Exhibit 10.59

Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

DURECT CORPORATION

AND

HOSPIRA, INC.

DATED AS OF

JUNE 1, 2010

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

DEVELOPMENT AND LICENSE AGREEMENT

THIS DEVELOPMENT AND LICENSE AGREEMENT (this “Agreement”) is entered into on
June 1, 2010 (“Effective Date”), by and between Durect Corporation, a
corporation organized and existing under the laws of the State of Delaware,
having offices located at 2 Results Way, Cupertino, CA 95014 (“Durect”), and
Hospira, Inc., a corporation organized under the laws of the State of Delaware,
having offices located at 275 N Field Drive, Lake Forest, IL 60045 (“Hospira”).

PRELIMINARY STATEMENTS

A. Durect owns and controls rights in and to the product known as POSIDUR™
currently under development by Durect.

B. Hospira is a pharmaceutical company possessing expertise in the development
and marketing of pharmaceutical products.

C. Hospira desires to participate in the development of POSIDUR and other
specified products and obtain a license for the development, manufacturing and
commercialization of such products in a specified territory, and Durect desires
for Hospira to participate in the development of such products and to grant a
license for development, manufacturing and commercialization of such products in
such territory to Hospira.

D. Durect and Hospira wish to enter into this Agreement to specify the rights
and obligations of the parties with respect to the license for such products,
including the rights and obligations of the parties with respect to the
development, manufacturing and commercialization of such products in the
specified territory.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements provided
herein, the parties hereby agree as follows:

1. DEFINITIONS.

As used in this Agreement, the following terms shall have the meanings set forth
in this Section 1:

1.1 “Affiliate” shall mean with respect to either Party, a Person or entity that
directly or indirectly through one or more Affiliates, controls, is controlled
by, or is under common control with such Party. For the purpose of this
definition, “control” means (a) ownership of more than fifty percent (50%) of
the capital stock or share capital entitled to vote for the election of
directors, in the case of a corporation, or more than fifty percent (50%) of
equity or voting interest of the entity, in the case of any other legal entity,
(b) status as a general partner in any partnership, or (c) any other arrangement
whereby a Person controls or has the right to control the Board of Directors or
equivalent governing body of a corporation or other entity. An entity will be an
Affiliate for purposes of this Agreement only so long as it satisfies the
definition set forth herein.

1.2 “Applicable Laws” shall mean all federal, state, local rules, regulations or
national laws, statutes, rules and regulations, including any requirements of
all Regulatory Authorities, major national securities exchange or major
securities listing organizations that may be in effect from time to time during
the Term of this Agreement and applicable to a particular activity hereunder.

1.3 “Bupivacaine” means 1-butyl-N-(2,6-dimethylphenyl) piperidine-2-carboxamide,
including any and all pharmaceutically acceptable salts, solvates, prodrugs,
esters, free base forms, enantiomers (and racemic or other mixtures of said
enantiomers) thereof.

1.4 “cGMP” shall mean current Good Manufacturing Practice for medicinal products
for human use as set forth in U.S. Code of Federal Regulations 21 CFR Part 210,
211 et seq. and Canadian equivalent thereof, as applicable, each as amended from
time to time.

1.5 “Clinical Trial” shall mean an investigation in human subjects and/or
patients intended to discover or verify the clinical, pharmacological and/or
other pharmacodynamic effects of an investigational product(s), and/or to
identify any adverse reactions to an

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

investigational product(s), and/or to study absorption, distribution,
metabolism, and excretion of an investigational product(s) with the objective of
ascertaining its safety and/or efficacy.

1.6 “CMC” shall mean chemistry, manufacturing and controls.

1.7 “CMC Data” shall mean the information contained in the CMC section of the
NDA as defined in 21 C.F.R. § 314.56(d)(1), as amended (or the equivalent in
other Regulatory Approvals in other Jurisdictions in the Territory), of a
Licensed Product in the Field in the Territory generated with respect to the
Licensed Product that is Controlled at any time during the Term of this
Agreement by a Party, or any Affiliate, subcontractor, agent, licensee thereof,
or jointly by any of the foregoing.

1.8 “Collaboration Inventions” means all Know-How (whether or not patentable)
conceived and/or reduced to practice by or for a Party, or any Affiliate,
subcontractor, agent, or licensee thereof, or jointly by any of the foregoing,
arising out of or in connection with performing the activities under this
Agreement.

1.9 “Committee” shall mean any of the “Joint Executive Committee” (JEC), the
“Joint Steering Committee” (JSC) or “Commercialization Committee” (CC) and, when
used in the plural, shall mean all of them or more than one of them, as the case
may be.

1.10 “Commercial Sublicense” means the sublicense by Hospira to a Commercial
Sublicensee.

1.11 “Commercial Sublicense Fees” means any upfront payments, milestone payments
and other license payments (including the fair market value of debt or equity
securities or other consideration) received by Hospira or any Affiliate thereof
as consideration for a Commercial Sublicense. [* * *]

1.12 “Commercial Sublicensee” means a Third Party in the Territory that, in
return for paying Hospira or any of its Affiliates any upfront license fees,
milestone license fees and/or royalties on the sale of a Licensed Product, is
granted Commercialization rights to the Licensed Product by Hospira or any of
its Affiliates such that the Third Party has the right to record sales for its
own account in lieu of Hospira. [* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.13 “Commercialization” or “Commercialize” shall mean any and all activities
directed to the commercialization of a Licensed Product in the Field in the
Territory, including pre-launch and post-launch marketing, promoting,
distributing, importing and exporting, using, keeping for sale, offering to sell
and selling the Licensed Product in the Field in the Territory.

1.14 “Commercially Reasonable Efforts” shall mean, with respect to an activity
to Exploit a Licensed Product, the level of effort used by a Party to conduct
such activities for its own proprietary product that is at a similar stage in
its lifecycle and is of comparable market potential or profit potential, taking
into account relevant considerations, including [* * *]. Commercially Reasonable
Efforts shall be determined on a Jurisdiction-by-Jurisdiction basis in the
Territory.

1.15 “Competing Product” shall mean a sustained release pharmaceutical product
containing one or more Drugs for use in the Field which is intended for
administration into the body other than by the [* * *] routes of delivery, other
than a Licensed Product.
[* * *]

1.16 “Confidential Information” means any and all proprietary information or
material, whether oral, visual, in writing or in any other form, that, at any
time since or after the date hereof, has been or is provided, communicated or
otherwise made known to the receiving Party or any of its Affiliates by or on
behalf of the disclosing Party or any of its Affiliates pursuant to this
Agreement or in connection with the transactions contemplated hereby or any
discussions or negotiations with respect thereto.

1.17 “Control” or “Controlled” shall mean the ownership in and to or the
possession of Intellectual Property Rights (including patent rights, Know-How,
trade secrets, data and rights to access or cross-reference regulatory filings)
by a Party or its Affiliate with the right to grant to the other Party a
license, sublicense or other right to use, of the scope provided for in this
Agreement, to such intangible or Intellectual Property Rights, without violating
the terms of any Applicable Laws, agreement or other arrangement, or increasing
the amount of any

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

payments between such Party and any Third Party existing at the time such Party
or such Affiliate would be first required hereunder to grant the other Party
such license, sublicense or other right.

1.18 “Cost” shall mean all reasonable internal and external costs (including
cost of labor), expenses and materials associated with an activity.

1.19 “Development Costs” shall mean the Costs of performing the Development Plan
as calculated in accordance with
Schedule 1.19.

1.20 “Development Data” shall mean all Preclinical, Non-Clinical and Clinical
data and CMC Data, including pharmacological, pharmacokinetic and toxicological
data and all data included in any Regulatory Documentation, generated with
respect to a Licensed Product that is Controlled at any time during the Term of
this Agreement by a Party, or any Affiliate, subcontractor, agent, licensee
thereof, or jointly by any of the foregoing.

1.21 “Dollars” shall mean U.S. Dollars, the lawful currency of the United
States.

1.22 “Dosage Form Development” shall mean any pharmaceutical development
activities for a Licensed Product that are necessary to design or modify a
pharmaceutical formulation which includes formulation development, in vitro
studies on solubility, stability, physical and chemical characteristics,
denaturation, particle formation, crystallization, micronization, excipient
selection, compounding, mixing, sterilization, filtration, quality assurance and
control.

1.23 “Drug” shall mean any one of the following: [* * *]

1.24 “Durect Technology” shall mean all Intellectual Property Rights and
Know-How related to the SABERTM Delivery System, the SABERTM Patent Rights, the
Product Know-How, the Product Patent Rights, Product Collaboration Inventions,
Durect Collaboration Inventions and Durect’s rights in Joint Inventions, that
are in each case Controlled by Durect or any of its Affiliates during the Term
of the Agreement.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.25 “Exploit” means to make, have made, import, export, use, sell, or offer for
sale, including to research, develop, Commercialize, register, modify, enhance,
improve, Manufacture, have Manufactured, hold or keep (whether for disposal or
otherwise), have used, transport, distribute, promote, market or have sold or
otherwise dispose of a Licensed Product. “Exploitation” means the act of
Exploiting a Licensed Product.

1.26 “FDA” shall mean the United States Food and Drug Administration and any
successor thereto.

1.27 “FDC Act” means the United States Federal Food, Drug, and Cosmetic Act and
any successor acts thereto, as amended from time to time.

1.28 “Field” shall mean all pain applications.

1.29 “First Commercial Sale” shall mean: (i) with respect to a Jurisdiction, the
first sale for use, consumption or resale of any Licensed Product by Hospira or
an Affiliate or a Commercial Sublicensee thereof to a Third Party in a bona fide
arm’s-length transaction in such Jurisdiction as evidenced by the invoice date
for such sale after Regulatory Approval has been obtained in such Jurisdiction
within the Territory and (ii) with respect to the Territory, the First
Commercial Sale in any Jurisdiction. A sale to an Affiliate or a Commercial
Sublicensee shall not constitute a First Commercial Sale unless the Affiliate or
Commercial Sublicensee is the end-user of a Licensed Product. For avoidance of
doubt, the provision of free samples of any Licensed Product including for
purposes of testing, marketing, sampling and promotional use, Clinical Trial
purposes or compassionate or similar use shall not be construed to constitute a
sale of any Licensed Product for purposes of this definition.

1.30 “Future Licensed Products” shall mean all Licensed Products other than the
Initial Licensed Product which come into existence under the terms of this
Agreement.

1.31 “GAAP” shall mean generally accepted accounting principles recognized in
the United States.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.32 “Governmental Entity” shall mean any regional, central, federal, state,
provincial or local court, commission or governmental, regulatory or
administrative body, board, bureau, agency, instrumentality, authority or
tribunal or any subdivision thereof.

1.33 “ICH Guidelines” shall mean the then-current guidelines applicable to
pharmaceutical products adopted by the International Conference on
Harmonization.

1.34 “IND” shall mean an Investigational New Drug application or Clinical Trial
application (together with all subsequent submissions, supplements and
amendments thereto, and any materials, documents or information referred to or
relied upon thereby) filed with the FDA to commence Clinical Trials, and its
equivalent in other Jurisdictions in the Territory.

1.35 “Initial Licensed Product” shall mean the pharmaceutical product under
development currently known as SABER™-Bupivacaine or POSIDUR™ consisting of a
Licensed Product wherein the Drug is Bupivacaine, as described in Schedule 1.35
hereto.

1.36 “Initial Licensed Product Trademarks” shall mean the trademark POSIDUR™,
and OPTESIA™ and all applications, registrations, extensions and renewals
relating thereto.

1.37 “Intellectual Property Rights” shall mean Patents, copyrights, trade
secrets, database rights, proprietary Know-How and similar rights of any type
(excluding trademarks) under the laws of any Governmental Entity, including all
applications, registrations, extensions and renewals relating to any of the
foregoing.

1.38 “Jurisdiction” shall mean a country within the Territory.

1.39 “Know-How” shall mean all technical information and other technical subject
matter, proprietary methods, ideas, concepts, formulations, discoveries,
inventions, devices, technology, trade secrets, compositions, designs, formulae,
know-how, show-how, specifications, drawings, techniques, results, processes,
methods, procedures and/or designs whether or not patentable.

1.40 “Knowledge” shall mean, with respect to a Party, the good faith
understanding of the facts and information in the possession of an officer of
such Party or any of its Affiliates.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

For purposes of this definition, an “officer” shall mean any person in the
position of vice president or above, including any chief executive officer,
president, or chief medical officer of a Party or any of its Affiliates.

1.41 “Line Extension” of a Licensed Product shall mean a pharmaceutical product
which is an improvement, reformulation or line extension (including any primary
packaging modification) of the Licensed Product intended to be Commercialized
after the first Regulatory Approval of the Licensed Product which uses the
identical Drug(s) as the Licensed Product as the active pharmaceutical
ingredient(s) formulated in the SABER™ Delivery System for use in the Field and
in the Territory which is administered into the body other than by the [* * *]
routes of delivery.

1.42 “Licensed Product” shall mean a pharmaceutical product consisting of one or
more Drugs as the sole active pharmaceutical ingredient(s) formulated in the
SABER™ Delivery System for use in the Field and in the Territory which is
intended for administration into the body other than by [* * *], including all
dosage strengths and Line Extensions thereof.

1.43 “Manufacture” and “Manufacturing” shall mean all activities related to the
production, manufacture, processing, filling, finishing, packaging, labeling,
shipping and holding of a Licensed Product or any excipients thereof, including
stability testing, quality assurance and quality control.

1.44 “Marketing Exclusivity Right” shall mean a marketing or data exclusivity
right conferred as a result of (a) designation as a drug for rare diseases or
conditions under Sections 525 et seq. of the FDC Act, (b) an exclusive right to
sell under an NDA pursuant to Section 505(j)(5)(F)(ii), (iii) and (iv) or
505(c)(3)(E)(ii), (iii) and (iv) of the FDC Act or any relevant subsequent
legislation, rules or regulations, or (c) the exclusive right granted by the FDA
upon completion of pediatric studies requested by the FDA under Section 505A(a)
of the FDC Act, including any equivalent or similar rights applicable in another
Jurisdiction in the Territory, successor legislations of any of the foregoing or
subsequent legislation that has the effect of extending marketing or data
exclusivity right to a pharmaceutical product in the Territory.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.45 “Non-Clinical” when used with respect to studies or data refers to safety,
toxicology and other studies undertaken in non-human animals in support of
Clinical Trials or otherwise required for Regulatory Approval.

1.46 “NDA” shall mean any applicable “New Drug Application,” filed with the FDA
as described in 21 CFR, as amended.

1.47 “Net Sales” shall mean, for any period, the total amount billed or invoiced
on sales of a Licensed Product (in its final, finished form for use by the end
user) in the Field in the Territory by Hospira, its Affiliates or Commercial
Sublicensees to independent, unrelated Third Parties such as wholesalers,
distributors or end-users in bona fide arm’s length transactions, less the
following deductions, in each case related specifically to the Licensed Product
and actually allowed and/or taken by a Third Party and not otherwise recovered
by or reimbursed to Hospira, its Affiliates or Commercial Sublicensees:

(i) trade, cash and quantity discounts (other than price discounts granted at
the time of invoicing and already included in the gross amount invoiced);

(ii) price reductions or rebates, retroactive or otherwise, imposed by,
negotiated with or otherwise paid to governmental authorities;

(iii) taxes on sales (such as sales taxes, value added taxes, use taxes or
similar taxes), but not including taxes assessed against the income derived from
such sales;

(iv) custom duties, surcharges and other governmental charges incurred in
connection with the exportation or importation of the Licensed Product;

(v) freight, insurance and other transportation charges to the extent added to
the sale price and set forth separately as such in the total amount invoiced, as
well as any fees for services provided by distributors, wholesalers and
warehousing chains related to the distribution of the Licensed Product that are
treated as sales allowances under GAAP if GAAP is applicable to such selling
party, provided that such fees are consistent with those charged across the
selling party’s product line;

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(vi) amounts repaid or credited by reason of rejections, defects, return
credits, recalls or returns or because of retroactive price reductions,
including rebates or wholesaler charge backs; and

(vii) the portion of management fees paid during the relevant time period to
group purchasing organizations and/or pharmaceutical benefit managers relating
specifically to the finished Licensed Product that are treated as sales
allowances under GAAP if GAAP is applicable to such selling party, provided that
such fees are consistent with those charged across the selling party’s product
line.

Where any reduction in the invoice price or deduction therefrom is based on
sales of a bundle of products in which the Licensed Product for use in the Field
in the Territory is included, the reduction in price or deduction therefrom
would be allocated as actually credited unless such Licensed Product receives a
higher than pro rata share of any reduction or deduction that the bundled set of
products receives. In such case, the reduction or deduction therefrom shall be
allocated to such Licensed Product on a no greater than a pro rata basis based
on the sales value (i.e., the unit average selling price multiplied by the
number of units) of such Licensed Product relative to the sales value
contributed by the other products in the bundle with respect to such sale.

Subject to the above, Net Sales shall be calculated in accordance with the
applicable selling party’s standard internal policies and procedures, which must
be in accordance with GAAP if GAAP is applicable to such party. If consideration
in addition to or in lieu of money is received for the sale of the Licensed
Product in the Field in the Territory on an arm’s-length transaction, the fair
market value of such consideration must be included in the determination of Net
Sales for such a sale. Net Sales shall not include (a) sales, transfers or
dispositions between or among Hospira, its Affiliates or Commercial
Sublicensees, (b) sales, transfers or dispositions of Licensed Product for
sampling, Preclinical, Clinical Trial or regulatory purposes conducted by or on
behalf of Hospira, its Affiliates or Commercial Sublicensees in connection with
the Licensed Product in the Field in the Territory, (c) destruction of the
Licensed Product and (d) sales, transfers or dispositions for legitimate
charitable purposes at no charge.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

[* * *]

Net Sales shall not include any amount billed or invoiced on sales of a Licensed
Product in a Jurisdiction after expiration of the Royalty Term with respect to
such Licensed Product in such Jurisdiction.

1.48 “Nycomed Agreement” shall mean the agreement entered into between Durect
and Nycomed Danmark APS dated November 29, 2006, as amended by the amendment
dated February 18, 2010.

1.49 “Party” shall mean Durect or Hospira, as the case may be, and, when used in
the plural, shall mean Durect and Hospira.

1.50 “Patent” and “Patents” shall mean issued patents and patent applications,
including any and all provisionals, continuations, divisionals,
continuation-in-part applications, foreign counterparts, substitutions,
reissues, renewals, re-examinations, supplementary protection certificates,
patent term extensions, adjustments or restoration rights, registrations,
confirmations or subsequently issued protective rights of similar nature of any
of the above.

1.51 “Person” shall mean an individual, sole proprietorship, partnership,
limited partnership, limited liability partnership, corporation, limited
liability company, business trust, joint stock company, trust, incorporated
association, joint venture, or other entity or organization, in any case whether
for-profit or not-for profit, and including, without limiting the generality of
any of the foregoing, a government or political subdivision, department or
agency of a government.

1.52 “Preclinical” shall mean preliminary pharmacological studies undertaken in
non-human animals, but not necessarily for purposes of submission in support of
Regulatory Approval.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.53 “Pricing” or “Pricing Approval” shall mean any and all pricing approvals,
licenses, registrations or authorizations of any Regulatory Authority necessary
to Commercialize, promote, distribute, sell or market a Licensed Product in the
Field and in the Territory.

1.54 “Product Know-How” shall mean Know-How related to the Licensed Products
that is (a) Controlled by Durect or any of its Affiliates during the Term of
this Agreement and (b) useful for a Party, or its Affiliates and/or licensees to
Exploit any Licensed Product in the Territory.

1.55 “Product Patents Rights” shall mean (i) those Patents in the Territory
Controlled by Durect or any of its Affiliates during the Term which relate to
the Licensed Products, excluding the SABERTM Patent Rights and (ii) those
Patents in the Territory Controlled by Durect or any of its Affiliates during
the Term which cover Product Collaboration Inventions. Schedule 1.55 sets forth
a list of the Product Patent Rights as of the Effective Date. Schedule 1.55
shall be updated by Durect on a regular basis throughout the Term.

1.56 “Regulatory Approval” means approvals (including NDAs), licenses,
registrations or authorizations of any Regulatory Authority of the Regulatory
Approval Application necessary to Manufacture and Commercialize a Licensed
Product in a Jurisdiction.

1.57 “Regulatory Approval Application” shall mean an NDA in the U.S., a New Drug
Submission in Canada, or other similar documentation required to be approved
before commercial sale or use of a Licensed Product as a pharmaceutical or
medicinal product in a Jurisdiction.

1.58 “Regulatory Authority” shall mean the FDA, Health Canada and any other
Governmental Entity in the Territory or Jurisdiction regulating or otherwise
exercising authority over the distribution, manufacture, use, storage,
transport, Clinical Trial or sale of a Licensed Product.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.59 “Regulatory Documentation” shall mean all submissions to Regulatory
Authorities, including for Clinical Trials, Non-Clinical trials, Pre-Clinical
trials, tests, and biostudies, relating to a Licensed Product, including all
INDs and Regulatory Approval Applications, as well as all correspondence with
Regulatory Authorities (registration and licenses, Pricing and Reimbursement
correspondence, regulatory drug lists, advertising and promotion documents),
Adverse Event files, complaint files, Manufacturing records and inspection
reports.

1.60 “Reimbursement” or “Reimbursement Approval” shall mean any and all
reimbursement approvals, licenses, registrations or authorizations of the
Regulatory Authority in any Jurisdiction necessary to Commercialize, promote,
distribute, sell or market a Licensed Product in the Field to cover the costs
related to the treatment of patients with a Licensed Product.

1.61 “Royalty Term” shall mean, with respect to a Licensed Product, in each
Jurisdiction of the Territory, the period of time commencing on the First
Commercial Sale of the Licensed Product in such Jurisdiction and ending on the
later of: (a) [* * *] years from the date of the First Commercial Sale of the
Licensed Product in such Jurisdiction and (b) the end of the Patent Royalty Term
for such Licensed Product in such Jurisdiction.

1.62 “SABERTM Delivery System” shall mean Durect’s non-polymeric, high viscosity
liquid carrier system for imparting controlled release to active ingredients,
including any and all Intellectual Property Rights therein and thereto.

1.63 “SABERTM Patent Rights” shall mean those Patents in the Territory
Controlled by Durect or any of its Affiliates during the Term which relate to
the SABERTM Delivery System as listed in Schedule 1.63. Schedule 1.63 shall be
updated by Durect on a regular basis throughout the Term.

1.64 “Specifications” shall mean the specifications for a Licensed Product as
agreed upon by the JSC, considering the applicable regulatory requirements in
the Territory, as may be amended from time to time.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.65 “Substitutable Product” shall mean a sustained release pharmaceutical
product that is bioequivalent and substitutable for the applicable Licensed
Product and given an “AA” or “AB” therapeutic equivalence code to the applicable
Licensed Product in the FDA Orange Book or equivalent thereof.

1.66 “Territory” shall mean the U.S. and Canada, excluding with respect to any
Licensed Product, any Jurisdiction in which Hospira’s rights to such Licensed
Product have terminated under the terms of this Agreement.

1.67 “Third Party” shall mean any Person who or which is neither a Party nor an
Affiliate of a Party.

1.68 “Topical” shall mean a route of delivery which consists of application
externally and topically to the epidermis other than to a wound or incision.

1.69 “U.S.” shall mean the United States of America, including all states,
territories and possessions (including Puerto Rico) thereof.

1.70 “Valid Claim” means (a) any claim of issued and unexpired Patents covering
Durect Technology that (i) has not been held permanently revoked, unenforceable
or invalid by a decision of a court or governmental agency of competent
jurisdiction, which decision is unappealable or unappealed within the time
allowed for appeal, and (ii) has not been abandoned, disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise; or (b) any claim of a pending Patent Right covering Durect Technology
that was filed and is being prosecuted in good faith and has not been abandoned
or finally disallowed without the possibility of appeal or re-filing of the
application; provided that such application has not been pending for
more than [* * *] years.

1.71 Other Definitions.

Each of the following terms is defined in the Section set forth opposite such
term below:

“ADR” – Section 14.10

“Adverse Event” – Section 4.7

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

“Agreement” – Preamble

“Annual Net Sales Period” – Section 6.2(a)

“Audited Party” – Section 7.5

“Auditing Party” – Section 7.5

“CEO/CO Resolution Period” – Section 2.1(d)

“CEO” – Section 2.1(d)

“cGCP” – Section 11.2(b)

“CO” – Section 2.1(d)

“Commercialization Committee” or “CC” – Section 2.3(a)

“Damages” – Section 12.1

“Deemed Royalty Obligation” – Section 9.3(e)

“Development Plan” – Section 4.1

“Development Plan Budget” – Section 4.1

“Defaulting Party” – Section 4.8

“Durect” – Preamble

“Durect Collaboration Invention” – Section 9.1(b)

“Durect Related Party” – Section 12.2

“Exclusivity Period” – Section 3.4(c)(i)

“Effective Date” – Preamble

“Force Majeure” – Section 14.12

“Hospira” – Preamble

“Hospira Collaboration Invention” – Section 9.1(c)

“Hospira Related Party” – Section 12.1

“Hospira Worldwide” – Section 8.1

“Indemnified Party” – Section 12.4.

“Indemnifying Party” – Section 12.4

“Joint Executive Committee” or “JEC” – Section 2.1(a)

“Joint Steering Committee” or “JSC” – Section 2.2(a)

“Joint Invention” – Section 9.1(d)

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

“Joint Patent Rights” – Section 9.2(b)

“Know-How Royalties” – Section 6.2(b)

“Know-How Royalty Term” – Section 6.2(b)

“Marketing Plan” – Section 5.2.

“Milestone Payment” – Section 6.1

“Non-Defaulting Party” – Section 4.8

“Patent Litigation Losses” – Section 9.5(c)

“Patent Royalties” – Section 6.2(a)

“Patent Royalty Term” – Section 6.2(a)

“Permitted Sublicensees” – Section 3.2

“Pharmacovigilance Agreement” – Section 4.7

“Product Collaboration Invention” – Section 9.1(a)

“Publication Policies – Section 10.1

“Product Trademarks” – Section 3.6(a)

“SAIB Supply Agreement” – Section 8.3

“Sales Projection” – Section 5.2

“Serious Adverse Drug Experience” – Section 13.3

“Supply Agreement” – Section 8.1

“Term” – Section 13.1

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

1.74 Interpretation

(a) Whenever any provision of this Agreement uses the term “including” (or
“includes”), such term shall be deemed to mean “including without limitation”
and “including but not limited to” (or “includes without limitations” and
“includes but is not limited to”) regardless of whether the words “without
limitation” or “but not limited to” actually follow the term “including” (or
“includes”);

(b) “Herein”, “hereby”, “hereunder”, “hereof” and other equivalent words shall
refer to this Agreement in its entirety and not solely to the particular portion
of this Agreement in which any such word is used;

(c) All definitions set forth herein shall be deemed applicable whether the
words defined are used herein in the singular or the plural;

(d) Wherever used herein, any pronoun or pronouns shall be deemed to include
both the singular and plural and to cover all genders;

(e) The recitals set forth at the start of this Agreement, along with the
Exhibits and Schedules to this Agreement, and the terms and conditions
incorporated in such recital, Exhibits and Schedules shall be deemed integral
parts of this Agreement and all references in this Agreement to this Agreement
shall encompass such recitals, Exhibits and Schedules and the terms and
conditions incorporated in such recitals, Exhibits and Schedules, provided, that
in the event of any conflict between the terms and conditions of this Agreement
and any terms and conditions set forth in the Exhibits and Schedules, the terms
of this Agreement shall control;

(f) In the event of any conflict between the terms and conditions of this
Agreement and any terms and conditions that may be set forth on any order,
invoice, verbal agreement or otherwise, the terms and conditions of this
Agreement shall govern;

(g) The Agreement shall be construed as if both Parties drafted it jointly, and
shall not be construed against either Party as principal drafter;

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(h) Unless otherwise provided, all references to Sections, Schedules and
Exhibits in this Agreement are to Sections, Schedules and Exhibits of and to
this Agreement;

(i) All references to days, months, quarters or years are references to calendar
days, calendar months, calendar quarters or calendar years unless otherwise
expressly provided; references to a “business day” herein shall mean a day when
both Hospira and Durect corporate headquarters are open during regular business
hours for the conduct of normal business operations;

(j) Any reference to any federal, national, state, local or foreign statute or
law shall be deemed to also refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise;

(k) Any requirements of notice or notification by one Party to another shall be
construed to mean written notice in accordance with Section 14.3; and

(l) Wherever used, the word “shall” and the word “will” are each understood to
be imperative or mandatory in nature and are interchangeable with one another.

2. GOVERNANCE.

2.1 Joint Executive Committee.

(a) (a) Members; Officers. Within [* * *] days of the Effective Date, the
Parties will establish a joint executive committee (the “Joint Executive
Committee” or “JEC”), which shall consist of up to [* * *] members with an equal
number of members from each of Durect and Hospira. The members of the JEC shall
be set forth on Schedule 2.1, as may be amended by the designating Party from
time to time. Representatives of the JEC shall be executives of the respective
Party. Each of Durect and Hospira may replace any or all of its representatives
on the JEC at any time upon written notice to the other Party. Any member of the
JEC may designate a substitute with due authority to temporarily attend and
perform the functions of that member at any meeting of the JEC. The JEC shall be
co-chaired by a representative of each of Durect and Hospira, as such
representative may be changed by the

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

designating Party at any time. The co-chairpersons shall appoint a secretary of
the JEC, and such secretary shall serve for such term as designated by the
co-chairpersons.

(b) Responsibilities. The JEC shall perform the following functions:

(i) manage and oversee the interactions and performance of the Parties pursuant
to the terms of this Agreement;

(ii) review and make strategic decisions as referred to the JEC by the JSC, and
in accordance with the procedures established in Section 2.1(d), resolve
disputes, disagreements and deadlocks unresolved by the JSC;

(iii) review and evaluate the progress of the JSC;

(iv) consider any Line Extension, including any Dosage Form Development related
to a Line Extension, of a Licensed Product in the Field and in the Territory,
and if deemed suitable by the JEC, discuss a development plan (including
timelines) and budget for such development, including Dosage Form Development;
[* * *];

(v) have such other responsibilities as may be assigned to the JEC pursuant to
this Agreement or as may be mutually agreed upon by the Parties from time to
time.

(c) Meetings. The JEC shall meet in person, by video teleconference or by
telephone annually and more frequently as required to resolve disputes,
disagreements or deadlocks in the JSC, on such dates, and at such places and
times, as the Parties shall agree. From time to time, each Party may request a
JEC meeting upon notice to the other Party specifying the subject matters to be
discussed, and the Parties shall convene such JEC meeting within [* * *]
business days of the date of the notice. Meetings of the JEC that are held in
person shall alternate between the offices of Durect and Hospira, or such other
place as the Parties may agree. The members of the JEC also may convene or be
polled or consulted from time to time by means of telecommunications, video
conferences, electronic mail or correspondence, as deemed necessary or
appropriate.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(d) Decision-making. The JEC may make decisions with respect to any subject
matter that is subject to the JEC’s decision-making authority and functions as
set forth in Section 2.1(b). All decisions of the JEC shall be made by unanimous
vote or written consent, with Durect and Hospira each having, collectively, one
vote in all decisions. The JEC shall use reasonable efforts to resolve the
matters within its roles and functions or otherwise referred to it. With respect
to all matters that are subject to the JEC’s decision-making authority, if the
JEC cannot reach consensus within [* * *] business days after it has met and
attempted to reach such consensus, the matter shall be referred on the [* * *]
business day to the chief executive officer (“CEO”) of Durect and a corporate
officer (“CO”) of Hospira who shall meet as soon as practicable, but no later
than [* * *] business days after such referral, to attempt in good faith to
resolve the dispute. If the dispute is not resolved by the CEO of Durect and a
CO of Hospira by mutual agreement within [* * *] business days after a meeting
to discuss the dispute (such [* * *]-business day period after the meeting of
the CEO and CO shall be referred to as the “CEO/CO Resolution Period”), the
dispute shall be resolved by the Alternative Dispute Resolution procedures under
Section 14.10. [* * *]

2.2 Joint Steering Committee.

(a) Members; Officers. Within [* * *] days of the Effective Date, the Parties
will establish a joint steering committee (the “Joint Steering Committee” or
“JSC”), which shall consist of an equal number of representatives from each of
Durect and Hospira, up to [* * *] members from each Party on such Committee
unless otherwise agreed to by the Parties in writing. The representatives on the
JSC shall be set forth on Schedule 2.2, as may be amended by the designating
Party from time to time. Each of Durect and Hospira may replace any or all of
its representatives on the JSC at any time upon notice to the other Party. Such
representatives shall be employees of each such Party, and those representatives
of each such Party shall, individually or collectively, have expertise in
pharmaceutical drug development,

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

regulatory matters, Clinical Trials, and/or other expertise to the extent
relevant. Any member of the JSC may designate a substitute with due authority to
temporarily attend and perform the functions of that member at any meeting of
the JSC. Durect and Hospira each may, in its discretion, invite non-member
representatives that are employees of or external consultants retained by either
Hospira or Durect (and non-employee agents and consultants if agreed to in
writing by the Parties) to attend meetings of the JSC, provided that such
non-employee agents and consultants have signed customary confidentiality
agreements. The JSC shall be chaired by a representative of each of Durect and
Hospira, as such representative may be changed by the designating Party at any
time. The secretary of the JSC shall alternate between a representative of
Durect and a representative of Hospira. The first secretary of the JSC shall be
a Durect representative.

(b) Responsibilities. The JSC shall perform the following functions:

(i) oversee the implementation of the Development Plan;

(ii) at each meeting, as applicable, review the applicable Licensed Product
development status with the timelines set forth in the Development Plan as well
as explanations to any deviations to timeline;

(iii) approve any modifications or amendments to the Development Plan (including
Development Plan Budget);

(iv) approve regulatory strategy for the applicable Licensed Product in the
Regulatory Approval Application for each Jurisdiction in the Territory;

(v) at each meeting of the JSC, review a comparison of actual Development Costs
to the budgeted Development Costs for the year-to-date, as current as
practicable to a date immediately prior to the date of the meeting and discuss
any deviations;

(vi) review and evaluate progress of the Development Plan;

(vii) define criteria for assessing the outcome of Pre-Clinical, Non-Clinical,
Clinical Trials, and the Development Plan;

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(viii) in connection with Pre-Clinical and Non-Clinical studies and Clinical
Trials and Manufacturing studies in the Development Plan, review, discuss and
approve protocols, trial budgets, Clinical Trial supplies and trial designs;

(ix) subject to Section 4.3, allocate the responsibilities for carrying out the
Development Plan between the Parties;

(x) review and approve the Specifications for the applicable Licensed Product in
the Territory, (provided, however, Hospira will, subject to Section 3.6(c),
solely decide the packaging lay-out/design and content and related materials for
use in the Territory, prior to commercial use);

(xi) review and oversee the Regulatory Approval process, including approve final
label indications for the applicable Licensed Product in the Regulatory Approval
Application, and interactions with Regulatory Authorities as set forth in
Section 4.6;

(xii) develop Publication Policies in accordance with Section 10.1;

(xiii) establish trademark usage and quality standards with respect to the use
of the Initial Licensed Product Trademarks; and

(xiv) have such other responsibilities as may be assigned to the JSC pursuant to
this Agreement or as may be mutually agreed upon by the Parties from time to
time.

(c) Meetings. The JSC shall meet in person, by video teleconference or by
telephone initially at least quarterly, and more or less frequently as Durect
and Hospira deem appropriate or as reasonably requested by either such Party, on
such dates, and at such places and times, as such Parties shall agree. From time
to time, each Party may request a JSC meeting upon written notice to the other
Party specifying the subject matters to be discussed, and the Parties shall
convene such JSC meeting within [* * *] business days of the date of the notice.
Meetings of the JSC that are held in person shall alternate between the offices
of Durect and Hospira, or such other place as such Parties may agree. The
members of the JSC

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

also may convene or be polled or consulted from time to time by means of
telecommunications, video conferences, electronic mail or correspondence, as
deemed necessary or appropriate.

(d) Decision-making. The JSC may make decisions with respect to any subject
matter that is subject to the JSC’s decision-making authority and functions as
set forth in Section 2.2(b). All decisions of the JSC shall be made by unanimous
vote or written consent, with Durect and Hospira each having, collectively, one
vote in all decisions. If, with respect to any matter that is subject to the
JSC’s decision-making authority, after all reasonable efforts to reach consensus
have been exhausted, the JSC cannot reach consensus within [* * *] business days
after it has first met and attempted to reach such consensus, the matter shall
be referred on the [* * *] business day to the JEC for resolution.

2.3 Commercialization Committee

(a) Members; Officers. At such time as Hospira deems appropriate, however not
later than upon the submission of the NDA in the U.S. for the Initial Licensed
Product, Hospira shall establish a commercialization committee (the
“Commercialization Committee” or “CC”), which shall consist of representatives
from each of Durect and Hospira. Each of Durect and Hospira may replace any or
all of its representatives on the CC at any time upon written notice to the
other Party. Such representatives shall be employees of each such Party, and
those representatives of each such Party shall, individually or collectively,
have expertise in marketing and sales of pharmaceutical products. Any member of
the CC may designate a substitute with due authority to temporarily attend and
perform the functions of that member at any meeting of the CC. Durect and
Hospira each may, in its discretion, invite non-member representatives that are
employees of or external consultants retained by either Hospira or Durect to
attend meetings of the CC, provided that such external consultants have signed a
confidentiality agreement with Hospira and Durect prior to such meeting. The CC
shall be chaired by a representative of Hospira. [* * *]

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(b) Responsibilities. The CC shall perform the following functions:

(i) review the annual Marketing Plan developed by Hospira in accordance with
Section 5.2;

(ii) review modifications to the Marketing Plan throughout the year;

(iii) inform and discuss the state of the markets for each Licensed Product in
the applicable Jurisdiction(s) in the Territory, competitors and the competitive
landscape, and opportunities and issues concerning the Commercialization of each
Licensed Product, including consideration of marketing and promotional strategy,
marketing research plans, labels for each Licensed Product, positioning of each
Licensed Product and profile issues regarding each Licensed Product;

(iv) review the phase IV protocols proposed by Hospira under Section 5.4, taking
into consideration the appropriateness of any proposed development activities
including line extensions, Clinical Trials for purposes of obtaining new label
indications and phase IV Clinical Trials in the context of the overall marketing
and promotional strategy for each Licensed Product in the Territory;

(v) review data and reports arising from and generated in connection with the
Commercialization of each Licensed Product in the Territory including the
Marketing Plan, marketing budgets, market research studies, and Licensed Product
sales and formulary access and sales forecasts;

(vi) at each meeting of the CC, review a comparison of actual sales and Costs to
the year-to-date forecast, as current as reasonable to a date immediately prior
to the date of the meeting; and

(vii) have such other responsibilities as may be assigned to the CC pursuant to
this Agreement or as may be mutually agreed upon by the Parties from time to
time.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(c) Meetings. The CC shall meet in person, by video teleconference or by
telephone twice annually, on such dates, and at such places and times, as such
Parties shall agree. From time to time, each Party may request a CC meeting upon
written notice to the other Party specifying the subject matters to be
discussed, and the Parties shall convene such CC meeting within [* * *] business
days of the date of the notice. Meetings of the CC that are held in person shall
alternate between the offices of Durect and Hospira, or such other place as the
Parties may agree. The members of the CC may also convene or be polled or
consulted from time to time by means of telecommunications, video conferences,
electronic mail or correspondence, as deemed necessary or appropriate.

2.4 Minutes of the JEC and JSC Meetings.

(a) Subject to Section 2.4(b), definitive minutes of all JEC and JSC meetings
shall be finalized no later than [* * *] business days after the meeting to
which the minutes pertain, as follows:

(i) Within [* * *] business days after a JEC or a JSC meeting, the secretary of
such JEC or JSC shall prepare and distribute to all such members of the JEC or
JSC draft minutes of the meeting. Such minutes shall provide a list of any
actions, decisions or determinations approved by such JEC or JSC and a list of
any issues yet to be resolved, either within the JEC or JSC, or through the
relevant escalation process.

(ii) The secretary of such JEC or JSC shall have [* * *] business days after
distribution of the draft minutes to discuss each JEC or JSC member’s comments
and finalize the minutes. The secretary and chairperson(s) of such JEC or JSC
shall each sign and date the final minutes. The signature of each chairperson
and secretary upon the final minutes shall indicate each Party’s assent to the
minutes.

(b) If at any time during the preparation and finalization of JEC or JSC meeting
minutes, the JEC or JSC members do not agree on any issue with respect to the
minutes, such issue shall be resolved as provided in Section 2.1(d) or 2.2(d),
as the case may be. The decision resulting from the foregoing process shall be
recorded by the secretary in

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

amended finalized minutes for said meeting. All other issues in the minutes that
are not subject to the foregoing process shall be finalized within the [* *
*]-business day period as provided in Section 2.4(a).

2.5 Duration of Committees. The JEC and CC shall exist until the termination of
this Agreement. The Parties may mutually agree to terminate the JEC or CC
earlier, in which case the JEC or CC shall terminate within [* * *] days of such
mutual agreement, and the Parties shall thereafter discuss and agree upon
alternative ways to cover the responsibilities and duties of the JEC or CC, as
applicable. The JSC shall terminate at such time when no Licensed Products are
being developed under the Agreement. In the event that after termination of the
JSC, the Parties begin development activities for any Licensed Product, the JSC
shall be reinstated. Notwithstanding the foregoing, however, commencing upon
receipt of Regulatory Approval of the Initial Licensed Product in the U.S.,
Durect may, upon written notice to Hospira, elect to have the JEC, JSC and CC
terminated, in which case the JEC, JSC and CC shall terminate within [* * *]
days of such notice from Durect, and the Parties shall thereafter discuss and
agree upon alternative ways to cover the responsibilities and duties of the JEC,
JSC and CC.

2.6 Expenses. Each Party shall be responsible for all travel and related Costs
for its members and other representatives to attend meetings of, and otherwise
participate on, a Committee.

2.7 Scope of Committees. Hospira and Durect have chartered the Committees with a
belief that vigorous interaction and cooperation between the Parties are
essential for the success of a Licensed Product; provided each Party shall
retain the rights, powers and discretion granted to it under this Agreement.
Except as expressly provided in the Agreement, no rights, powers or discretion
shall be delegated to or vested in the Committees. Nothing in this Article 2,
and no decision made by a committee shall be deemed to modify or supersede any
term or condition set forth in this Agreement, any of the rights, powers and/or
discretions granted to a Party under this Agreement, nor any decision or
decision-making authority

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

provided to a Party in this Agreement. Furthermore, the Committees shall not
have the authority to make any determination that a Party is in breach of this
Agreement, or that a Party has engaged or not engaged in acts related to breach.
The Committees shall not have the power to amend, modify or waive compliance
with this Agreement, which may only be amended or modified, or compliance with
which may only be waived, as provided in Section 14.8.

3. GRANT OF RIGHTS.

3.1 Rights Granted to Hospira. On the terms and subject to the conditions of
this Agreement, Durect hereby grants to Hospira:

(a) the exclusive right and license, even as to Durect and its Affiliates, to
Exploit the Licensed Products in the Field and in the Territory, including the
right to record sales for its own account; and

(b) an exclusive license, even as to Durect and its Affiliates, under the Durect
Technology for use in the Field and Territory to Exploit the Licensed Products.

Although Hospira is being granted an exclusive license in the Field and
Territory to Exploit the Licensed Products, during the Term, Hospira hereby
grants to Durect the right to perform the development and Manufacturing
activities with respect to the Licensed Products in the Field and in the
Territory as expressly set forth in this Agreement.

3.2 Sublicense. Hospira shall have the right to grant sublicenses under the
exclusive license granted pursuant to Section 3.1 to any Affiliate of Hospira
and any Third Party wholesalers, subdistributors, co-promoters or similar Third
Parties as well as contract research organizations and contract manufacturing
organizations (“Permitted Sublicensees”). In addition, Hospira may delegate or
sublicense any of the rights granted hereunder to a sublicensee, other than the
Permitted Sublicensees, with the prior written consent of Durect, which consent
shall not be unreasonably withheld, provided that [* * *]. In the event Hospira
desires to grant a sublicense of the rights granted hereunder in accordance with
this Section 3.2, it shall provide Durect, within [* * *] days prior to
execution of each Commercial Sublicense agreement, the name of the Commercial
Sublicensee, the territories for which the

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

sublicense would be granted and the proposed sublicense expiration date. Any
Commercial Sublicense by Hospira hereunder shall be subject to the terms and
conditions of this Agreement, and the Commercial Sublicensees will not be
permitted to grant further sublicenses. In addition, any Commercial Sublicensee
shall be subject to the terms and conditions of this Agreement to the same
extent as applicable to Hospira with respect to the field sublicensed. Any
sublicense or delegation by Hospira shall not relieve Hospira of its obligations
under the Agreement, Hospira may not grant any sublicensee greater rights than
the rights granted to Hospira under this Agreement, and the rights of Durect
under this Agreement shall not be prejudiced, reduced or limited in any way as a
result of such sublicense or delegation.

3.3 Section 365(n) of the Bankruptcy Code. All rights and licenses granted under
or pursuant to this Agreement, including amendments hereto, by each Party to the
other Party are, for all purposes of 11 U.S.C. Section 365(n), licenses of
rights to intellectual property as defined in Title 11. Each Party may elect to
retain and may fully exercise all of its rights and elections under 11 U.S.C.
Section 365(n).

3.4 Exclusivity.

(a) Licensed Product Exclusivity. Pursuant to the rights granted to Hospira
under Section 3.1, Durect and its Affiliates shall not develop (except in
performance of its obligations under this Agreement), Manufacture nor
Commercialize, and shall not grant any rights or licenses to any Third Party to
develop, Manufacture or Commercialize any Licensed Product in the Territory;
provided, however, notwithstanding the foregoing and Section 3.1(a), Durect
shall have the right to Manufacture or have Manufactured any Licensed Product in
the Territory solely for development or Commercialization outside the Territory.

[* * *]

3.5 Product Diversion. To the extent permitted by Applicable Laws, (i) Durect
shall not, and shall cause its Affiliates and licensees (other than Hospira) and
their distributors not to, knowingly or intentionally sell any Licensed Product
in the Field in the Territory

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

including through any media (e.g., the internet) and, (ii) should Durect become
aware of any such Licensed Product diversion, it shall, and shall cause its
Affiliates and licensees (other than Hospira) to stop the diversion. To the
extent permitted by Applicable Laws, (x) Hospira or its Affiliates shall not,
and shall include in agreements with its sublicensees and distributors that sell
any Licensed Product in the Field in the Territory covenants from such parties
not to, knowingly or intentionally sell any Licensed Product outside the
Territory or outside the Field including through any media (e.g., the internet),
and (y) should Hospira become aware of such Licensed Product diversion, it
shall, and cause its Affiliates, sublicensees and distributors to stop the
diversion.

3.6 Trademarks; Logos.

(a) Product Trademarks. Hospira shall have the right to select the Licensed
Product name and all trademarks used in connection with the marketing, promotion
and Commercialization of the applicable Licensed Product including special
promotional or advertising taglines used in connection with the marketing of the
applicable Licensed Product, in each case in the Territory (all such trademarks
except for the Initial Licensed Product Trademarks, including all goodwill
associated therewith, and all applications, registrations, extensions and
renewals relating thereto shall be referred to as “Product Trademarks”). Hospira
shall be the exclusive owner of the Product Trademarks and all goodwill
associated therewith, and shall, at its sole discretion and Cost, register and
maintain such Product Trademarks. Durect agrees that it will not challenge the
title or ownership of Hospira in the Product Trademarks or any Hospira
trademark, or attack or contest the validity of such trademarks.

(b) License to Initial Licensed Product Trademarks. Subject to the terms hereof,
Durect hereby grants to Hospira an exclusive license, even as to Durect and its
Affiliates, with the right to sublicense to Permitted Sublicensees and
Durect-approved Commercial Sublicensees under Section 3.2 to use the Initial
Licensed Product Trademarks in the Territory solely in connection with the
Manufacture and Commercialization of the

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Initial Licensed Product in the Territory; provided, however, with respect to
the OPTESIA™ mark, the foregoing license to Hospira and subsequent sublicense by
Hospira shall be subject to the prior approval of Nycomed, and in addition,
notwithstanding anything to the contrary in this Agreement, the rights of
Hospira granted hereunder with respect to the OPTESIA™ mark shall at all times
be subject to the terms and conditions applicable to such license as set forth
in the Nycomed Agreement. Hospira agrees that it will not challenge the title or
ownership of Durect in the Initial Licensed Product Trademarks, or attack or
contest the validity of such trademark.

(c) Durect Trademark. Hospira agrees to use Commercially Reasonable Efforts to
utilize a Durect trademark on labels and/or packaging for all Licensed Product
marketed, distributed or sold in the Territory, provided that [* * *] Licensed
Product labels and/or packaging shall include all appropriate patent markings
and notices reasonably agreed to by the Parties.

[* * *]

4. DEVELOPMENT AND REGULATORY

4.1 Plans. The “Development Plan” sets forth, on a calendar year-by-calendar
year basis, the Development Plan activities, for development of a Licensed
Product through Regulatory Approval (including any mandated post-conditional
Regulatory Approval obligations) in the Territory, including: (i) the
development, scientific, medical, regulatory and other activities including
Clinical Trials, Non-Clinical and Pre-Clinical studies and Dosage Form
Development, Manufacturing process development, scale-up, validation, ICH
registration batches, quality control, stability and manufacturing qualification
and supply of the Licensed Product for Clinical Trials for the development of
the Licensed Product through Regulatory Approval (including post-Regulatory
Approval if mandated by a Regulatory Authority in order to obtain or maintain
Regulatory Approval for the Licensed Product) in the Field in the Territory;
(ii) the estimated budget for each development activity, and estimated over-all
budget for performance of all development activities under the Development Plan

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(“Development Plan Budget”); (iii) target Licensed Product profiles; and
(iv) timelines. The Development Plan for the Initial Licensed Product shall be
agreed to by the Parties prior to the Effective Date, and thereafter shall be
updated by and reviewed by the JSC at least once each calendar year by a date no
later than [* * *] of each year or more frequently as the JSC deems, so as to
cover any other amendments, and each amendment shall be approved by the JSC. The
terms of the Development Plan are expressly incorporated herein.

4.2 [* * *]

4.3 Development of Licensed Product in the Territory. Under the supervision and
auspices of the JSC, the Parties shall have the following responsibilities
relating to development of a Licensed Product (including Line Extension(s), if
any) in the Territory:

(a) Durect or its designees shall perform any Dosage Form Development for the
Initial Licensed Product as set forth in the Development Plan for the Initial
Licensed Product.

(b) Durect or its designees shall perform any additional Dosage Form Development
not set forth in the Development Plan for the Initial Licensed Product and
perform any Dosage Form Development for any Future Licensed Product, the Cost of
which shall be calculated in accordance with [* * *], unless the Parties
otherwise agree. [* * *];

(c) Notwithstanding any other language herein, Hospira shall have the right, in
its sole discretion, to develop any Line Extensions to a Licensed Product in the
Field and in the Territory subject to Section 4.3 (b) above;

(d) Unless otherwise determined by the JSC, Durect will be responsible for
conducting the activities set forth in the Development Plan;

(e) The Parties shall perform their obligations under the Development Plan, and
all other development activities required for registration for Licensed
Product(s) for use in the Field in the Territory using Commercially Reasonable
Efforts, in good scientific manner and in material compliance with Applicable
Laws and:

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(i) cooperate with the other Party to implement the Development Plan;

(ii) perform the work set out for such Party to achieve the objectives of such
plan efficiently and expeditiously; and

(iii) completely and accurately record in writing all work done and results
achieved in connection with the development of Licensed Product(s) under their
respective Development Plans.

4.4 Ownership and Exchange of Data and Know-How. Durect shall own all
Development Data. Durect hereby grants to Hospira an exclusive right and license
in the Field and in the Territory to use all such Development Data for all
purposes necessary to allow Hospira to exercise its rights and perform its
obligations under this Agreement. During the Term of this Agreement, (i) Durect
shall promptly provide to Hospira copies of all Know-How related to the Licensed
Products and Development Data that is in existence as of the Effective Date, and
each Party shall promptly provide the other Party with all Know-How related to
the Licensed Products and Development Data that is developed, acquired by such
Party during the Term, in each case as required or useful to perform the
Development Plan or exercise its rights and obligations under the Agreement, and
(ii) each Party shall promptly provide the other Party with all material safety
information concerning any Licensed Product of which it becomes aware.

4.5 Funding of Development.

(a) From and after the Effective Date, each of Durect and Hospira shall be
responsible for the Costs incurred on or after the Effective Date listed below
its name in the following table:

 

  Durect    Hospira   Fifty percent (50%) of the Development Costs under the
Development Plan for the Initial Licensed Product (excluding Line Extensions
thereof)    Fifty percent (50%) of the Development Costs under the Development
Plan for the Initial Licensed Product (excluding Line Extensions thereof)   [* *
*]    [* * *]   [* * *]    [* * *]   [* * *]    [* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(b) With respect to those Development Costs to be paid by one Party to the other
hereunder, within [* * *] calendar days after the end of each month, Durect
and/or Hospira, as the case may be, shall provide to the other Party an invoice
in an amount equal to Costs incurred by such Party in such month for which the
other Party is obligated to reimburse under the terms of this Agreement. Payment
terms shall be net [* * *] days from the date of each Party’s receipt of any
correct invoice. Payments shall be sent to the “Remit to” address set forth on
the invoice. Should a Party dispute any portion of an invoice, it shall not be
required to pay any portion of such invoice until such time as the dispute is
resolved and such disputing Party receives a fully corrected invoice; provided
that, in such an event, the other Party shall have the option of issuing a new,
correct invoice for the portion of the original invoice not in dispute, and the
disputing Party shall pay such new invoice within the time limits set forth in
this Section 4.5(b).

4.6 Regulatory

(a) Initial Licensed Product.

(i) U.S. prior to FDA Regulatory Approval. Except as otherwise provided under
this Agreement or mutually agreed by Durect and Hospira, prior to FDA Regulatory
Approval in the U.S. for the Initial Licensed Product, Durect shall own all
Regulatory Documentation, including INDs, in the U.S. and shall use Commercially
Reasonable Efforts to prepare, file and prosecute all regulatory actions
connected with seeking Regulatory Approval of the Initial Licensed Product in
the U.S. in accordance with the Development Plan.

(ii) U.S. after FDA Regulatory Approval. Upon the receipt by Durect of the FDA
Regulatory Approval for the Initial Licensed Product in the U.S., Durect shall
transfer ownership of any Regulatory Approvals in the U.S. to Hospira,

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

and Hospira shall thereafter own the Regulatory Approval for the Initial
Licensed Product in the U.S. and shall use Commercially Reasonable Efforts to
maintain in good standing the Regulatory Approval of the Initial Licensed
Product in the U.S., including payment of all user fees and other maintenance
Costs, so long as Hospira retains the right to Commercialize the Initial
Licensed Product in the U.S.

(iii) Canada. Upon the receipt by Durect of the FDA Regulatory Approval for the
Initial Licensed Product for the U.S., Hospira shall use Commercially Reasonable
Efforts to prepare, file and prosecute all regulatory actions connected with
seeking Regulatory Approval of the Initial Licensed Products in Canada, and upon
receipt of Regulatory Approval, maintain such Regulatory Approval in good
standing, including payment of all user fees and other maintenance Costs, and
shall own all such Regulatory Approvals obtained in Canada so long as Hospira
retains the right to Commercialize the Initial Licensed Product in Canada. In
the event that any additional development and/or regulatory activities are
required to obtain Regulatory Approval in Canada, then, subject to
Section 4.3(a) and (b), Hospira shall be responsible for performing such
activities, but the Parties shall each be responsible for fifty percent (50%) of
the Costs therefore as set forth in Section 4.5.

(b) [* * *]

(c) Cooperation. With respect to each Licensed Product, each Party shall in a
timely manner provide the other Party with copies of all Regulatory
Documentation in such Party’s Control as reasonably requested by the other Party
necessary for applying for and maintaining such Regulatory Approval(s) and INDs.
Each Party shall submit proposed filings and correspondence to a Regulatory
Authority regarding major or material issues (e.g., submissions, telephone
conference meeting records, correspondence that include commitments or
agreements) to the JSC for its approval prior to submission to a Regulatory
Authority, shall keep the JSC informed as to the status of such efforts, permit
the JSC to review any revisions to any filings or communications with a
Regulatory Authority during their preparation and

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

shall confer with the JSC regarding the preparation of such filings and
communications and the Regulatory Approval process. Each Party, [* * *], shall
have the right to participate in any major conference or meeting with Regulatory
Authorities with respect to a Licensed Product in the Territory.

4.7 Reporting Adverse Events. As soon as practicable, and in no event later than
ninety (90) calendar days of the Effective Date, Hospira and Durect will develop
and agree upon safety data exchange procedures for the Territory which will be
set forth in a separate and detailed safety agreement (the “Pharmacovigilance
Agreement”). The Pharmacovigilance Agreement will describe the coordination of
collection, investigation, reporting, and exchange of information concerning
adverse drug reactions (and to the extent applicable, adverse events) with
respect to a Licensed Product (as defined in the then current edition of ICH
Guidelines and any other relevant regulations or regulatory guidelines) or any
other safety problem of significance (each such adverse event or problem, an
“Adverse Event”), and product quality and product complaints involving Adverse
Events, sufficient to permit each Party, its Affiliates, sublicensees or
licensees to comply with its legal obligations, including to the extent
applicable, those obligations contained in ICH Guidelines. The safety data
exchange procedures will be promptly updated if required by changes in legal
requirements or by agreement between the Parties.

[* * *]

5. DISTRIBUTION AND PROMOTION.

5.1 Generally. As between the Parties, Hospira will be exclusively responsible
for Commercializing of a Licensed Product in the Territory and all Costs
associated therewith.

5.2 Marketing Plan. No later than [* * *] prior to the anticipated date of the
First Commercial Sale of the applicable Licensed Product in the Territory,
Hospira will develop a “Marketing Plan” outlining Hospira’s plans for
Commercialization of the Licensed Product in the Territory, which plan shall be
presented at the CC. The Marketing Plan shall be consistent with Hospira’s
requirement under Section 5.5 to use Commercially Reasonable Efforts to

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Commercialize the applicable Licensed Product in the Field and in the Territory
and include, at such time as appropriate, (i) preliminary plans related to the
prelaunch, launch, Reimbursement, promotion and sales of the applicable Licensed
Product in the Territory, Pricing and Reimbursement strategy (provided, however,
that Hospira shall be free, at its discretion, to determine the pricing of a
Licensed Product in all the Territory), competitive landscape, public relations
and promotional communications, forecasts for the number of sales
representatives, sales detailing plans, and a summary of proposed phase IV
Clinical Trials and a reasonably descriptive overview of the marketing and
advertising campaigns proposed to be conducted; (ii) a good faith projection of
the anticipated Net Sales for the Licensed Product in the Territory for the
following [* * *] years (“Sales Projection”). The Marketing Plan shall be
updated by Hospira and reviewed by the CC at least once each calendar year by a
date no later than [* * *] of each year so as to cover the next [* * *] full
calendar years.

5.3 Promotional Materials and Activities. All promotional materials and
promotional activities with respect to a Licensed Product in the Territory shall
be consistent with the then current Marketing Plan. To the extent permitted by
Applicable Laws, Hospira will use Commercially Reasonable Efforts to include an
acknowledgment of Durect as the developer and licensor of the Licensed Product
in promotional materials for the Licensed Products.

5.4 Post-Registration Development. Hospira shall be responsible for the
preparation of all phase IV protocols (which shall be reviewed by the CC in
accordance with Section 2.3(b)(iv)) and the conduct of phase IV Clinical Trials
for the Territory; [* * *]

5.5 Commercial Diligence. Within [* * *] of obtaining Regulatory Approval of a
Licensed Product in a Jurisdiction, Hospira (or its Affiliates or Commercial
Sublicensees, as applicable) shall use Commercially Reasonable Efforts to make
its First Commercial Sale of such Licensed Product in such Jurisdiction, and
shall continue to use Commercially Reasonable Efforts to Commercialize such
Licensed Product in such Jurisdiction so long as Hospira retains
Commercialization rights in such Jurisdiction. During the [* * *] following the
First Commercial Sale of a Licensed Product in a Jurisdiction, Hospira shall
provide to its sales

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

representatives who are promoting such Licensed Product sales incentive
compensation programs for the Licensed Product that are no less favorable to
those that Hospira provides to those specific sales representatives with respect
to their sale of any pharmaceutical products.

5.6 Global Marketing Team. To the extent reasonably feasible, Durect shall
permit Hospira to participate in any global marketing strategy team formed by
Durect that includes Durect and/or Third Parties licensed by Durect to market a
Licensed Product outside the Territory to discuss marketing tactics and
synergies for a Licensed Product.

6. PAYMENTS.

6.1 Milestone Payments to Durect. In consideration for the grant of the
exclusive license under Section 3.1, Hospira shall pay to Durect the following
one-time, non-refundable and non-creditable payments with regards to the Initial
Licensed Product (each a “Milestone Payment”) within [* * *] days after the
occurrence of the corresponding specific event set forth in the table below,
provided, however, [* * *]. In the case of Milestone Payment No. 1, such payment
shall be made within ten (10) days of the Effective Date.

 

Milestone

No.

  

Event

  

One-Time Payments to

Durect (U.S. Dollars)

1

   Effective Date   

Twenty-Seven Million

Five Hundred Thousand

Dollars ($27,500,000)

2

   [* * *]    [* * *]

3

   [* * *]    [* * *]

4

   [* * *]    [* * *]

5

   [* * *]    [* * *]

6

   [* * *]    [* * *]

7

   [* * *]    [* * *]

Each Party shall notify the other Party within [* * *] business days of the
occurrence of any event triggering a Milestone Payment listed above.

6.2 Royalties. In further consideration of the grant of license to Hospira by
Durect hereunder, and subject to the other provisions of this Section 6, Hospira
shall pay the royalties

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

to Durect on a Jurisdiction-by-Jurisdiction basis for the applicable Royalty
Term as set forth in Section 6.2(a)-(d) below. Upon the expiration of the
Royalty Term in a Jurisdiction with respect to a Licensed Product, all licenses
with respect to such Licensed Product in such Jurisdiction, including the
license rights granted under Section 3.1 and Section 4.4 herein, shall be fully
paid-up, exclusive, royalty free, irrevocable and perpetual.

(a) Patent Royalties. Subject to Section 6.2 (d) below, from the date of the
First Commercial Sale in a Jurisdiction of a Licensed Product until the later
of: (i) expiration of the last Valid Claim that would be infringed by the
manufacture, sale, offer for sale, use or importation of such Licensed Product
in such Jurisdiction; and (ii) expiration of Marketing Exclusivity Rights in
such Jurisdiction (the “Patent Royalty Term”), Hospira shall pay Durect a
royalty equal to the following percentages of the aggregate annual Net Sales of
such Licensed Product in the applicable Jurisdiction (“Patent Royalties”):

 

Aggregate Annual Net Sales in the

Territory ($)

  

Royalty to Durect (percent of Net Sales)

[* * *]    [* * *] [* * *]    [* * *] [* * *]    [* * *] [* * *]    [* * *] [* *
*]    [* * *]

The royalty rates set forth above shall apply only to that portion of Net Sales
of such Licensed Product within the applicable tier of Net Sales. For purposes
of illustration, Patent Royalties owed on $[* * *] million in annual Net Sales
of a Licensed Product would be calculated as the sum of (a) [* * *] and (b) [* *
*]. The periods by which annual net sales are measured for purposes of this
Section 6.2(a) shall be a calendar year (each, an “Annual Net Sales Period”)
except that the first Annual Net Sales Period shall begin on the first day of
the calendar quarter preceding the First Commercial Sale of such Licensed
Product and continue to the end of the calendar quarter ending on December 31st
of that calendar year.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(b) Know-How Royalties. [* * *] If the Know-How Royalty Term is in effect in a
particular Jurisdiction, Hospira shall pay Durect royalties equal to the
following percentage of the aggregate annual Net Sales of the applicable
Licensed Product in such Jurisdiction in the Territory (“Know-How Royalties”):

 

Aggregate Annual Net Sales in the

Territory ($)

  

Royalty to Durect (percent of Net Sales)

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *]

(c) The first Annual Net Sales Period in which Know-How Royalties are payable
shall begin on the first day of the Know-How Royalty Term and continue to the
end of the calendar quarter ending on December 31st of that calendar year.

[* * *]

6.3 Commercial Sublicense Income. In addition to the royalties payable to Durect
under Section 6.2 and the Milestone Payments payable to Durect under
Section 6.1, if Hospira grants a Commercial Sublicense under Section 3.2,
Hospira shall thereafter pay Durect, within [* * *] days after the receipt
thereof by Hospira, [* * *] of any Commercial Sublicense Fees received by
Hospira; provided, however, in the case where Hospira receives a milestone
payment from a Commercial Sublicensee for the same event that triggers one of
the Milestone Payments set forth in Section 6.1, then Hospira shall only be
required to pay [* * *] of the portion of such payment it receives from its
Commercial Sublicensee for such milestone that exceeds the amount of the
Milestone Payment that Hospira is obligated to pay Durect with respect to such
milestone in Section 6.1 above.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

7. PAYMENTS AND REPORTS.

7.1 Payments of Royalties. Beginning [* * *] calendar days after the end of the
calendar quarter in which the First Commercial Sale of a Licensed Product is
made and for each calendar quarter thereafter, Hospira shall submit a statement
to Durect (no later than [* * *] calendar days after the end of such calendar
quarter), which shall set forth the amount of Net Sales of such Licensed Product
in the Territory by Jurisdiction during such quarter, and the calculation of the
royalties due on such Net Sales in the aggregate for the Territory for such
quarter pursuant to Section 6.2 herein. Each such statement shall be accompanied
by the royalty payment, if any, due to Durect.

7.2 Currency Conversion. To the extent that Hospira must convert any Canadian
dollars to U.S. Dollars for purposes of its payment obligations to Durect
hereunder, Hospira shall take each quarter’s Canadian Dollar denominated Net
Sales and convert to U.S. Dollars by using the average exchange rate for the
quarter by taking the average monthly exchange rate for each of the three
months’ in the quarter for the Canadian dollar as published by Reuters. These
rates will be consistent with the rates used internally by Hospira for its
accounting and record-keeping purposes, which rates shall be consistent with
GAAP.

7.3 Mode of Payment. Hospira shall make all payments required under this
Agreement in U.S. Dollars by wire transfer to any U.S. bank account as specified
by Durect in writing within [* * *] days of any applicable due date.

7.4 Records Retention. Hospira, Durect and each such Party’s respective
Affiliates and Commercial Sublicensees, as applicable, shall keep complete and
accurate records in accordance with GAAP (if GAAP is applicable to such party)
and pertaining to such Party’s Development Costs, the sale of applicable
Licensed Product and the calculation of Net Sales in the Territory, as
applicable, to permit the determination of Development Costs which are
reimbursable by the other Party hereunder and royalties for a minimum period of
[* * *] calendar years after the calendar year in which such sales or costs
occurred, and in sufficient detail to permit the Parties to confirm the accuracy
of each of the foregoing.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

7.5 Audit Request. During the Term of this Agreement and for a period of [* * *]
[* * *] thereafter, at the request and Cost of a Party (the “Auditing Party”),
Durect and its Affiliates (in the case of a request by Hospira) or Hospira and
its Affiliates and Commercial Sublicensees (in the case of a request by Durect)
(the “Audited Party”) shall permit an independent, certified public accountant
appointed by the Auditing Party and reasonably acceptable to the Audited Party,
at reasonable times and upon reasonable advance notice of not less than [* * *]
calendar days, but not more often than once in each calendar year, to examine
such records for the [* * *] years prior to the notice as may be necessary to
determine the correctness of any report or payment made under this Agreement or
obtain information as to the determination of Development Costs which are
reimbursable by the other Party hereunder, Net Sales for purposes of calculating
royalties payable hereunder for any calendar quarter in such audited period.
Results of any such examination shall be made available concurrently to all
Parties except that said independent, certified public accountant shall verify
to the Auditing Party such amounts and shall disclose no other information
revealed in such audit. The examination shall also include disclosure of the
methodology and calculations used to determine the results. The said
independent, certified public accountant shall execute a written confidentiality
agreement with the Audited Party.

7.6 Cost of Audit. The Auditing Party shall bear the full Cost of the
performance of any audit requested by the Auditing Party except as hereinafter
set forth. If, as a result of any inspection of the books and records of the
Audited Party, it is shown that payments made by one Party to the other under
this Agreement were less than the amount which should have been paid (in the
case of royalties) or the amount of costs charged by one Party to the other
Party were more than the amount that should have been charged (in the case of
Development Costs), then the under-paying or over-charging Party, as applicable,
shall make all payments required to be made to eliminate any discrepancy
revealed by said inspection within [* * *] calendar days from receipt of the
results of said examination, including in each case interest at the rate of one
percent ([* * *]) per month (or the maximum interest allowable by Applicable
Laws, whichever is less) for the amount of the discrepancy. Furthermore, if the
payments made were

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

less than [* * *] of the amount that should have been paid during any calendar
year, or if there was an overcharge of more than
[* * *] of the amount of that was owed, in either case due to the error of the
Audited Party, the Audited Party shall also reimburse the Auditing Party for
reasonable Costs incurred by the Auditing Party in respect of such audit.

8. COMMERCIAL SUPPLY OF PRODUCT

8.1 Amendment of Supply Agreement. Durect shall use Commercially Reasonable
Efforts to amend, within [* * *] days of the Effective Date, on terms reasonably
acceptable to each Party, the Manufacturing Development, Manufacturing and
Packaging Agreement between Durect and Hospira Worldwide, Inc. (“Hospira
Worldwide”) for POSIDUR dated December 18, 2006 (“Supply Agreement”) to:
(i) exclude the Territory from the scope of the commercial supply obligations
for the Initial Licensed Product in the Supply Agreement, and (ii) [* * *].

8.2 Commercial Supply. Effective upon the amendment of the Supply Agreement in
accordance with Section 8.1, Hospira shall be responsible for the Manufacture
and supply of the Initial Licensed Product for Commercialization within the
Territory. For clarity, Durect shall retain the right to Manufacture clinical
supplies of the Initial Licensed Product excluding Line Extensions, if any.
Hospira shall be responsible for the clinical and commercial supply of any
Future Licensed Products.

8.3 Supply of [* * *]. Attached hereto as Schedule 8.3 is a [* * *] Supply
Agreement that the Parties have entered into as of the Effective Date hereof.

9. INTELLECTUAL PROPERTY.

9.1 Ownership of Collaboration Inventions. Subject to the terms herein, all
Collaboration Inventions shall be owned as follows:

(a) [* * *]

(b) With respect to Collaboration Inventions that do not constitute Product
Collaboration Inventions, Durect shall own the entire right, title and interest
in and to all such

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Collaboration Inventions (including all Patents and other Intellectual Property
Rights relating thereto) to the extent such Collaboration Inventions are made
solely by its employees and/or Third Parties acting on behalf of Durect in the
performance of the Agreement (each such Collaboration Invention a “Durect
Collaboration Invention”).

(c) With respect to Collaboration Inventions that do not constitute Product
Collaboration Inventions, Hospira shall own the entire right, title and interest
in and to all such Collaboration Inventions (including all Patents and other
Intellectual Property Rights relating thereto) to the extent such Collaboration
Inventions are made solely by its employees and/or Third Parties acting on
behalf of Hospira in the performance of the Agreement (each such Collaboration
Invention, an “Hospira Collaboration Invention”).

(d) With respect to Collaboration Inventions that do not constitute Product
Collaboration Inventions, the Parties shall jointly own all Joint Inventions (as
defined below) and, subject to the rights granted each Party under this
Agreement and except as otherwise specifically provided under this Agreement,
each Party shall be free to use and exploit its interest in Joint Inventions and
otherwise undertake all activities a sole owner might undertake with respect to
such Joint Inventions, without the consent of and without accounting to the
other Party. “Joint Invention” means a Collaboration Invention which is not a
Product Collaboration Invention which: (i) one or more employees, consultants or
agents of Durect or any other persons obligated to assign such Collaboration
Invention to Durect; and (ii) one or more employees, consultants or agents of
Hospira or any other persons obligated to assign such Collaboration Invention to
Hospira, are joint inventors of such Collaboration Invention. The term “joint
inventors,” as it applies generally to Collaboration Inventions, shall be
construed in accordance with how that term is used pursuant to United States
patent law.

(e) Subject to appropriate confidentiality undertakings, each Party shall notify
the other Party promptly after the completion of invention disclosure statements
(or similar type of internal process employed by such Party for recording or
recognizing inventions) for each Collaboration Invention (or, if any provisional
or other patent application

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

is filed claiming such invention, promptly upon such filing), and shall provide
a copy of written documentation of the Collaboration Invention suitable to
describe the invention and identify any inventors participating in the invention
(or, if any patent application is filed, a full and complete copy of the
documents submitted to the relevant patent office) to the other Party.

(f) Each Party may use and practice its own Collaboration Inventions in any
manner not inconsistent with the terms of this Agreement without the consent of
the other Party and without an obligation to notify the other Party of such
intended use or to pay royalties or other compensation to the other by reason of
such use. For the avoidance of doubt, neither Party is granted any license
rights to any Intellectual Property Rights of the other Party which may be
required for such Party to use a Collaboration Invention, unless otherwise
expressly granted herein or as may be necessary to fulfill the intent of this
Agreement. In addition, Durect is not granted any license rights to any Hospira
Collaboration Inventions.

(g) Each Party shall, at the request of the other Party, execute all assignment
documents necessary to perfect the ownership interests in Collaboration
Inventions as determined pursuant to this Section 9.1.

(h) Each Party has and will continue to have written contracts with all Third
Parties (including employees, sublicensees and subcontractors) performing
services on its behalf under this Agreement and, where such services may give
rise to the creation of inventions that may be Collaboration Inventions, such
Party shall ensure that such contracts provide for the assignment to such Party
of all Collaboration Inventions and rights therein.

(i) Notwithstanding any language to the contrary herein, with respect to any
services provided by Hospira Worldwide, Inc. pursuant to the Supply Agreement
(as defined in Section 8.1 herein), nothing herein shall supersede the terms and
conditions set forth in the Supply Agreement with respect to the ownership or
license rights of Intellectual Property Rights.

(j) Notwithstanding any language to the contrary herein, the provisions of
Section 9.1 shall survive any expiration or termination of this Agreement for
any reason.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

9.2 Prosecution of Patents.

(a) Durect Controlled Patents.

(i) As between Durect and Hospira, Durect shall prepare, prosecute and maintain
the SABERTM Patent Rights, Product Patent Rights and Patents relating to Durect
Collaboration Inventions (including their issuance, reissuance, reexamination
and the defense of any interference, revocation or opposition proceedings) at
Durect’s sole Cost and discretion, subject to the provisions of this
Section 9.2(a).

(ii) With respect to the Product Patent Rights, Durect shall promptly furnish
Hospira with copies of all substantive prosecution correspondence to and from
patent offices in the Territory and provide Hospira a reasonable time to offer
its comments thereon before Durect makes a submission to the relevant patent
office, provided that in the event that delay would jeopardize any potential
Product Patent Right, Durect shall have the right to proceed without awaiting
Hospira’s comments on any patent application or correspondence relating thereto.
Hospira shall offer its comments promptly, and Durect shall consider in good
faith such comments of Hospira and shall incorporate such comments if
reasonable. Durect shall not abandon any patent application or patent in the
Product Patent Rights without the prior written consent of Hospira, such consent
not to be unreasonably withheld or delayed. If, subject to Hospira’s foregoing
consent right, Durect determines to abandon, or not to file, prosecute, defend
or maintain, any Product Patent Right (including not to defend any interference,
revocation or opposition proceedings) in any Jurisdiction, then [* * *] With
respect to the SABER™ Patent Rights, Durect shall promptly furnish Hospira with
copies of all substantive prosecution correspondence to and from patent offices
in the Territory to the extent relevant to the Licensed Products, and provide
Hospira a reasonable time to offer its comments thereon before Durect makes a
submission to the relevant patent office, provided that in the event that delay
would jeopardize any potential SABER™ Patent Right, Durect shall have the right
to proceed without awaiting Hospira’s comments on any patent application or
correspondence relating thereto. Hospira shall offer its comments promptly, and
Durect shall

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

consider in good faith such comments of Hospira. If Durect determines to
abandon, or not to file, prosecute, defend or maintain, any SABER™ Patent Right
(including not to defend any interference, revocation or opposition
proceedings) in any Jurisdiction, then subject to Durect’s consent, not to be
unreasonably withheld, [* * *].

(b) Joint Patent Rights. With respect to the decision to initiate the drafting
and filing of a new patent application claiming a Joint Invention, the Parties
shall first exchange sufficient information identifying such Joint Invention and
discuss in good faith the relative merits of seeking patent rights thereto and,
upon the prior mutual agreement of the Parties to proceed, not unreasonably
withheld, the Parties shall engage and co-direct outside patent counsel to
undertake such actions as are necessary or appropriate to procure, prosecute and
maintain patents and/or patent applications to such Joint Inventions (“Joint
Patent Rights”) (including any issuance, reissuance or reexamination thereof and
the defense of any interference, revocation or opposition proceedings related
thereto), subject to the provisions of this Section 9.2(b); provided, that all
associated Costs shall be shared equally between the Parties. The patent counsel
shall be instructed to furnish both Parties with copies of drafts of such Joint
Patent Rights and any substantive prosecution correspondence relating to such
Joint Patent Rights to and from patent offices and permit each party to offer
its comments thereon before any submission or response to a patent office. Each
Party shall offer its comments promptly, including any request regarding which
countries the Joint Patents should be filed and maintained. If a Party
determines in its sole discretion not to file, prosecute, defend or maintain any
Joint Patent Right (including failing to defend any interference, revocation or
opposition proceedings) in any country, then such Party shall provide the other
Party with [* * *] days’ prior written notice (or such shorter time period that
would permit the other Party a reasonable opportunity to respond in a timely
manner) of such determination, and the other Party shall have the right and
opportunity to file, prosecute, defend and/or maintain such Joint Patent Rights
at its sole Cost, and shall thereafter own such Joint Patent Right.

(c) Hospira Patents. As between Durect and Hospira, Hospira may prepare, file,
prosecute and maintain all Patents claiming a Hospira Collaboration Invention
(including their issuance, reissuance, reexamination and the defense of any
interference, revocation or opposition proceedings) in Hospira’s sole name and
at Hospira’s sole Cost and discretion.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(d) Assistance. Each Party shall, at the reasonable request of the other Party,
execute all lawful papers, all divisional, continuing, reissue and foreign
applications, make all rightful oaths and take such other actions as may be
reasonably requested by the other Party in conjunction with submission, filing,
prosecution and defense of Patents and to aid in obtaining the proper protection
of inventions pursuant to this Section 9.2.

9.3 Enforcement of Patent Rights.

(a) In the event that either Hospira or Durect becomes aware of any Competing
Product that is or is intended to be made, used, or sold in the Territory by a
Third Party that it believes to infringe Product Patent Rights and/or SABERTM
Patent Rights, such Party will promptly notify the other Party of all the
relevant facts and circumstances known by it in connection with the
infringement. Hospira and Durect shall thereafter consult and cooperate fully to
determine a course of action, including the commencement of legal action as
provided in this Section 9.3 by either or both Parties, to terminate any such
infringement.

(b) As between Durect and Hospira, Durect shall have the first right, but not
the duty, upon written notice to Hospira to initiate, prosecute and control the
enforcement of any of the Product Patent Rights against actual, alleged or
threatened infringement by a Third Party in the Territory through the marketing
or sale of a Competing Product. Upon receipt of written notice from Durect, the
Parties shall discuss in good faith the filing of a motion for preliminary
injunction in either Durect’s name or the names of both Parties. If Durect does
not file such injunction or proceed further against such Third Party alleged
infringement of a Product Patent Right within [* * *] days of a Party’s first
notice to the other Party of such Third Party infringement, then Hospira shall
have the right, but not the duty, to institute or proceed with such an action
against such Third Party for infringement of such Product Patent Right.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(c) As between Durect and Hospira, Durect shall have the first right, but not
the duty, upon written notice to Hospira to initiate, prosecute and control the
enforcement of any of the SABER™ Patent Rights against actual, alleged or
threatened infringement by a Third Party in the Territory through the marketing
or sale of a Competing Product. If Durect does not institute a proceeding
against such Third Party alleging infringement of the SABERTM Patent Rights
within [* * *] of a Party’s first notice to the other Party of such Third Party
infringement, then Hospira shall have the right, but not the duty, to institute
such an action against such Third Party for infringement of any of the SABERTM
Patent Rights; provided, however, that Hospira’s right to undertake any such
action alleging infringement of the SABERTM Patent Rights shall be subject to
the prior written consent of Durect, not to be unreasonably withheld.

(d) Except as provided below, the Costs of any such action under this
Section 9.3 (including fees of attorneys and other professionals) shall be borne
[* * *]. For any such action to terminate any such infringement, in the event
that Hospira is unable to initiate or prosecute such action solely in its own
name or it is otherwise advisable to obtain an effective remedy, Durect will
join such action voluntarily and will execute and cause its Affiliates to
execute all documents necessary for Hospira to initiate and maintain such
action. Each Party shall at its own expense promptly give to the Party bringing
such infringement proceedings such reasonable assistance as the Party bringing
the action may reasonably request. The Party instituting any such action may not
enter into any settlement, consent judgment or other voluntary final disposition
of such action that admits the invalidity or unenforceability of any Patent
licensed hereunder, subjects the other Party to an injunction or any other
liability or obligations, including a monetary payment in connection therewith
without the prior written consent of the other Party, not to be unreasonably
withheld. The Party undertaking any proceedings shall keep the other reasonably
informed of the progress of the action and shall consider the comments and
observations of the other in prosecuting the proceedings.

(e) Any recovery obtained as a result of an infringement action brought under
this Section 9.3, whether by judgment, award, decree or settlement, will first
be applied to reimbursement of each Party’s Costs in bringing such suit or
proceeding, and any remaining balance will be distributed to [* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

9.4 Defense of Patents.

(a) In the event that either Hospira or Durect becomes aware of any action
initiated by a Third Party (or any counterclaim or defense asserted in any other
action) in the Territory alleging non-infringement, invalidity or
unenforceability of any Product Patent Rights and/or SABERTM Patent Rights, such
Party will promptly notify the other Party of all the relevant facts and
circumstances known by it in connection with such action. Hospira and Durect
shall thereafter consult and cooperate fully to determine a course of action.

(b) Durect shall have the first right, but not the duty, to defend and control
any action initiated by a Third Party (or any counterclaim or defense asserted
in any other action) in the Territory alleging invalidity or unenforceability of
any Product Patent Rights. If Durect fails to defend any such action initiated
by a Third Party (or any counterclaim or defense asserted in any other action)
within [* * *] days of notice from such Third Party (or such shorter time period
that would permit Hospira a reasonable opportunity to respond in a timely
manner), Hospira shall thereafter have the right, but not the duty, to defend
and control any such invalidity action, counterclaim or defense in the
Territory.

(c) Durect shall have the first right, but not the duty, to defend and control
any action initiated by a Third Party (or any counterclaim or defense asserted
in any other action) in the Territory alleging invalidity or unenforceability of
the SABERTM Patent Rights. If Durect fails to defend any such action initiated
by a Third Party (or any counterclaim or defense asserted in any other action)
within [* * *] days of notice from such Third Party (or such shorter time period
that would permit Hospira a reasonable opportunity to respond in a timely
manner), then Hospira shall have the right, but not the duty, to defend and
control any such invalidity action, counterclaim or defense in the Territory;
provided, however, that Hospira’s right to undertake the defense of such action
relating to the SABERTM Patent Rights shall be subject to the prior written
consent of Durect, not to be unreasonably withheld.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(d) Except as provided below, the Costs of any such action under this
Section 9.4 (including fees of attorneys and other professionals) shall be borne
[* * *] For any such action, in the event that Hospira is unable to defend such
action solely in its own name or it is otherwise advisable to obtain an
effective remedy, then Durect will join such action voluntarily and will execute
and cause its Affiliates to execute all documents necessary for Hospira to
defend such action. Each Party shall at its own expense promptly give to the
defending Party such reasonable assistance as the Party defending the action may
reasonably request. The defending Party may not enter into any settlement,
consent judgment or other voluntary final disposition of such action that admits
the invalidity or unenforceability of any Patent licensed hereunder, subjects
the other Party to an injunction or any other liability or obligations including
any monetary payment in connection therewith without the prior written consent
of the other Party, not to be unreasonably withheld. The Party undertaking any
such defense shall keep the other reasonably informed of the progress of the
action and shall consider the comments and observations of the other in the
proceedings.

(e) [* * *]

9.5 Patent Infringement Claims.

(a) Each Party shall notify the other Party promptly in writing of any claim of,
or action for, infringement of any Patents or misappropriation of trade secret
rights of any Third Party that is threatened, made or brought against either
Party by reason of the development, manufacture, use, sale, offer for sale,
importation or exportation of a Licensed Product in the Territory.

(b) In the event of the institution of any suit by a Third Party against Hospira
or any of its Affiliates or Commercial Sublicensees alleging Patent infringement
or misappropriation of trade secret rights of any Third Party in connection with
the manufacture, use, sale, offer for sale, importation or exportation by or on
behalf of Hospira, its Affiliates or Commercial Sublicensees of a Licensed
Product in the Territory, as between Durect and Hospira, Hospira shall be
responsible for the defense of any such suit and, subject

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

to the terms of this Section 9.5, Hospira shall control such defense. Hospira
shall select counsel and, provided that Hospira can do so without compromising
attorney-client privilege, regularly consult with Durect and its counsel to keep
Durect reasonably informed on the progress and status of the suit. Durect shall,
at its own Cost, reasonably assist and cooperate with Hospira in any such
litigation at Hospira’s request. Hospira may not enter into any settlement,
consent judgment or other voluntary final disposition of such action that admits
infringement by a Licensed Product or subjects the Licensed Product to an
injunction or Durect to an injunction or any other liability or obligations,
including a monetary payment in connection therewith without the prior written
consent of Durect, not to be unreasonably withheld.

(c) Hospira shall be responsible for all Costs to defend any suit that it is
responsible for under this Section 9.5, including all fees and costs of
attorneys, expert witnesses and other out-of-pocket litigation costs and all
damages, penalties, court costs, attorney fees and other payments payable to any
such Third Party, whether as a result of any judgment, award, settlement or
otherwise (such liability, “Patent Litigation Losses”); provided, however,
Hospira may, without limiting Durect’s liability for any breach of its
representations and warranties hereunder, offset [* * *] of all such Patent
Litigation Losses against any future royalties for such Licensed Product due to
Durect for Net Sales in such applicable Jurisdiction(s). Notwithstanding the
foregoing, however: [* * *]. Except in the event of a breach by Durect of any of
its representations or warranties hereunder, Durect’s sole liability and
Hospira’s exclusive remedy against Durect for any Patent Litigation Losses shall
be Hospira’s right of offset in accordance with this Section 9.5(c).

(d) In the event a Third Party threatens suit against either Party for Patent
infringement involving the development, manufacture, use, sale, offer for sale,
importation, exportation, license or marketing of a Licensed Product in the
Territory, the Parties shall confer with respect to the appropriate course of
action, and if they determine that a declaratory action is warranted, then with
respect to such action, the provisions of this Section 9.3, 9.4, or 9.5 as
applicable shall apply thereto with respect to the prosecution of such action
and/or the defense of any claims asserted in response thereto.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(e) In the event that either Party becomes aware of a Third Party Patent, under
which, in the good faith reasonable judgment of such Party, it would be
advisable to obtain a license to avoid infringement or potential infringement by
the development, manufacture or Commercialization of a Licensed Product in any
Jurisdiction, such Party shall promptly notify the other Party. The Parties
shall then confer in good faith with respect to the appropriate course of
action. Hospira shall have the right to negotiate and obtain such a license and,
subject to the terms of this Section 9.5(e) below and without limiting Durect’s
liability for any breach of its representations and warranties hereunder,
Hospira shall be solely responsible for all costs and obligations under such
license (the “Third Party License Fees”), provided, however, that: [* * *],
Hospira may offset [* * *] of such Third Party License Fees against any future
royalties due to Durect for Net Sales of such Licensed Product in such
applicable Jurisdiction(s) provided that [* * *].

9.6 Prosecution of Initial Licensed Product Trademarks. If requested by Hospira,
Durect shall use Commercially Reasonable Efforts to register and maintain, or
cause to be registered and maintained, any of the Initial Licensed Product
Trademarks in the Territory at Hospira’s Cost. Durect shall furnish Hospira with
copies of all substantive prosecution correspondence to and from trademark
offices in the Territory and provide Hospira a reasonable time to offer its
comments thereon before Durect makes a submission to the relevant trademark
office, provided that in the event that delay would jeopardize any potential
rights, Durect shall have the right to proceed without awaiting Hospira’s
comments on any application or correspondence relating to the Initial Licensed
Product Trademarks. Hospira shall offer its comments promptly, and Durect shall
consider in good faith such comments of Hospira and shall incorporate such
comments if reasonable. If Hospira utilizes an Initial Licensed Product
Trademark, then all Products bearing the Initial Licensed Product Trademark
shall be manufactured, in accordance with the trademark usage and quality
standards established by the JSC and approved by Durect, such approval not to be
unreasonably withheld nor delayed;

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

provided that, on a Jurisdiction-by-Jurisdiction basis, the JSC shall, if
commercially reasonable, adopt any trademark usage and quality standards timely
proposed by Durect to the JSC prior to the First Commercial Sale in such
Jurisdiction.

9.7 Enforcement of Initial Licensed Product Trademarks or Product Trademarks. If
either Party learns of any infringement or threatened infringement by a Third
Party of any of the Initial Licensed Product Trademarks or a Product Trademark
in the Territory, such Party shall as soon as reasonably practicable notify the
other Party and will provide such other Party with all available evidence of
such infringement or threatened infringement. As between Durect and Hospira,
Durect (or Nycomed with respect to OPTESIA™) shall have the first right, but not
the duty, upon written notice to Hospira to initiate, prosecute and control the
enforcement of any of the Initial Licensed Product Trademarks or a Product
Trademark against actual, alleged or threatened infringement by a Third Party in
the Territory through the marketing or sale of a Competing Product. Upon receipt
of written notice from Durect, the Parties shall discuss in good faith the
filing of a motion for preliminary injunction in either Durect’s name or the
names of both Parties. If Durect does not file such injunction or proceed
further against such Third Party alleged infringement of a Product Patent Right
within [* * *] days of a Party’s first notice to the other Party of such Third
Party infringement, Hospira shall have the right, but not the duty, to
institute, prosecute and control, at its own Cost, any action or proceeding with
respect to any infringement or threatened infringement by a Third Party of an
Initial Licensed Product Trademark or any Product Trademark in the Territory, by
counsel of its own choice, and provided that Hospira can do so without
compromising attorney-client privilege, shall regularly consult with Durect and
its counsel with regards to a claim of enforcement of the Initial Licensed
Product Trademark to keep them reasonably informed on the progress and status of
such suit. The Costs of any such action under this Section 9.7 (including fees
of attorneys and other professionals) shall be borne [* * *]. For any such
action to terminate any such infringement, in the event that Hospira is unable
to initiate or prosecute such action solely in its own name or it is otherwise
advisable to obtain an effective remedy, Durect will join such action
voluntarily and will execute and cause its Affiliates to execute all

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

documents necessary for Hospira to initiate litigation and maintain such action.
Hospira will control the action, including settlement thereof; provided, that no
settlement or consent judgment or other voluntary final disposition of any such
action brought by Hospira to enforce the Initial Licensed Product Trademark in
the Territory pursuant to this Section 9.7 may be entered into without the prior
written consent of Durect, such consent not to be unreasonably withheld, if such
settlement would adversely affect the Initial Licensed Product Trademark
(e.g., restrict the rights or admit invalidity). Any damage award or other
consideration resulting from any such action or proceeding shall be retained by
[* * *].

10. PUBLICATION; CONFIDENTIALITY

10.1 Publications. The Parties, through the JSC, shall develop policies and
procedures (the “Publication Policies”) for any publication with respect to the
results of Clinical Trials and phase IV Clinical Trials for a Licensed Product
in the Territory, including disclosure applicable to Clinical Trial registries,
which policies and procedures shall be consistent with the Parties’ respective
policies and procedures for publication and disclosure of the results of human
Clinical Trials, with disputes to be resolved in favor of the policy that
provides for the broadest disclosure of such results. All abstracts, manuscripts
and presentations (including information to be presented verbally) that disclose
results of Clinical Trials or phase IV Clinical Trials for a Licensed Product
shall be reviewed and approved by the JSC in accordance with the Publication
Policies. Notwithstanding the foregoing, each Party shall provide to the other
Party (through the JSC) the opportunity to review each of the submitting Party’s
proposed abstracts, manuscripts or presentations (including information to be
presented verbally) that relate to any development activities or otherwise with
respect to a Licensed Product, at least [* * *] days prior to its intended
presentation or submission for publication, and such submitting Party agrees,
upon written request from the other Party given within such [* * *] day period,
not to submit such abstract or manuscript for publication or to make such
presentation until the other Party is given up to [* * *] days from the date of
such written request to seek appropriate Patent protection for any material in
such publication or presentation that it reasonably believes may be patentable.
Once an abstract, manuscript or

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

presentation has been reviewed and approved by the JSC, the same abstract,
manuscript or presentation does not have to be provided again to the other Party
for review for a later submission for publication. Each Party also shall have
the right to require that any of its Confidential Information (but not the
results of the Clinical Trials or phase IV Clinical Trials for a Licensed
Product that have been approved for disclosure pursuant to the Publication
Policies) that is disclosed in any such proposed publication or presentation be
deleted prior to such publication or presentation. In any permitted publication
or presentation by a party, the other Party’s contribution shall be duly
recognized, and co-authorship shall be determined in accordance with customary
standards.

10.2 Publicity. Each Party shall maintain the confidentiality of all provisions
of the Agreement and this Agreement itself, and neither Party shall make any
press release nor public announcement concerning the existence of or the terms
of this Agreement or containing material new information regarding the
development or Commercialization of a Licensed Product, without the prior
written approval of the other Party with regard to the content of such press
release or public announcement, except as may be required to be made by either
Party in order to comply with Applicable Laws in which case the disclosing Party
shall provide the nondisclosing Party with at least [* * *] business days prior
written notice of such disclosure (to the extent permitted by Applicable Laws)
so that the nondisclosing Party shall have the opportunity if it so desires to
seek a protective order or other appropriate remedy and, in connection with any
such required disclosure, the disclosing Party shall use reasonable efforts to
obtain confidential treatment for such disclosure or to prevent or modify such
disclosure as may be requested by the nondisclosing Party (to the extent
permitted by Applicable Laws). Such consent will not be unreasonably withheld or
delayed by such other Party. Except as otherwise provided herein, prior to any
such press release or public announcement requiring the other Party’s prior
written approval, the Party wishing to make the announcement will submit a draft
of the proposed press release or public announcement to the other Party not less
than [* * *] business days in advance to enable the other Party to consider and
comment thereon. Failure to respond with comments in writing prior to [* * *]
before scheduled release

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

shall be deemed approval of such press release or public announcement. [* * *]
Any written public announcements regarding a Licensed Product for which Hospira
or Durect would be required to obtain the other Party’s written consent shall
include a standard statement in a form agreed to by the Parties stating that the
relevant Licensed Product has been licensed from and is being co-developed with
Durect. Notwithstanding anything to the contrary in this Agreement, nothing in
this Section 10.2 is intended to prohibit either Party from republishing or
restating information that has already been approved by the other Party for use
in a prior press release or public announcement.

10.3 Confidentiality.

(a) Except to the extent expressly authorized by this Agreement or otherwise
agreed in writing, the Parties agree that, during the Term of this Agreement and
for [* * *] years following the expiration or termination of the Agreement, the
receiving Party, its Affiliates and its designees shall, and shall ensure that
their respective employees, officers, directors and other representatives shall,
keep confidential and not publish or otherwise disclose and not use for any
purpose, other than the purpose of this Agreement, any Confidential Information
of the disclosing Party. The receiving Party shall treat Confidential
Information as it would its own proprietary information which in no event shall
be with less than a reasonable standard of care, and take reasonable precautions
to prevent the disclosure of Confidential Information to a Third Party, except
as explicitly set forth herein, without written consent of the disclosing Party.

(b) The receiving Party’s obligations set forth in this Agreement shall not
extend to any Confidential Information of the disclosing Party that:

(i) the receiving Party can demonstrate by competent evidence was already in its
possession without any limitation on use or disclosure prior to its receipt from
the disclosing Party;

(ii) is or hereafter becomes part of the public domain by public use,
publication, general knowledge or the like or is made generally available by a
Third Party, in each case, other than through a wrongful act, fault or
negligence on the part of the receiving Party, or a breach of this Agreement;

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(iii) is received from a Third Party without restriction and with the right to
disclose such Confidential Information; or

(iv) the receiving Party can demonstrate by competent evidence was independently
developed by or for the receiving Party without reference to, use of or
disclosure of the disclosing Party’s Confidential Information.

Notwithstanding the foregoing, specific aspects or details of Confidential
Information shall not be deemed to be within the public domain or in the
possession of the receiving Party merely because the Confidential Information is
embraced by more general information in the public domain or in the possession
of the receiving Party. Further, any combination of Confidential Information
shall not be considered in the public domain or in the possession of the
receiving Party merely because individual elements of such Confidential
Information are in the public domain or in the possession of the receiving Party
unless the combination and its principles are in the public domain or in the
possession of the receiving Party. Any and all information, data and materials,
including any and all Intellectual Property Rights therein and thereto, owned by
a Party pursuant to this Agreement shall constitute Confidential Information of
such Party which shall be deemed the disclosing Party with respect to such
Confidential Information for the purposes of this Article 10 and for the
avoidance of doubt, subject to the exclusions to the confidentiality obligations
in this Article 10 as described in Section 10.3(b)(ii) and (iii).
Notwithstanding the foregoing, the obligations of confidentiality under this
Section 10.3 regarding any Confidential Information relating to or containing a
Party’s trade secret that has been suitably identified to the other Party as
such shall continue beyond the period set forth in this Section 10.3 (i.e., the
Term plus [* * *]) so long as the subject matter remains a trade secret.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

10.4 Authorized Disclosures. The restrictions contained in Section 10.3 shall
not apply to Confidential Information that are:

(a) made to an applicable Regulatory Authority as useful or required in
connection with any filing, application or request for Regulatory Approval for a
Licensed Product; provided that reasonable measures shall be taken to assure
confidential treatment of such information;

(b) to the extent necessary, (i) in connection with a proposed financing
transaction, merger, acquisition or other change of control of a Party or sale
of all or substantially all of the assets of a Party or (ii) subject to
subcontracting provisions set forth in this Agreement, to its Affiliates,
directors, officers, employees, consultants, sublicensees of Hospira or Durect
(or bona fide potential sublicensees of Hospira or Durect), vendors and
clinicians who have a need to know such information in connection with a Party
performing its obligations or exercising its rights under this Agreement, in
each case under written agreements of confidentiality substantially similar or
at least as restrictive as those set forth in this Agreement; provided, that
either Party may enter into such written agreements that provide for shorter
timeframes for maintaining confidentiality than those set forth in this
Agreement with the written consent of the other Party;

(c) otherwise required by Applicable Laws or the requirements of a major U.S.
securities exchange, in the reasonable opinion of legal counsel to the receiving
Party, provided that the Party disclosing such Confidential Information shall
exercise its Commercially Reasonable Efforts to obtain a protective order or
other reliable assurance that confidential treatment shall be accorded and if
possible give the other Party a reasonable opportunity to review and comment on
any such disclosure in advance thereof (but not less than [* * *] Business Days,
if possible, prior to the date of such disclosure);

(d) made in response to an order of a court of competent jurisdiction or other
Regulatory Authority or any political subdivision or regulatory body thereof of
competent jurisdiction; provided that the receiving Party shall first have, if
reasonably possible, given notice to the disclosing Party and given the
disclosing Party, at such disclosing Party’s own expense, a reasonable
opportunity to quash such order or to obtain a protective order

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

requiring that the Confidential Information or documents that are the subject of
such order be held in confidence by such court or Regulatory Authority or, if
disclosed, be used only for the purposes for which the order was issued; and
provided, further, that if a disclosure order is not quashed or a protective
order is not obtained, the Confidential Information disclosed in response to
such order shall be limited to that information which is legally required, in
the reasonable opinion of legal counsel to the receiving Party, to be disclosed
in such response to such court or governmental order; or

(e) is reasonably necessary in filing or prosecuting of Product Patent Rights or
(ii) reasonably necessary in defending litigation related to Product Patent
Rights if such litigation relates to this Agreement.

10.5 Remedies. Each Party shall be entitled, in addition to any other right or
remedy it may have, at law or in equity, to seek an injunction, without the
posting of any bond or other security, enjoining or restraining the other Party,
its Affiliates and/or its licensees from any violation or threatened violation
of this Article 10.

10.6 Patient Information. The Parties shall abide (and cause their respective
Affiliates and sublicensees to abide), and take (and cause their respective
Affiliates and sublicensees to take) all reasonable and appropriate actions to
ensure that all Third Parties conducting or assisting with any Clinical
development activities hereunder in accordance with, and subject to the terms of
this Agreement, to abide, to the extent applicable, by all Applicable Laws
concerning the confidentiality or protection of patient identifiable information
and other patient protected health information.

11. REPRESENTATIONS AND WARRANTIES

11.1 Representations and Warranties of the Parties.

Each Party represents and warrants to the other Party that as of the Effective
Date:

(a) Corporate Power. Such Party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation,
and has full corporate power and authority to enter into this Agreement and to
perform its obligations hereunder;

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(b) Due Authorization. Such Party has taken all corporate action required to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement and has full power and authority to enter
into this Agreement and perform its obligations under this Agreement;

(c) Binding Agreement. This Agreement has been duly executed and delivered on
behalf of such Party and constitutes a valid and legally binding obligation of
such Party, enforceable in accordance with its terms hereof, subject to and
limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws generally applicable to creditors’ rights; and (ii) judicial
discretion in the availability of equitable relief;

(d) Consents. With the exception of required Regulatory Approvals, such Party
has obtained, or is not required to obtain, the consent, approval, order, or
authorization of any Third Party, or has completed, or is not required to
complete, any registration, qualification, designation, declaration or filing
with, any Governmental Entity, in connection with the execution and delivery of
this Agreement and the performance by such Party of its obligations under this
Agreement, including any grant of rights to the other Party pursuant to this
Agreement;

(e) Conflicts. The execution and delivery of this Agreement, and the performance
by such Party of its obligations under this Agreement, including the grant of
rights to the other Party pursuant to this Agreement, does not and will not:
(i) conflict with or violate any provision of incorporation, bylaws or any
similar instrument of such Party, as applicable, in any material way,
(ii) conflict with, nor result in any violation of or default under any
instrument, judgment, order, writ, decree, contract or provision to which such
Party is otherwise bound, and (iii) conflict with any rights granted by such
Party to any Third Party or breach any obligation that such Party has to any
Third Party;

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(f) Every employee of such Party has an obligation to assign his or her
inventions to such Party to the extent such inventions are within the scope of
his or her activities for such Party with respect to this Agreement, and all
such employees and every consultant retained by such Party to provide services
to such Party has an obligation to maintain the confidentiality of such Party’s
confidential information;

(g) As of the Effective Date, each Party is in compliance with Section 3.4.

(h) Debarment. Neither Party, nor any of its Affiliates, employees or agents
working on its behalf, has ever been, is currently, or is the subject of a
proceeding that could lead to that Party becoming, as applicable, a Debarred
Entity or Individual. Such Party further covenants, represents and warrants that
if, during the Term of this Agreement, it, or any of its Affiliates, employees
or agents working on the other Party’s behalf, becomes or is the subject of any
FDA investigation or debarment proceeding that could lead to that Party
becoming, as applicable, a Debarred Entity or Individual, the Party shall
immediately remove such Affiliate, employee or agent from performing services
related to this Agreement and notify the other Party. In the event that the
Party does not immediately remove such Affiliate, employee or agent from
performing under this Agreement, the other Party shall have the right to
immediately terminate this Agreement. For purposes of this provision, the
following definitions shall apply:

(i) A “Debarred Individual” is an individual who has been debarred by the FDA
pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity
to a person that has an approved or pending drug product application.

(ii) A “Debarred Entity” is a corporation, partnership or association that has
been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting
or assisting in the submission of any abbreviated drug application, or a
subsidiary or affiliate of a Debarred Entity.

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

11.2 Additional Representations and Warranties of Durect. Durect hereby further
represents, warrants and covenants to Hospira that as of the Effective Date:

(a) Grant of License.

(i) Durect is the sole and exclusive owner of the entire right, title and
interest in the Durect Technology in existence on the Effective Date, and has
the right to grant to Hospira the rights specified herein. The Product Patent
Rights and the SABER™ Patent Rights constitute all of the Patents Controlled by
Durect and its Affiliates or licensed to Durect or its Affiliates as of the
Effective Date that would be infringed by the Exploitation of a Licensed Product
in the Field in the Territory. The Product Know-How constitutes all the Know-How
Controlled by Durect and its Affiliates or licensed to Durect or its Affiliates
that would be infringed by the Exploitation of a Licensed Product in the Field
in the Territory. All fees required to maintain issued and pending Patent Rights
have been paid to date;

(ii) prior to the Effective Date, Durect has delivered to Hospira a true,
correct and complete copy of the Nycomed Agreement, with all redactions
expressly noted; other than the Nycomed Agreement, Durect has not entered into
any license or similar grant of rights between Durect, on the one hand, and a
Third Party, on the other hand, pursuant to which Durect grants to any such
Third Party a license or other rights with respect to the Product Patent Rights
or Product Know-How in each case for Exploitation of a Licensed Product;
furthermore, Durect has not entered into any agreement with any Third Party
pursuant to which it grants a license or other rights with respect to the Durect
Technology for Exploitation of a Licensed Product in the Field in the Territory;

(iii) except for Nycomed’s consent to the sublicense by Durect to Hospira of the
right to use the OPTESIA™ mark under Section 3.6(b), no provision of the Nycomed
Agreement or any other agreement between Durect and any other Third Party
(i) requires the consent of any Third Party (including Nycomed) in order for
Durect to grant to Hospira, or Hospira, in turn to grant to its Affiliates,
(ii) precludes Durect from granting to Hospira, or Hospira in turn from granting
to its Affiliates or sublicensees, in each case ((i) and (ii)), a license or a
sublicense under the rights granted to Hospira with respect to the Exploitation
of a Licensed Product in accordance with the terms and conditions of this

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Agreement, in each case in the Field in the Territory; or (iii) grants to a
Third Party (including Nycomed) the right to prevent Hospira from engaging in
any Clinical Trials for a Licensed Product in the Field in the Territory or to
require Durect to exercise its right set forth in the first sentence of
Section 5.4;

(b) Regulatory Filings. With respect to the Initial Licensed Product (i) to its
Knowledge, each regulatory filing made by Durect was, at the time of filing,
true, complete and accurate in all material respects, (ii) no serious adverse
event information has come to the attention of Durect that is materially
different in terms of the incidence, severity or nature of such serious adverse
events than that which was filed as safety updates to the IND or disclosed or
made available to Hospira, (iii) to its Knowledge, Durect has not failed to
disclose or make available any material safety or toxicity information to
Hospira, (iv) to its Knowledge, all written data summaries prepared by Durect
that were included in the Regulatory Filings and that are based on Clinical
Trials conducted or sponsored by Durect accurately summarize in all material
respects the corresponding raw data underlying such summaries, and (v) to the
Knowledge of Durect, all of the studies, tests and Preclinical and Clinical
Trials conducted prior to, or being conducted as of, the Effective Date were
conducted, or are being conducted, in accordance with Applicable Laws, and in
the case of Clinical Trials, the then valid cGCP. “cGCP” shall mean the current
standards for Clinical Trials for drugs, as set forth in the FDC Act and
applicable FDA regulations (including without limitation 21 C.F.R. Parts 50, 54
and 56) and guidances promulgated thereunder, as amended from time to time;

(c) No Existing Claims. The Product Patent Rights, the SABER Patent Rights, the
Product Know-How and POSIDUR trademark and, to Durect’s Knowledge, the OPTESIA
trademark, are valid and in good standing, all assignments for such Patents have
been appropriately obtained and recorded, all inventors have been correctly and
appropriately listed, and no inventorship disputes exist. To Durect’s Knowledge,
in the Territory, there is no claim or demand of any Person pertaining to or any
proceeding which is pending or threatened that challenges Durect’s interest in
the Product Patent Rights, the SABER Patent Rights, the Product Know-How or any
of the Initial Licensed Product Trademarks or makes any adverse

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

claim of ownership thereof. To Durect’s Knowledge, none of the relevant Patents,
or Know-How in the Product Patent Rights, the SABER Patent Rights, the Product
Know-How and any Initial Licensed Product Trademarks are the subject of any
pending or threatened, adverse claim, judgment, injunction, order, decree or
agreement restricting its use in connection with a Licensed Product in the Field
in the Territory.

(d) Future Authorizations. Durect shall obtain and maintain during the Term all
authorizations, consents and approvals, governmental or otherwise, necessary for
Durect to grant the rights and licenses granted by Durect under this Agreement.

(e) Non-Infringement. As of the Effective Date, (i) Durect has no Knowledge of
any Third Party Patent that would be infringed or Third Party trade secret that
would be misappropriated by the development, Manufacture and/or
Commercialization of the Initial Licensed Product in the Field in the Territory,
(ii) Durect has no Knowledge of any infringement or misappropriation by a Third
Party of the Durect Technology, the Product Patent Rights and/or Product
Know-How, and (iii) Durect has received no written claims relating to any such
(including corresponding use of any Initial Licensed Product Trademark)
infringement or misappropriation. None of the Durect trademarks Durect requests
Hospira to utilize pursuant to Section 3.6(c) shall, at any time during the
Term, infringe a Third Party trademark or copyright.

(f) No Litigation. As of the Effective Date, there is no pending, settled or, to
its Knowledge, threatened litigation with respect to the SABER Delivery System
or the Licensed Products or that may materially affect Durect’s ability to grant
the rights and licenses granted by Durect under this Agreement.

(g) No Additional Material Information. The documentation disclosed or made
available by Durect as requested by Hospira in connection with Hospira’s due
diligence in entering into this Agreement, to Durect’s Knowledge is, in all
material respects, true, complete and unredacted (except as expressly noted in
such documentation).

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

11.3 Disclaimer of Other Warranties. EXCEPT AS SET FORTH IN THIS AGREEMENT, THE
PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES WITH RESPECT TO THE
MANUFACTURE OF PRODUCT, ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT
MATTER OF THIS AGREEMENT OR OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT.

11.4 Survival of Representations. The representations and warranties set forth
in this Agreement shall survive indefinitely.

12. INDEMNIFICATION; INSURANCE

12.1 Indemnification by Durect. Durect shall indemnify, defend and hold harmless
Hospira and its Affiliates, and their respective directors, officers, employees
and agents and permitted assigns including, its Commercial Sublicensees and
Permitted Sublicensees (each a “Hospira Related Party”) from and against any and
all liabilities, damages, losses, judgments, penalties, fines, settlements, and
costs and expenses (including reasonable fees of attorneys and other
professionals) (collectively, “Damages”) resulting from Third Party claims that
arise out of or result from: (i) Durect’s breach of this Agreement, including a
breach of any of Durect’s representations, warranties, covenants or agreements
hereunder; (ii) negligence or willful misconduct by or on behalf of Durect or
any of its Affiliates, designees, licensees, representatives or agents in the
performance of its activities under this Agreement; (iii) the development,
manufacture, promotion or sale of any Licensed Product outside the Territory by
or on behalf of Durect, its Affiliates, any licensee and/or any sublicense; or
(iv) the development, manufacture, promotion or sale of a Licensed Product by or
on behalf of Durect, its Affiliates, any licensee and/or sublicensee after the
termination of the license granted to Hospira under this Agreement.

12.2 Indemnification by Hospira. Hospira shall indemnify, defend and hold
harmless Durect and its Affiliates and their respective directors, officers,
employees and agents (each a

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

“Durect Related Party”) from and against any and all Damages resulting from
Third Party claims that arise out of or result from (i) any breach by Hospira of
this Agreement, including breach by Hospira of its representations, warranties,
covenants or agreements hereunder; (ii) negligence or willful misconduct by or
on behalf of Hospira or any of its Affiliates, designees, licensees,
representatives or agents in the performance of its activities under this
Agreement; or (iii) negligence or willful misconduct by or on behalf of Hospira
or any of its Affiliates, designees, licensees, representatives or agents (other
than Durect and any of Durect’s Affiliates, designees, licensees,
representatives or agents) in the Manufacture or Commercialization of a Licensed
Product by Hospira, or any of its Commercial Sublicensees, Affiliates under this
Agreement.

12.3 Shared Liability. If Damages arise out of Third Party claims that are
subject to indemnification by Hospira under Section 12.2 and also subject to
indemnification by Durect under Section 12.1, then the Parties shall indemnify
each other to the extent of their respective liability for the Damages. In the
event that the Parties cannot agree to their respective indemnity obligations
hereunder, a Party shall be free at any time to seek resolution of the
respective indemnity obligations of the Parties under this Section 12 pursuant
to the provisions set forth in Section 14.10.

12.4 Indemnification Procedure. Upon receipt by the Party seeking
indemnification hereunder (an “Indemnified Party”) of notice of any action,
suit, proceeding, claim, demand or assessment against such Indemnified Party
which might give rise to Damages, the Indemnified Party shall give prompt
written notice thereof to the Party from which indemnification is sought (the
“Indemnifying Party”) indicating the nature of the claim and the basis
therefore, provided that the failure to give such prompt notice shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
the Indemnifying Party or the defense of any such claim is materially prejudiced
thereby. The Indemnifying Party shall have the right, at its option, to assume
the defense of, at its own Cost and by its own counsel, any such claim involving
the asserted liability of the Indemnified Party. If any Indemnifying Party shall
undertake to compromise or defend any such asserted liability, it shall promptly
notify the

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Indemnified Party of its intention to do so, and the Indemnified Party shall
agree to cooperate fully with the Indemnifying Party and its counsel in the
compromise of, or defense against, any such asserted liability; provided,
however, that the Indemnifying Party shall not, as part of any settlement or
other compromise, (i) admit to liability for which the Indemnifying Party is not
fully indemnifying the Indemnified Party, or agree to an injunction or other
relief with respect to activities of the Indemnified Party without the written
consent of the Indemnified Party or otherwise adversely affect the business of
the Indemnified Party in any manner, admit to any violation of any Applicable
Laws or any violation of the rights of any Person, or adversely affect the
Indemnified Party’s rights under this Agreement. Notwithstanding an election by
the Indemnifying Party to assume the defense of any claim as set forth above,
such Indemnified Party shall have the right (at its own Cost if the Indemnifying
Party has elected to assume such defense) to employ separate counsel and to
participate in the defense of any claim.

12.5 LIMITATION ON DAMAGES. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, EXCEPT IN CIRCUMSTANCES OF INTENTIONAL MISCONDUCT BY A PARTY OR ITS
AFFILIATES, OR WITH RESPECT TO INDEMNIFICATION OBLIGATIONS FOR THIRD PARTY
CLAIMS SET FORTH IN ARTICLE 12 AND BREACHES OF A PARTY’S CONFIDENTIALITY
OBLIGATIONS HEREUNDER, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY
OF ITS AFFILIATES FOR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS OR LOST REVENUES, WHETHER UNDER
ANY CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY.

12.6 Insurance. Each Party shall carry and maintain in full force and effect
while this Agreement is in effect and for [* * *] years thereafter if written on
a claims made or occurrence reported form, the types of insurance specified
below with carriers maintaining an AM Best rating of no lower than A-VII:

 

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request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(a) Commercial general liability insurance including premises operations,
contractual liability, personal injury and advertising injury including fire
legal liability for bodily injury and property damage with combined limits of
not less than $[* * *] per occurrence and $[* * *] in the aggregate for bodily
injury, including death, and property damage;

(b) Workers’ compensation insurance in the amounts required by the law of the
Jurisdictions, countries or states in which such Party’s workers are located;

(c) Employer’s Liability with a limit of liability in an amount of not less than
$[* * *];

(d) Commercial Automobile Liability for owned, hired and non-owned motor
vehicles with a combined single limit in an amount not less than $[* * *] each
occurrence;

(e) Umbrella liability insurance with a policy limit of at least $[* * *] per
occurrence and in the aggregate;

(f) Products liability insurance with a policy limit of at least $[* * *] per
occurrence and in the aggregate; provided that Hospira shall have a policy with
a limit of no less than $[* * *] upon First Commercial Sale of the Initial
Licensed Product in the Territory; and

(g) Cargo/Transit insurance covering all risks of physical loss or damage to
cargo handled by Supplier at a full replacement cost.

Each Party shall include the other party and their subsidiaries, affiliates,
directors, officers, employees and agents as additional insureds with respect to
Commercial General Liability and Products Liability but only as their interest
may appear by written contract. Prior to commencement of services, and annually
thereafter, each Party shall furnish to the other Party certificates of
insurance evidencing the insurance coverages stated above and shall endeavor to
provide at least [* * *] days written notice to the other Party prior to any
cancellation, non-renewal

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

or material change in said coverage. In the case of cancellation, non-renewal or
material change in said coverage, each Party shall promptly provide to the other
Party with a new certificate of insurance evidencing that the coverage meets the
requirements in Section 12.6. Each Party agrees that its insurance shall act as
primary and noncontributory from any other valid and collectible insurance
maintained by the other Party. Each party may, at its option, satisfy, in whole
or in part, its obligation under this Section 12.6 through its self- insurance
program. If either Party chooses to self-insure, then that Party must indemnify
the other Party to the same as an additional insured would be in a traditional
insurance policy.

13. TERM AND TERMINATION

13.1 Term of Agreement. This Agreement shall become effective as of the
Effective Date and, unless earlier terminated as provided in this Agreement,
shall remain in effect until the latest to expire of the Royalty Term for the
Initial Licensed Product or any Future Licensed Product in the Territory (the
“Term”).

13.2 Termination for Material Breach. In the event of an alleged material breach
of this Agreement by a Party, the other Party must give the Party that is
allegedly in default notice thereof if such non-breaching party intends to
terminate the Agreement pursuant to this Section 13.2. Any dispute regarding an
alleged material breach of this Agreement shall be resolved in accordance with
this Section 13.2. [* * *] If, however, a Party receives a notice of material
breach that relates solely to the payment of amounts due hereunder, and
(a) there is no dispute as to the amounts owed and (b) such material breach for
non-payment is not cured within [* * *] days after receipt of such notice, the
notifying Party shall be entitled to terminate this Agreement by giving written
notice to the defaulting Party. In the event that the Neutral (as defined in
Schedule 14.10), in accordance with the procedures set forth in Section 14.10,
has rendered a ruling that a Party has materially breached this Agreement, which
ruling specified the remedies imposed on such breaching Party for such breach,
and the breaching Party has failed to comply with the terms of such adverse
ruling within the time period specified therein for compliance, or if such
compliance cannot be fully achieved by such date, the breaching

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Party has failed to commence compliance and/or has failed to use diligent
efforts to achieve full compliance as soon thereafter as is reasonably possible,
or in the event the material breach cannot be remedied, [* * *], then in each
case the non-breaching Party shall have the following rights:

(a) if Hospira is the breaching Party that failed to cure such breach or, if
applicable comply with an adverse ruling and if the basis for such breach is
Hospira’s failure to abide by a material obligation under this Agreement, Durect
may terminate this Agreement by delivering written notice to Hospira after the
expiration of the period during which Hospira was to comply as set forth in the
adverse ruling (if applicable);

(b) where Hospira is the breaching party that failed to comply with an adverse
ruling and if the basis for such breach is Hospira’s failure to use Commercially
Reasonable Efforts to Commercialize a Licensed Product in a particular
Jurisdiction, Durect may upon written notice given after the expiration of the
period to comply, terminate Hospira’s license rights solely with respect to the
Licensed Product in the particular Jurisdiction; and

(c) if Durect is the breaching Party that failed to cure such breach or, if
applicable, comply with an adverse ruling and if the basis for such breach is
Durect’s failure to abide by a material obligation under this Agreement, Hospira
may terminate this Agreement by delivering written notice to Durect after the
expiration of the period during which Durect was to comply as set forth in the
adverse ruling (if applicable) but, at its sole discretion, may, notwithstanding
any language to the contrary, retain its license rights and other rights under
this Agreement subject to the royalty payments in Section 6.2 and the milestone
payments in Section 6.1 and Commercial Sublicense Fees in Section 6.3; provided,
however, that Hospira shall be entitled to deduct from the royalty and milestone
payments otherwise due to Durect [* * *]; and provided, further, that Hospira’s
license rights shall also be subject to all the provisions of this Agreement
directly applicable to such license rights.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

13.3 Termination for Product Withdrawal or Material Adverse Event. If during the
development, Manufacture, or Commercialization of a Licensed Product, such
Licensed Product becomes subject to one or more Serious Adverse Drug Experiences
(as defined below) or either Party receives notice from a Regulatory Authority,
independent review committee, data safety monitoring board or another similar
Clinical Trial or post-marketing monitoring body alleging significant concern
regarding a patient safety issue or notice of withdrawal of the Licensed Product
from the market in the Territory or Hospira, in good faith, has a reasonable
safety concern with respect to the viability of the Licensed Product, Hospira
shall have the right, upon [* * *] prior written notice to Durect setting forth
the reasons therefor, to terminate this Agreement. For purposes of this
Agreement, a “Serious Adverse Drug Experience” means any adverse drug experience
occurring at any dose that results in any of the following outcomes: death, a
life-threatening adverse drug experience, inpatient hospitalization or
prolongation of existing hospitalization due to a Licensed Product, a persistent
or significant disability/incapacity, or a congenital anomaly/birth defect.
Important medical events that may not result in death, be life-threatening, or
require hospitalization may be considered a Serious Adverse Drug Experience
when, based upon appropriate medical judgment, they may jeopardize the patient
or subject and may require medical or surgical intervention to prevent one of
the outcomes listed in this definition.

13.4 Termination for Insolvency. Either Party may terminate this Agreement
effective immediately upon written notice to the other Party in the event a
Party files for protection under the bankruptcy laws, makes an assignment for
the benefit of creditors, appoints or suffers appointment of a receiver or
trustee over its property, files a petition under any bankruptcy or insolvency
act or has any such petition filed against it which is not discharged within [*
* *] days of the filing thereof.

13.5 Other Termination Rights. Prior to [* * *], Hospira may terminate this
Agreement upon [* * *] prior written notice to Durect after [* * *]. After [* *
*], Hospira may terminate the Agreement in its entirety or with respect to any
or all Jurisdictions without cause upon [* * *] prior written notice to Durect,
in which case the Territory shall be modified to exclude any such terminated
Jurisdiction therefrom. [* * *].

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

13.6 Effect of Termination or Expiration.

(a) Early Termination. In the event of the early termination of the Agreement in
its entirety or with respect to a Licensed Product and/or Jurisdiction, except
as otherwise expressly provided in this Agreement, including in Section 13.2(c),
as applicable:

(i) the rights and obligations of the Parties hereunder with respect to the
applicable Licensed Product in the applicable Territory or Jurisdiction,
including any Manufacture, Commercialization and/or payment obligations not due
and owing as of the termination shall immediately cease;

(ii) all licenses granted by Durect to Hospira in Section 3 and 4.4 shall
terminate with respect to the applicable Licensed Product in the applicable
Territory or Jurisdiction, as applicable;

(iii) Hospira shall or shall cause its Affiliates and Commercial Sublicensees,
if any, to assign or transfer to Durect (to the extent not already owned by
Durect) at no Cost, all Regulatory Documentation, Regulatory Approvals, Product
Trademarks (and goodwill associated therewith) Controlled by Hospira or its
Affiliates, as applicable, that relate to the Exploitation of the applicable
Licensed Product in the Territory or Jurisdiction as applicable (collectively,
the “Product Material);

(iv) Hospira will cooperate in any reasonable manner requested by Durect to
achieve a smooth transition of the Manufacture and Commercialization of the
applicable Licensed Product to Durect or its licensees in the particular
terminated Jurisdiction or the Territory, as applicable; without limiting the
foregoing, if Durect so elects, Hospira shall, at no Cost to Durect, facilitate
and cause Hospira Worldwide to amend the Supply Agreement such that the Supply
Agreement is restored to its status quo ante before any amendments due to this
Agreement;

 

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request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

(v) if Hospira has inventory of the applicable Licensed Product for
Commercialization in the Territory or a particular terminated Jurisdiction, as
applicable, at Durect’s sole discretion: [* * *];

(vi) in the event of the termination of the Agreement by Hospira pursuant to
Sections 13.2(c), and Hospira elects to retain the license to Exploit a Licensed
Product, Durect will cooperate in any reasonable manner requested by Hospira to
achieve a smooth transition of the development of the applicable Licensed
Product to Hospira or its Affiliates or sublicensees; and

(vii) each Party, at the request of the other Party, shall return or destroy,
and thereafter provide to the other Party written certification evidencing such
destruction, all data, files, records and other materials in its possession or
control containing or comprising the other Party’s Confidential Information.

(b) Expiration.

(i) Upon the expiration of the Royalty Term in a Jurisdiction with respect to a
Licensed Product, all licenses with respect to such Licensed Product in such
Jurisdiction, including the license rights granted under Section 3.1 and
Section 4.4 herein, shall be fully paid-up, exclusive, royalty free, irrevocable
and perpetual.

(ii) Upon the expiration of the Term of this Agreement, all licenses with
respect to all Licensed Products in all Jurisdictions in the Territory,
including the license rights granted under Section 3.1 and Section 4.4 herein,
shall be fully paid-up, exclusive, royalty free, irrevocable and perpetual.

(c) Upon Early Termination or Expiration. In addition, upon expiration or
termination of this Agreement, in whole or in part, for any reason, (i) except
as provided in Section 13.6 or 13.7, all rights and obligations of the Parties
hereunder shall terminate, and (ii) nothing herein shall be construed to release
either Party from any accrued rights or obligations that matured prior to the
effective date of such expiration or termination, nor preclude either Party from
pursuing any right or remedy it may have hereunder or at law or in equity with
respect to any breach of this Agreement.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

13.7 Surviving Provisions. Expiration or any termination of this Agreement shall
not release a party from the obligations to make any payments that were due or
had accrued prior to the effective date of such termination (including
non-cancelable obligations or commitments made in good faith prior to notice of
termination), and the following Sections of this Agreement shall survive any
expiration or termination of this Agreement for any reason: Sections 1, 3.3, 4.4
(first sentence only), 6.2 (last sentence only), 7.4, 7.5, 7.6, 9.1, 9.2(b),
(c) and (d), 9.6 (unless the Agreement has been terminated by Durect pursuant to
Section 13.2), 9.7 (unless the Agreement has been terminated by Durect pursuant
to Section 13.2), 10, 11, 12, 13.6, 13.7 and 14.

14. MISCELLANEOUS PROVISIONS

14.1 Relationship of Parties. Nothing in this Agreement is intended or shall be
deemed to constitute a partnership, agency, employer-employee or joint venture
relationship between the Parties. No Party shall incur any debts or make any
commitments for the other, except to the extent, if at all, specifically
provided herein.

14.2 Assignment. Except as otherwise expressly provided in this Agreement,
neither Party shall assign this Agreement or its rights or obligations hereunder
without the express written consent of the other Party hereto, except that
either Party may assign or transfer this Agreement and its rights or obligations
hereunder without the consent of the other Party to (i) an Affiliate, (ii) any
assignee of all or substantially all of its business or assets relating to the
subject matter of this Agreement, or (iii) its successor pursuant to an
operation of law. An assignment or transfer by a Party pursuant to this
Section 14.2 shall be binding on its successors or assigns. Except as otherwise
expressly provided in this Agreement, no such assignment or transfer shall be
valid or effective unless done in accordance with this Section 14.2.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

14.3 Notice. Any notice, request or other communication required or permitted to
be given under or in connection with this Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered, facsimile
transmission (receipt verified), electronic mail or overnight express courier
service (signature required), prepaid, to the Party for which such notice is
intended, at the address set forth for such Party below:

In the case of Durect, to:

Durect Corporation

2 Results Way

Cupertino, CA 95014

Attention: General Counsel

Facsimile No:(408) 777-3577

Telephone No:(408) 777-1417

In the case of Hospira, to:

Hospira Inc.

275 North Field Drive

Lake Forest, Illinois 60045

Attn: General Counsel

Fax: 224-212-2086

or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall be
effective only upon receipt thereof. If delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given. If sent by overnight express courier service, the
date of delivery shall be deemed to be the next business day after such notice
or request was deposited with such service.

14.4 Use of Name. Except as otherwise provided herein, Durect, on the one hand,
and Hospira on the other hand, shall not have any right, express or implied, to
use in any manner the name or other designation of the other or any other trade
name, trademark or logos of the other for any purpose, unless consented to in
writing by the other Party.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

14.5 Waiver. A waiver by any Party of any of the terms and conditions of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or of any subsequent breach hereof. All
rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and except as specifically provided herein none of
them shall be in limitation of any other remedy, right, undertaking, obligation
or agreement of either Party.

14.6 Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, any one of which need not contain the signature of more than
one Party but all such counterparts taken together shall constitute one and the
same agreement. This Agreement, to the extent signed and delivered by means of a
facsimile machine (or pdf-file attachment to Email), shall be treated in all
manner and respects and for all purposes as an original agreement or instrument
and shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person.

14.7 Severability. When possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.

14.8 Amendment. No amendment, modification or supplement of any provisions of
this Agreement shall be valid or effective unless made in writing and signed by
a duly authorized officer of each Party.

14.9 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of [* * *] without regard to conflicts of
law principles.

14.10 Alternative Dispute Resolution. Unless expressly provided herein, any
dispute, difference or question arising between the Parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either Party shall be resolved in accordance with the alternative dispute
resolution (“ADR”) procedure set forth in Schedule 14.10.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

14.11 Compliance with Laws. Each Party shall review in good faith and cooperate
in taking actions to ensure compliance of this Agreement and the Parties’
activities hereunder with all Applicable Laws. Each Party shall provide the
other Party such reasonable assistance as may be required for the Party
requesting such assistance to comply with all Applicable Laws necessary to
permit the Parties to perform hereunder and to exercise their respective rights
hereunder.

14.12 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to be in default under, or in breach of any provision
of, this Agreement for failure or delay in fulfilling or performing any
obligation of this Agreement to the extent that such failure or delay is due to
Force Majeure, and without the willful wrongdoing, recklessness or gross
negligence of the Party so failing or delaying. For purposes of this Agreement,
“Force Majeure” is defined as causes beyond the reasonable control of the Party,
including acts of God; war; terrorism; civil commotion; fire, flood, earthquake
or explosion; strike, riot or epidemic. In the event that the ability of Durect
or Hospira to perform its obligations under this Agreement, as the case may be,
shall be so affected, the affected Party shall immediately notify the other
Party of such inability and of the period for which such inability is expected
to continue. The Party giving such notice shall thereupon be excused from such
of its obligations under this Agreement for the duration of such Force Majeure
and for so long as it is unable to perform its obligations hereunder. To the
extent possible, each Party shall use Commercially Reasonable Efforts to
minimize the duration of any Force Majeure.

14.13 Entire Agreement. This Agreement including schedules and exhibits thereto,
including the Development Plan together with all other future written agreements
entered into by the Parties and specifically made a part of this Agreement,
constitute the entire agreement between the Parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the Parties with respect to the subject matter of
this Agreement.

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

14.14 Parties in Interest. All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties
hereto and their respective permitted successors and assigns.

14.15 No Third Party Beneficiaries. Except for rights and obligations
specifically referred to herein that apply to Affiliates, sublicensees or
licensees of the Parties, nothing in this Agreement is intended to confer on any
Person other than Durect or Hospira any rights or obligations under this
Agreement, and there are no intended Third Party beneficiaries to this
Agreement.

14.16 Descriptive Headings; Certain Terms. The descriptive headings of this
Agreement are for convenience only, and shall be of no force or effect in
construing or interpreting any of the provisions of this Agreement.

14.17 Fees and Payments. All fees and payments properly paid by one Party to the
other under this Agreement shall be deemed non-refundable unless expressly
provided to the contrary herein.

14.18 No Implied Licenses. Except as specifically and expressly granted in this
Agreement, no rights or licenses to any intellectual property rights are granted
by either Party to the other, by implication, estoppel or otherwise, and each
Party specifically reserves all its rights with respect to any intellectual
property rights not specifically granted hereunder. Furthermore, unless
expressly provided otherwise herein, each Party may use and practice its own
Intellectual Property Rights, technology and data in any manner not inconsistent
with the terms of this Agreement without the consent of the other Party and
without obligation to notify the other Party of its intended use.

14.19 Information for Financial Reporting. In addition to any reports provided
by the Parties hereunder, including the reports provided by Hospira pursuant to
Section 7.1, each

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Party agrees to use reasonable efforts to provide the other party such financial
information, including Development Costs and/or royalties in each calendar month
within [* * *] weeks of the end of each calendar month to allow the other Party
to accrue the proper expenses and revenues as required by GAAP and required for
financial reporting under Applicable Laws; provided however, for clarity, this
Section 14.19 shall not be construed to require a Party to disclose any
information that is not otherwise required to be disclosed to the other Party
under the terms of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
by its duly authorized representative as of the day and year first above
written.

 

Durect Corporation

By:  

/s/ James E. Brown

Name:   James E. Brown Title:   President and Chief Executive Officer Hospira,
Inc. By:  

/s/ Brian J. Smith

Name:   Brian J. Smith Title:   Sr. Vice President

 

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filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 1.19- Development Costs

Development Costs are equal to the sum of the following, in each case reasonably
incurred by a Party in the performance of the Development Plan: (i) labor cost
of such Party’s research and development personnel charged as set forth below,
(ii) direct outside expenditures, and (iii) capital asset expenditures.

 

[* * *]   

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *]

[* * *]

   [* * *] [* * *]   

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 1.35- Initial Licensed Product Description

[* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 1.55 - Product Patents Rights

[* * *]

 

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]      

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 1.63—SABER™ Patents Rights

[* * *]

 

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

 

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

 

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]      

[* * *]

   [* * *]    [* * *]    [* * *]      

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 2.1- Initial Members of JEC

[* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 2.2- Initial Members of JSC

[* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 8.1

[* * *]

 

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

  

[* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

   [* * *]    [* * *]    [* * *]    [* * *]

[* * *]

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 8.3

[* * *] Supply Agreement

 

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Confidential treatment has been sought for portions of this Agreement. The copy
filed herewith omits the information subject to the confidential treatment
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

 

Schedule 14.10 – Alternative Dispute Resolution

                        [* * *]