change, or amendment shall be binding on the parties unless it shall have been
agreed to in writing. No surrender of the Demised Premises or of the remainder
of the Term under this Lease shall be valid unless accepted by LANDLORD in
writing.

LEGAL EFFECT

31. In the event any provision of this Lease is found by a court of competent
jurisdiction to be contrary to law or void as against public policy or
otherwise, such provision shall be either modified to conform to law or
considered severable, with the remaining provisions hereof continuing in full
force and effect.

BINDING EFFECT

32. This Agreement and all covenants, obligations, and conditions hereof shall
inure to the benefit of and shall be binding upon LANDLORD, and LANDLORD’s
successors and assigns. This Agreement and all its covenants, obligations, and
conditions hereof also shall inure to the benefit of and be binding upon TENANT
and TENANT’s heirs, executors, administrators, successors, and assigns, except
that TENANT shall have no right to assign or sublet the Leased Premises or any
part thereof without the prior written consent of LANDLORD.

IMPROVEMENTS

33. Upon TENANT’S reasonable request, the LANDLORD will install in the Premises,
at TENANT’S cost and expense, additional divisional partitioning with wall,
ceiling, and floor surface treatments and finishes, electrical and telephone
outlets and other facilities, or will remove or replace existing walls or
petitions. Any and all other alterations, changes, additions, and improvements,
if consented to by LANDLORD, including, but not limited to

 

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  (1) All partitioning or shelving required by TENANT, other than LANDLORD’S
standard partitioning and shelving,

 

  (2) Any special decorative millwork treatment,

 

  (3) Any special floor coverings,

 

  (4) Any special decorative paint or other wall or surface treatments,

 

  (5) Any private laboratory, private shower or private plumbing and fixtures,

 

  (6) Any abnormal quantity of electrical or telephone outlets

shall be made by the LANDLORD at TENANT’S cost and expense and the same shall
immediately be and become part of the realty without any payment therefor by
LANDLORD. Upon completion of such work, TENANT shall immediately pay the
LANDLORD the full amount of such charges.

CERTIFICATE

34. TENANT agrees to deliver a certificate to any proposed mortgagee or
purchaser or the LANDLORD certifying (if such be the case) that this Lease is in
full force and effect, that there are no defenses or offsets hereto, or stating
those claimed by TENANT, and also stating any other pertinent information
required by the LANDLORD or the LANDLORD’S lender.

POWER OF SALE

35. TENANT shall, in the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under any mortgage made by
the LANDLORD covering the Premises, attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the LANDLORD under this
Lease.

QUIET ENJOYMENT

36. Upon payment by TENANT of the rents provided, and upon the observance and
performance of all the covenants, terms, and conditions on TENANT’S part to be
observed and performed, TENANT shall peaceably and quietly hold and enjoy the
Premises for the term hereby demised without hindrance or interruption by
LANDLORD or any other person or persons lawfully or equitably claiming by,
through, or under LANDLORD; subject, nevertheless, to the terms and conditions
of this Lease.

FULL PAYMENT

37. No payment by TENANT or receipt by LANDLORD of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and LANDLORD may accept such check or payment without
prejudice to LANDLORD’S right to recover the balance of such rent or pursue any
other remedy provided in this Lease.

 

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MUTUAL AGREEMENT

38. It is expressly understood and agreed that this Lease and the covenants
contained herein are for the sole benefit of LANDLORD and TENANT, their
successors and assigns, and that all rights of action for any breach or any
covenant herein contained are reserved to such parties. It is further expressly
understood and agreed that such parties may by mutual agreement alter, amend,
modify, or revoke or rescind this Lease or any covenant herein contained in
writing and at any time.

EXPIRATION OF LEASE

39. During the period of six (6) months prior to the expiration of this Lease or
any renewal thereof, LANDLORD shall have the right to display on the exterior of
the Premises, but not in any window or doorway thereof, the customary sign “For
Rent,” and during such period LANDLORD may show the Premises and all parts
thereof to prospective lessees between the hours of 10:00 a.m. and 5:00 p.m. on
any day.

RECORDATION

40. TENANT shall not record this Lease without the written consent of LANDLORD;
however, upon the request of either party hereto, the other party shall join in
the execution of a “short form” of this Lease for the purposes of recordation.
The short form of this Lease shall describe the parties, the Premises and the
term of this Lease and shall incorporate this Lease by reference. TENANT shall
record this Lease or said short form at the request of LANDLORD, and shall pay
the cost of recording same.

INSURANCE

41. TENANT will maintain at the TENANT’S expense throughout the Lease Term a
policy or policies of insurance insuring the TENANT and the LANDLORD against:
(a) loss or damage by fire, explosion, or other casualty covering the TENANT’S
property located in the Leased Premises for the full insurable value thereof;
and (b) all liability for injury to or death of any person occasioned by or
arising out of or in connection with the occupancy of the Leased Premises. The
limits of such policy or policies shall be in an amount not less than $1,000,000
per occurrence and $2,000,000 annual aggregate. The TENANT will furnish evidence
satisfactory to the LANDLORD of the maintenance of such insurance and will
obtain a written obligation on the part of each insurance company to notify the
LANDLORD at least ten (10) days prior to cancellation of such insurance. The
TENANT hereby waives any cause of action that the TENANT might now or hereafter
have against the LANDLORD on account of any loss or damage that is insured
against under any insurance policy that names the TENANT as an additional
insured.

 

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LIABILITY FOR LOSSES

42. Neither LANDLORD nor TENANT shall be liable to the other for any loss or
damage from risks ordinarily insured against under fire insurance policies with
extended-coverage endorsements, irrespective of whether such loss or damage
results from their negligence or that of any of their agents, servants,
employees, licensees, or contractors to the extent that such losses are covered
by valid and collectable insurance on the property at the time of loss.

COMPLIANCE WITH AUTHORITIES

43. TENANT shall promptly comply with all statutes, ordinances, rules, orders,
regulations, and requirements of the federal, state, county, and city
governments, and of any and all their departments and bureaus, applicable to
said Premises and shall also promptly comply with all rules, orders, and
regulations of the Fire Underwriters’ Association for the Prevention of Fires at
TENANT’s own cost and expense. TENANT agrees to pay any increase in the amount
of insurance premiums over and above the rate now in force that may be caused by
TENANT’s use or occupancy of the Premises. Said payments shall be in addition to
any amounts due LANDLORD.

TENANT understands that LANDLORD and LANDLORD’S property is subject to the
Americans with Disabilities Act (ADA). TENANT specifically agrees to comply
with, and to pay all costs of compliance with, laws, regulations and any
ordinances that may apply to TENANT’S business or locations, including, but not
limited to, the ADA requirements as it may relate to the Premises. The TENANT
will hold harmless and protect the LANDLORD in the event the TENANT is found to
be in violation of its obligation to comply with the ADA.

ATTORNEY’S FEES

44. TENANT agrees to pay all attorneys’ fees, court costs, and expenses that
LANDLORD incurs in enforcing any of the obligations of the TENANT under this
Lease, or in any litigation or negotiation in which the LANDLORD shall become
involved through or on account of the Lease.

HOLD HARMLESS

45. TENANT shall be liable for and shall hold LANDLORD harmless in respect of
damage or injury to the Leased Premises, or the person or property of the
TENANT, or the person or property of LANDLORD’s other tenants, or anyone else,
if due to the act or neglect of TENANT or anyone in his control or employ.
TENANT shall at once report in writing to LANDLORD any defective condition known
to him which LANDLORD is required to repair and failure to so

 

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report shall make TENANT responsible for damages resulting from such defective
conditions. All personal property upon the Premises shall be at the risk of the
TENANT only, and LANDLORD shall not be liable for any damage thereto or theft
thereof.

RULES AND REGULATIONS

46. The present rules and regulations in regard to the Building are attached
hereto as “Exhibit D”, and made a part hereof as though fully set out herein.
LANDLORD reserves the right to change these rules and regulations. Notice of
changes in the rules and regulations shall be given to the Tenant in written
form. The TENANT shall faithfully observe and perform such rules and
regulations, as modified or supplemented from time to time by the LANDLORD, and
the TENANT shall further be responsible for the compliance with such rules and
regulations by the TENANT’s employees, its invitees, agents, servants, or
visitors.

TIME

 

47. With respect to all obligations of TENANT as set forth in this Lease, time
is of the essence.

STORAGE OF RADIOACTIVE MATERIAL

48. Tenant will carefully designate specific locations for the storage of
Radioactive Material. These designated areas must be positioned away from the
more traveled areas of the laboratory. These areas must be approved by the UAB
Radiation Safety Division prior to the storage of Radioactive Material. When the
storage area is located inside a laboratory or office suite, it must have
adequate shielding to ensure that the radiation exposure rate at one foot from
the surface of the storage area does not exceed 0.5 mR/hour. No Radioactive
Material may be stored in common or public areas of the building.

Storage areas must be kept locked at all times, except for when in use.
Radioactive Material that is volatile or powdery or that might be emitted into
the air must be kept in a fume hood. All storage areas must be labeled with the
conventional radiation symbol and must bear the words “Caution Radioactive
Material” or “Danger Radioactive Material.” All storage containers must be
labeled with a standard radiation symbol and the identity, quantity, and assay
date of the radioisotope must be on the container.

No Radioactive Material will be allowed to be stored in any hallway, not even
temporarily awaiting decontaminated radioactive waste removal. Decontaminating
radioactive waste must be properly stored in the laboratory or other designated
site location away from the more heavily traveled areas. Proper shielding must
be maintained for decontaminating radioactive waste. An inventory must be taken
quarterly by the Tenant for all sealed sources that are in storage and are
either being used or have not been used in six months.

 

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All of Tenant’s employees must be provided with and wear Radiation I.D. Badges.
The badges must be worn at all times while on the premises.

Tenant agrees to freely submit to inspections conducted by the UAB Department of
Occupational Health and Safety. Tenant further agrees to abide by all State,
Federal, and UAB Radiation Safety Committee guidelines regarding the handling
and storage of Radioactive Material. The terms and conditions of Paragraph 48
are subject to the approval and changes as designated by the UAB Department of
Occupational Health and Safety.

STORAGE OF HAZARDOUS MATERIAL

49. No prolonged storage of Hazardous Material is allowed in the building at any
time. Tenant may accumulate no more than twenty (20) gallons of liquid Hazardous
Material at any given time. The allowable limit of twenty (20) gallons must be
kept in four (4) separate five gallon containers. All Hazardous Material must be
kept in a fireproof storage container at all times. This storage container must
remain locked at all times except for when in use. Upon reaching the allowable
limit of twenty (20) gallons, Tenant agrees to have a licensed hazardous waste
carrier promptly remove the waste from the building. All related documents,
certificates of insurance, and shipment forms must be submitted in advance to
the OADI Technology Center staff. The terms and conditions of Paragraph 49 are
subject to the approval and changes as designated by the UAB Department of
Occupational Health and Safety. Tenant agrees to abide by all State, Federal,
and UAB guidelines regarding the handling and storage of Hazardous Material.

SMOKING POLICY

 

50. Smoking is strictly prohibited in all areas within the OADI Technology
Center.

TENANT MANUAL

 

51. TENANT has read OADI TENANT MANUAL and agrees to abide by all rules and
regulations of the OADI program.

This Lease shall be governed, construed and enforced in accordance with the laws
of the State of Alabama.

 

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IN WITNESS WHEREOF, the TENANT and the LANDLORD have hereunto set their hands
and seals in duplicate, as set forth below, on the day and year first above
written.

 

LANDLORD: THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ALABAMA FOR THE UNIVERSITY
OF ALABAMA AT BIRMINGHAM By  

/s/ Eli Capilouto

Its   Eli Capilouto, DMD, MPH, ScD Provost TENANT:   DURECT CORPORATION By:  

Paula Mendenhall

Its:   SR. VP, OPERATONS

 

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LANDLORD’S ACKNOWLEDGMENT:

STATE OF ALABAMA )

COUNTY OF JEFFERSON)

I, the undersigned authority, a Notary Public in and for said County in said
State, hereby certify that ELI CAPILOUTO,whose name as Provost, of the Board of
Trustees of the University of Alabama is signed to the foregoing conveyance and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the conveyance, he, in his capacity as such Provost, executed
the same voluntarily and with full authority as for the act of the Board of
Trustees of the University of Alabama on the day the same bears date.

Given under my hand this the 17th day of Oct, 2006.

 

    /s/

   

NOTARY PUBLIC

   

My commission expires:

NOTARY PUBLIC STATE OF ALABAMA AT LARGE

MY COMMISSION EXPIRES: Nov 15, 2007

BONDED THRU NOTARY PUBLIC UNDERWRITERS

 

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TENANT’S ACKNOWLEDGMENT (CORPORATE) :

STATE OF California

COUNTY OF Santa Clara ss.

On 08/03/2006 before me, Crystal Susa, personally appeared Paula Mendenhall,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her authorized capacity as Sr.
Vice President, Operations, of DURECT CORPORATION, and that by her signature on
the instrument the person, or the entity upon behalf of which person acted,
executed the instrument.

WITNESS my hand and official seal.

 

SEAL  

/s/ Crystal Susa         8/3/06

  Notary Signature/Date

 

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INSERT FLOOR PLAN AS EXHIBIT A

 

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EXHIBIT B

OFFICIAL UAB HOLIDAYS*

New Year’s Day

Martin Luther King Day

Memorial Day

Independence Day

Labor Day

Thanksgiving Day

The Day after Thanksgiving

Christmas Eve

Christmas Day

New Year’s Eve

 

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* Although the University is officially closed on these days, the OADI
Technology Center is accessible via the cardkey system.

 

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INSERT OH&S REVIEW FOR

LEASE APPLICATIONS/RENEWALS AS EXHIBIT C

 

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EXHIBIT D

RULES AND REGULATIONS

 

1. Sidewalks, entries, passages, courts, corridors, stairways, etc., shall not
be obstructed by TENANT or its clerks or used by them for other purposes than
ingress and egress.

 

2. All heavy articles or machinery shall be carried up or into the Premises only
at such times and in such manner as shall be prescribed by LANDLORD, and
LANDLORD shall in all cases have the right to specify the proper weight and
position of any heavy machinery or articles. Any damage done to the Building by
installing or removing such machinery or from overloading any floor in any way
shall be paid by the TENANT. Any repairs or restoration caused by defacing or
injuring in any way part of the Building by TENANT, its agent(s) or servant(s)
shall by paid by TENANT.

 

3. No sign advertisement, or notices may be inscribed, painted, or affixed on
any part of the inside or outside of said Building unless of such color, size,
and style and in such place in or upon said Building as shall be designated
under prior approval therefor by LANDLORD, but there shall be no obligation or
duty on LANDLORD to allow any sign, advertisement, or notice to be inscribed,
painted, or affixed on any part of the inside or outside of said Building. Signs
on doors shall be subject to the approval of LANDLORD, and the cost of such
signs shall be paid by the TENANT. Directory in a conspicuous place with the
names of the TENANT will be provided by the LANDLORD. Any necessary revision of
same shall be made by LANDLORD within a reasonable time after written notice
from the TENANT of the error or change making the revision necessary. No
showcase or any other fixture or object whatsoever shall be placed in front of
the Building or in the court, corridor, or parking area of the Building without
prior written consent of the LANDLORD.

 

4. No TENANT shall do or permit anything to be done in the said Premises or
bring or keep anything therein which will in any way increase the rate of fire
insurance on said Building or on property kept therein or obstruct or interfere
with the rights of other TENANTS or in any way injure or annoy them or conflict
with the laws relating to fire or with any regulation of the Fire Department or
with any insurance policy upon said Building or any part thereof.

 

5. No TENANT shall employ any person or persons other than the janitor of the
LANDLORD (who will be provided with pass keys to all offices) for the purpose of
cleaning or taking charge of the Premises Leased without the written consent of
the LANDLORD, it being understood and agreed that the LANDLORD shall in no way
be responsible to any TENANT for any loss of property from the Leased Premises,
however occurring, or for any damage done to the furniture by the janitor or any
of his employees, or by any other person or persons whomsoever. Any person or
persons employed by the TENANT with the written consent of the LANDLORD must be
subject to and under control and direction of the LANDLORD of the Building and
all things in the Building and outside of said Premises.

 

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6. No additional locks, hooks, or attachments shall be placed on any door or
window of the Building. TENANT will not permit any duplicate keys to be made,
but if more than two keys for any locks are desired, the additional number must
be procured from the LANDLORD and paid for by the TENANT.

 

7. No animal or birds, bicycles, or other vehicles shall be allowed in halls,
corridors, elevators, or elsewhere in the Building.

 

8. The water closets, wash basins, sinks, and other apparatus shall not be used
for any purpose than those for which they are constructed, and no sweepings,
rubbish, or other substance shall be thrown therein nor shall anything be thrown
by the TENANTS or their agents, or employees out of the windows, doors, or other
openings.

 

9. The floors, skylights, and windows that reflect or admit light into the
corridors or passageways or to any place in said Building shall not be covered
or obstructed by any of the TENANTS.

 

10. All TENANTS and occupants must not open their windows. In the case of
emergency, an OADI employee is to be called and they will open the window with a
special unlocking device.

 

11. If any TENANT desires telegraphic, telephonic, fiber optic or other
electronic connections, the LANDLORD or its agents will direct the electricians
as to where and how the wires may be introduced and without such directions, no
boring or cutting for wires will be permitted. TENANT will be held responsible
for all costs associated with the installation and service of such electronic
connections.

 

12. No shade or awning shall be put up, no painting done, or any alterations
made in any part of the Building by putting up or changing any partitions,
doors, or windows, nor shall there be any nailing, boring, screwing into
woodwork or walls or plastering, nor shall there be upon the Premises any
engine, boiler, or other machinery without the prior written consent of the
LANDLORD in each and every instance.

 

13. TENANT, its employees, clerks, or servants shall not use the Demised
Premises for the purpose of lodging rooms or for any immoral or unlawful
purpose.

 

14. No room or rooms shall be occupied or used for sleeping or lodging
apartments or for any other purpose than the purpose for which same is leased at
any time.

 

15. No TENANT shall permit gambling or unlawful practice or practices of any
kind in the Leased Premises.

 

16. The LANDLORD or any agents or watchman shall have the right, with a passkey
or otherwise, to enter any Premises in the Building at any time to examine the
same or to make such alterations, repairs, or additions as it shall deem
necessary for the safety, preservation, cleanliness, or improvement of the
Building.

 

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17. TENANT shall not install or operate vending machines of any kind in the
Leased Premises without the written consent of LANDLORD.

 

18. All glass, locks, and trimmings, in or about the doors and windows, and all
electric globes and shades, belonging to the Building, shall be kept whole, and
whenever broken by any TENANT, shall be immediately replaced or repaired and put
in order by such TENANT under the direction and to the satisfaction of the
LANDLORD, and on removal, shall be left whole and in good repair.

 

19. LANDLORD reserves the right to make and enforce such other reasonable rules
and regulations as, in its judgment, may be deemed necessary or advisable from
time to time to promote the safety, care, and cleanliness of the Premises and
for the preservation of good order therein.

 

20. Smoking is strictly prohibited in all areas within the OADI Technology
Center.

 

21. Any TENANT occupying laboratory space shall attach as “Exhibit E”, a list of
the chemicals and other substances to be used in said laboratory, and the
maximum quantity of each expected to be on site, The list shall be provided
prior to signing of the LEASE. A new list shall be provided when there has been
a significant change in the types and quantity of chemicals on site.

 

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INSERT CHEMICAL LIST AS EXHIBIT E

(IF APPLICABLE)