[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

Exhibit 10.2

AMENDED AND RESTATED CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT

THIS AMENDED AND RESTATED CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT (this
“Agreement”) is made as of December 12, 2012 (the “Effective Date”) between

ACELRX PHARMACEUTICALS, INC.,

a corporation existing under the laws of the State of Delaware, located at 575

Chesapeake Drive, Redwood City, California 94063 (“AcelRx”)

- and -

PATHEON PHARMACEUTICALS INC.,

a corporation existing under the laws of the State of Delaware, located at 2110
East

Galbraith Road, Cincinnati, Ohio 45237-1625 (“Patheon”)

BACKGROUND

AcelRx and Patheon entered into a Manufacturing Services Agreement effective
December 12, 2012 (the “MSA”) under which Patheon will perform certain
commercial supply manufacturing services (the “Services”) related to AcelRx’s
ARX-01 Tablets (the “Product”), which Product will be incorporated into products
intended for commercial sale. For clarity, Patheon and AcelRx are parties to a
Master Agreement for Pharmaceutical Development Services effective August 7,
2009, as amended (the “Patheon MA”), and Patheon’s corporate affiliate, Patheon
Inc. (“Patheon Canada”) and AcelRx are parties to a Master Agreement for
Pharmaceutical Development Services effective October 28, 2009, as amended (the
“Patheon Canada MA”), and Patheon and Patheon Canada have and/or are performing
clinical trial manufacturing services related to the Product for AcelRx under
these existing agreements. In order for Patheon to perform the Services, certain
capital expenditures will be required for the purchase and installation of
capital equipment and facility modifications at Patheon’s facility located at
2110 East Galbraith Road, Cincinnati, Ohio 45237-1625 (the “Facility”). Other
capital equipment owned by AcelRx and located at Patheon Canada’s manufacturing
facilities in Ontario will need to be transferred to the Facility. The parties
entered into a Capital Expenditure and Equipment Agreement dated May 25, 2011,
that set out the parties’ understanding regarding the capital expenditures (the
“Capital Agreement”). The parties intend that this Agreement will supersede the
Capital Agreement and restate the parties’ agreement and undertakings regarding
these capital expenditures.

AGREEMENT

NOW, THEREFORE, in consideration of the rights conferred and the obligations
assumed herein, and intending to be legally bound, the parties hereby agree as
follows:

 

1. Definitions

“Dedicated Equipment” means the equipment listed in Schedule A, which equipment
is to be used by Patheon solely to perform manufacturing services for AcelRx
under the Patheon MA, the Patheon Canada MA, or the MSA, and for no other
purpose.

--------------------------------------------------------------------------------

“Facility Modifications” means the modifications to the Facility and all related
engineering and Facility qualification costs that are listed in Schedule B.

“Project” means the activities to be performed under this Agreement with respect
to the purchase, modification, transfer, testing, and qualification of Dedicated
Equipment and the performance of Facility Modifications.

 

2. Performance of the Project

Patheon will perform the Project in compliance with the terms and conditions of
this Agreement, AcelRx’s instructions, and all applicable laws and regulations.
Patheon will perform the Project in accordance with the timeline that will be
established by the combined Patheon-AcelRx Project team. This timeline may be
modified by mutual agreement of the parties.

With respect to the Dedicated Equipment that will be transferred from Patheon
Canada’s facilities to the Facility, AcelRx will be responsible for the
packaging and transport of the Dedicated Equipment to the Facility. Patheon
Canada will allow and support access to the Dedicated Equipment by the AcelRx
packaging/transport contractor(s). AcelRx will bear the risk of loss of or
damage to the Dedicated Equipment during transit to the Facility, and will
obtain insurance covering such risk of loss or damage while in transit. AcelRx
will be responsible for obtaining appropriate import and related documentation
for the transport of the Dedicated Equipment. Once delivered to the Facility,
Patheon will be responsible for the installation of the Dedicated Equipment and
for any risk of damage thereof.

 

3. Expenditures and Payment

 

  (a) The estimated cost for the purchase and, as applicable, transfer of the
Dedicated Equipment for use to perform the Services is set forth in Schedule A.
AcelRx will agree on the specific Dedicated Equipment to be purchased by Patheon
and will agree on the actual purchase price for such equipment prior to Patheon
purchasing such equipment. Notwithstanding any other provisions of this
Agreement, and provided that AcelRx agrees on the purchase price for the
applicable Dedicated Equipment, the individual amount of each item on Schedule A
may be increased or decreased to reflect Patheon’s actual cost, but the
aggregate amount contributed by AcelRx for the Dedicated Equipment will not
exceed $[*] (the “Dedicated Equipment Cap”) unless there are further
modifications or changes in the processes or requirements for the Services or if
the assumptions underlying the estimated costs change. If this occurs, the
parties will agree on revised cost estimates and a revised maximum aggregate
amount to be contributed by AcelRx. At AcelRx’s option, AcelRx may purchase some
or all of the Dedicated Equipment directly and arrange to have it delivered to
the Facility rather than have Patheon purchase the Dedicated Equipment on
AcelRx’s behalf, in which case the applicable amounts specified in Schedule A
for the purchase of such Dedicated Equipment will be deducted from the Dedicated
Equipment Cap and will not be payable to Patheon. Upon completion of the
project, Patheon will give AcelRx a final Schedule A with the actual costs for
each item.

 

  (b) The estimated cost for making the Facility Modifications (including
related engineering and Facility qualification costs) is set forth in Schedule
B. Notwithstanding any other provisions of

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 2 –

--------------------------------------------------------------------------------

  this Agreement, the individual amount of each item on Schedule B may be
increased or decreased to reflect Patheon’s actual cost, but the aggregate
amount contributed by AcelRx for the Phase I and Phase II Facility Modifications
will not exceed $[*] unless there are further modifications or changes in the
processes or requirements for the Services or if the assumptions underlying the
estimated costs change. If this occurs, the parties will agree on revised cost
estimates and a revised maximum aggregate amount to be contributed by AcelRx.
Upon completion of the project, Patheon will give AcelRx a final Schedule B with
the actual costs for each item. Any reimbursement to AcelRx for the cost of
Facility Modifications will be discussed by the parties and, if agreed to, will
be addressed in the MSA. For clarity, except as set forth in Section 8(d),
nothing in this Agreement obliges Patheon to agree to reimburse AcelRx for the
cost of the Facility Modifications.

 

  (c) Subject to the limitations set forth in this Section 3, AcelRx hereby
directs Patheon to incur, on its behalf, pre-approved direct out-of-pocket costs
for the Dedicated Equipment and the Facility Modifications as set forth in
Schedule A and Schedule B, respectively. Patheon will give AcelRx copies of
third party invoices for these items (where applicable) within 30 days after
Patheon’s receipt thereof and will issue its invoice to AcelRx. AcelRx will pay
all amounts owing to Patheon within 30 days of the date of the Patheon invoice
to enable Patheon to pay all amounts owed under the third party invoices

 

4. Patheon Use of Facility Modifications and Dedicated Equipment

 

  (a) Patheon may use the Facility Modifications to manufacture third party
products but AcelRx Product will have priority over any third party product.
Patheon will not use the Facility Modifications to manufacture OEL Category 4
drugs and will follow its internal SOPs to prevent cross-contamination and to
ensure proper cleaning of the Facility Modifications after use on third party
products. Patheon will pay the following fees to AcelRx for third party use of
the Facilities Modifications during the term of this Agreement:

 

  •  

$[*] for commercial product manufactured

 

  •  

$[*] for Development work

The use fees will include all development and commercial batches manufactured by
Patheon, will be calculated by Patheon as of December 121 of each Year, and will
be paid to AcelRx by February 15 of the following Year. The total use fees paid
during the term of the Agreement will not exceed the total investment paid by
AcelRx for the Facilities Modifications ($[*]).

 

  (b) Patheon may only use the Dedicated Equipment to manufacture the Product
for AcelRx and not for the manufacture of any other products. Patheon will
operate and use the Dedicated Equipment in accordance with its SOPs and the
instructions set forth in the applicable equipment operation manual, if any,
provided by the manufacturer of the Dedicated Equipment and delivered to
Patheon.

 

  (c) In no event shall AcelRx be liable for any use of the Facility
Modifications by Patheon. Patheon agrees to indemnify and hold AcelRx and its
affiliates, officers, directors, employees and agents harmless from and against
all costs (including reasonable attorneys’ fees), losses, liabilities,

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 3 –

--------------------------------------------------------------------------------

  damages, and expenses of any kind arising from (i) the Modified Facility, or
(ii) the negligence or misconduct of Patheon, Patheon’s affiliates, or their
respective personnel with respect to their use of the Dedicated Equipment.

 

5. Maintenance of Dedicated Equipment and Facility Modifications

 

  (a) Patheon will at its expense perform routine repairs, preventive
maintenance, and calibration on the Dedicated Equipment owned by AcelRx. Patheon
will have an annual aggregate limit on these costs of $[*] but this limit will
not apply if Patheon has been negligent in performing the repairs, maintenance
and calibration. Repair, maintenance, and calibration costs, including the cost
of spare part purchases or equipment upgrades requested by AcelRx that exceed
this annual aggregate limit (other than the costs that result from Patheon’s
negligence, which costs will be borne by Patheon) will be invoiced to AcelRx at
Patheon’s actual cost.

 

  (b) Patheon will, at its expense, perform routine repairs, preventive
maintenance, calibration and air monitoring per Patheon’s SOPs with respect to
the Facility Modifications.

 

  (c) Upon prior mutual agreement between the parties on a suitable date for an
inspection, Patheon will give AcelRx reasonable access during normal working
hours for the inspection of the Dedicated Equipment owned by AcelRx.

 

  (d) Patheon will (i) keep the Dedicated Equipment free from encumbrances,
liens, and interests of third parties, (ii) take all necessary care to prevent
any damage, loss or theft to the Dedicated Equipment, and (iii) clearly identify
all Dedicated Equipment in the Modified Facilities (e.g., by labelling such
equipment) and in its books as belonging to AcelRx.

 

  (e) Patheon will promptly notify AcelRx if any accident, loss of or damage
occurs to the Dedicated Equipment and Facility Modifications but the
notification will be no later than two business days after the occurrence.

 

6. Title and Risk of Loss of the Equipment and Facility Improvements

The Dedicated Equipment will be owned by AcelRx, which will be the sole legal
and beneficial owner thereof. The Facility Modifications will be owned by
Patheon, which will be the sole legal and beneficial owner thereof. Patheon will
at all times keep the Dedicated Equipment and the Facility Modifications insured
against loss, damage or destruction at the replacement cost with inflation
adjustment, and Patheon will replace any of these items that are lost, damaged
or destroyed. Patheon will name AcelRx as an additional insured on any insurance
policy or endorsement that covers the Dedicated Equipment owned by AcelRx, and
will provide proof of such insurance to AcelRx upon request.

 

7. Fees

OVERHEAD FEE

Due to the uniqueness of AcelRx’s process and package, significant dedicated
space is necessary at the Facility and a minimum return on this space is
required. Commencing in 2013 and, in each Year

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 4 –

--------------------------------------------------------------------------------

thereafter during the term of the MSA, an annual “Overhead Fee” will be charged
to AcelRx. The Overhead Fee will be $200,000 per Year, but will be prorated
based on the aggregate revenues recorded by Patheon from AcelRx under both the
Development Agreement and the MSA for all services performed by Patheon for any
and all AcelRx products (such as the products referred to as ARX-02, ARX-03, and
ARX-04, as well as any other future products that AcelRx may develop), including
the Product (collectively, “Patheon Revenues”) in the prior Year, such that if
Patheon recorded at least $[*] in Patheon Revenues in the prior Year, no
Overhead Fee will be payable for such Year, but if Patheon recorded less than
$[*] in Patheon Revenues in the prior Year, the Overhead Fee payable in such
Year shall be pro-rated such that the actual Overhead Fee payable by AcelRx will
be equal to $200,000 multiplied by a percentage equal to the percentage that the
amount of Patheon Revenues recorded in the prior Year represents of $[*]. For
example, if the Patheon Revenues recorded are greater than $[*] in 2012, no
Overhead Fee will be due for the Year 2013. If Patheon Revenues recorded in 2012
are equal to $[*], then the Overhead Fee payable by AcelRx for 2013 will be
equal to [*]of $200,000, or $[*].

If an Overhead Fee is payable for a particular Year, it will be divided into
four equal installments, with each installment paid on the last day of each
calendar quarter. For example, if the Overhead Fee for 2013 is equal to $[*],
AcelRx will pay the first installment of $[*] to Patheon by March 31, 2013, and
each subsequent $[*] installment by June 30, September 30, and December 121,
2013, respectively. There will be no Overhead Fee payable for any Year where the
total Patheon Revenues recorded in the prior Year exceed $[*]. Patheon
acknowledges and agrees that the Overhead Fee is intended to, and does, cover
all dedicated space at the Facility for the Product included in the scopes of
Phase I and Phase II Manufacturing as outlined on Schedule B. If Patheon is
selected to perform Finished Product Packaging, an additional Overhead Fee will
be considered by the parties if this packaging cannot be accomplished within the
dedicated space covered above.

FACILITY FEES

 

  A. Phase I Facility Fee

AcelRx will pay to Patheon a “Phase I Facility Fee” in the amount of $480,000 to
offset taxes incurred and paid by Patheon for Facility Modifications made to the
Facility pursuant to this Agreement shown as Phase I on Schedule B in the amount
of $1,098,537. Upon execution of this Agreement, AcelRx will pay to Patheon $[*]
of the Phase I Facility Fee. The remaining $[*] of the Phase I Facility Fee will
be made in five equal quarterly installments of $[*] each, with the first
installment payable on October 1, 2012 and the last installment payable on
October 1, 2013.

Patheon will reimburse AcelRx for the Phase I Facility Fee paid by AcelRx
hereunder over a three-year period, commencing in the Year in which the
Application for Marketing Authorization is approved by the FDA. The Phase I
Facility Fee reimbursement will be made by Patheon in [*] equal quarterly
installments of $[*], with the first installment payable on the first day of the
calendar quarter following the date of FDA approval of the Application for
Marketing Authorization. For example, if the Application for Marketing
Authorization is approved by the FDA on September 15, 2015, Patheon will pay to
AcelRx $[*] on October 1, 2015 and an additional $[*] on the first day of each
subsequent calendar quarter thereafter until the entire amount of the Phase I
Facility Fee has been reimbursed to AcelRx.

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 5 –

--------------------------------------------------------------------------------

  B. Phase II Facility Fee

The parties are currently in discussions regarding additional facility
modifications that will be required to support Phase II Manufacturing. Once the
parties have reached agreement regarding the scope and cost of these additional
facility modifications, Schedule B and Section 3(b) of this Agreement will be
modified to reflect the new capital amounts. The parties have agreed that AcelRx
will pay to Patheon a “Phase II Facility Fee” to offset taxes owed by Patheon
for these additional facility modifications. The Phase II Facility Fee will be
equal to the cost of the facility modifications for Phase II multiplied by
Patheon’s effective tax rate, but will be prorated based on cumulative Patheon
Revenues starting in 2013 as described herein, and will only be payable by
AcelRx until such time as the cumulative Patheon Revenues recorded starting in
2013 have reached $[*]. The Phase II Facility Fee will be divided into eight
equal quarterly installments and will be paid in arrears so that no installment
of the Phase II Facility Fee will be paid until the first day of the calendar
quarter commencing after the date on which all facility modifications required
under the Phase II capital expenditure have been completed. For example, if all
facility modifications required under the Phase II capital expenditure are
completed during May 2014, AcelRx will make its first installment payment of the
Phase II Facility Fee on July 1, 2014, and would make seven additional quarterly
payments with the final payment due July 1, 2016, assuming that Patheon Revenues
from AcelRx have not reached the $[*] threshold.

As noted above, the Phase II Facility Fee will be prorated based on cumulative
Patheon Revenues of $[*] starting from January 1, 2013. The actual installment
amount of the Phase II Facility Fee due for each calendar quarter will be
determined based on the cumulative Patheon Revenues recorded from January 1,
2013 as a percentage of $[*]. For clarification, if the cumulative Patheon
Revenues recorded up through the first Phase II Facility Fee installment payment
are equal to or greater than $[*], no installment payment will be due by AcelRx.
If the cumulative Patheon Revenues recorded up through the first Phase II
Facility Fee installment payment are less than $[*], the first installment
payment of the Phase II Facility Fee due by AcelRx will be equal to one eighth
of the Phase II facility fee multiplied by the Patheon Revenues recorded after
January 1, 2013 as a percentage of the $[*] per calendar quarter target.

The parties agree that Patheon will reimburse AcelRx for the full amount of the
Phase II Facility Fee paid by AcelRx once the cumulative Patheon Revenues
recorded on or after January 1, 2013 have reached $[*], regardless of whether at
least $[*] of Patheon Revenues were recorded in each calendar quarter. Patheon
will, within 30 days after the first day of the applicable calendar quarter,
reimburse AcelRx for any installment amounts of the Phase II Facility Fee that
have been paid by AcelRx in prior calendar quarters based on a quarterly true-up
of the installment amounts of the Phase II Facility Fee paid by AcelRx to date
and the total cumulative Patheon Revenues recorded on or after January 1, 2013.
Patheon will reimburse to AcelRx all Phase II Facility Fee amounts paid by
AcelRx that have not been previously reimbursed by Patheon within 30 days after
the cumulative Patheon Revenues recorded on or after January 1, 2013 have
reached $[*], even if this cumulative amount is not recorded until after
December 121, 2014.

Example of Phase II Facility Fee payment calculations

Example 1:

If the Phase II Facility Fee is equal to $[*], then the portion of the Phase II
Facility Fee that could be payable by AcelRx for each calendar quarter is $[*].
If all Facility Modifications required under the Phase II capital expenditure
are completed by February 1, 2013, then the first installment of the Phase II
Facility Fee is payable on April 1, 2013. If Patheon has recorded $[*] in
Patheon Revenues for the first calendar quarter of 2013, AcelRx will owe Patheon
[*] of the $[*] installment for the first calendar quarter (i.e., $[*] is [*]%
of $[*], so AcelRx owes [*] of the $[*] installment for a total payment of
$[*]). If the cumulative Patheon Revenues recorded for 2013 are $[*] at the end
of the second calendar quarter

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 6 –

--------------------------------------------------------------------------------

of 2013 (i.e., $[*] in Q1 2013 and $[*] in Q2 2013), AcelRx will not owe an
installment of the Phase II Facility Fee on July 1, 2013, and instead, Patheon
will reimburse to AcelRx the full amount of the first calendar quarter
installment ($[*]) no later than 30 days after the first day of the second
calendar quarter of 2013.

For further clarification, in this example if the cumulative Patheon Revenues
recorded as of December 121, 2014 total $[*], AcelRx will have paid Patheon [*]
of the Phase II Facility Fee (i.e., $[*] is [*] of $[*], so AcelRx will have
paid [*] of $[*], for a total of $[*]) by January 1, 2015. AcelRx will not owe
Patheon any further installments of the Phase II Facility Fee and, once Patheon
has recorded additional Patheon Revenues of $[*] for a cumulative total of $[*],
Patheon will reimburse to AcelRx the $[*] of the Phase II Facility Fee
previously paid by AcelRx within 30 days after the date on which the cumulative
Patheon Revenues recorded reach at least $[*].

Example 2:

Assuming the Phase II Facility Modifications are completed in May 2014 at a cost
of $[*], Patheon’s effective tax rate is [*], and as of June 30, 2014 Patheon
Revenues from AcelRx are $[*] (starting from January 1, 2013), AcelRx would pay
Patheon a Facility Fee installment of $[*] ($[*] *[*] tax rate = $[*]). If in
the following quarter, Patheon recognized $[*] in revenue, no installment
payment would be due, and Patheon would Reimburse AcelRx for the first $[*]
installment payment subject to the previous section.

For further clarification, assuming the Phase II Facility Modifications are
completed in May 2014 and Patheon Revenues are $[*] as of June 30, 2014
(starting from January 1, 2013), AcelRx would never make a Facility Fee payment,
as the $[*] threshold for Patheon Revenues has been met prior to the completion
of the Phase II facility.

 

8. Term; Termination; Effect of Termination on Future Funding

 

  (a) Term; Termination. This Agreement will commence on the Effective Date and,
unless earlier terminated as set forth in this Section 8, will continue in
effect until the expiration or termination of the MSA, including any extensions
thereof. Either party at its sole option may terminate this Agreement upon
written notice where the other party has failed to remedy a material breach of
any of its obligations under this Agreement within 60 days following receipt of
a written notice of the breach that expressly states in reasonable detail the
nature of the breach. This Agreement will terminate automatically if the parties
have not executed the MSA by December 121, 2012 unless this date is extended by
written agreement of the parties. AcelRx will have the right, upon written
notice to Patheon, to terminate the portion of the Project applicable to
Dedicated Equipment at any time upon written notice to Patheon, in which event
the Project will no longer cover the transfer or purchase of Dedicated Equipment
and the provisions of Section 8(c) below will apply.

 

  (b) Effect of Termination on Future Funding. If this Agreement or the MSA is
terminated, AcelRx’s obligation to further fund expenditures under this
Agreement will cease upon Patheon’s receipt of the notice of termination of this
Agreement or the MSA, except for the cost of non-cancelable commitments that are
made by Patheon prior to receiving written notice of the termination, and for
which AcelRx is responsible under Section 3 of this Agreement If this Agreement
terminates automatically due to failure of the parties to enter into the MSA as
set forth above in Section 8(a), AcelRx’s obligation to fund expenditures under
this Agreement will

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

- 7 –

--------------------------------------------------------------------------------

  cease as of the automatic termination date except for the cost of
non-cancellable commitments that are made by Patheon under this Agreement prior
to the automatic termination date. If this Agreement terminates, Patheon will
use reasonable efforts to cancel or otherwise reduce the amount of
non-cancellable commitments that have been made by Patheon under this Agreement
prior to the termination date and for which AcelRx is responsible under
Section 3 of this Agreement.

 

  (c) Return of Equipment; Option to Purchase Equipment. If this Agreement
expires or is terminated for any reason, or if AcelRx elects to terminate the
portion of the Project applicable to the purchase and transfer of Dedicated
Equipment in accordance with Section 8(a), AcelRx will remove, or arrange to
remove, from the Facility at its expense all Dedicated Equipment that is not
purchased by Patheon as provided in this Section 8(c), and will repair or
arrange to repair, at its reasonable expense, any damage to the Facility
resulting from this removal. AcelRx may, at its sole option, offer to Patheon
the option to purchase some or all of the Dedicated Equipment at its depreciated
value under a five year straight line depreciation schedule from the date of the
original Capital Agreement or 10% of the original purchase price, whichever is
greater. If Patheon elects to purchase some or all of the Dedicated Equipment,
it will pay AcelRx for the agreed upon purchase price of this equipment within
30 days of electing to purchase the equipment and, as of the date of AcelRx’s
receipt of the payment, all right, title and interest in and to the purchased
equipment will be vested in Patheon.

 

  (d) Refund of Facility Payments for Patheon Material Breach. If AcelRx
terminates this Agreement for Patheon’s uncured material breach under
Section 8(a), Patheon will refund to AcelRx, within 30 days after the date of
such termination, the amounts paid by AcelRx to Patheon under this Agreement as
set forth below. If AcelRx terminates this Agreement due to Patheon’s uncured
material breach at any time, Patheon will reimburse AcelRx for 100% of all
outstanding amounts paid by AcelRx for Facility Fees. Further, Patheon will
reimburse AcelRx for the then current value of all Facility Modifications. The
current value of Facility Modifications shall be calculated based on the total
cost of the Facility Modification prorated on a monthly basis over a ten year
life from the time of completion. For example, if AcelRx terminates this
agreement due to Patheon’s uncured breach five years (60 months) after the
September, 2011 completion date of the Phase I Facility Modifications and three
years (36 months) after completion of the Phase II Facility Modifications, then
Patheon would reimburse AcelRx for 50.0% of total Phase I cost [(120 - 60) / 120
= .500] and 70% of total Phase II cost [(120 - 36) / 120 = .700].

 

  (e) Survival. Sections 4(a), 4(c), 8(b), 8(c), 8(d), 8(e), 9(b), 9(i) and
98(j) will survive the expiration or termination of this Agreement for any
reason.

 

9. General

 

  (a) All monetary amounts are expressed in the lawful currency of the United
States of America.

 

  (b) This Agreement will be construed and enforced in accordance with the laws
of the State of Delaware (without regard to principles of conflicts of law).

 

  (c)

This Agreement contains the entire understanding of the parties about the
subject matter herein and supersedes all previous agreements (oral and written),
negotiations and discussions. For clarity, this Agreement is a supplement to,
and does not supersede, the Patheon MA. The Confidentiality Agreement between
Patheon and AcelRx effective December 22, 2010 (the

--------------------------------------------------------------------------------

  “CDA”) will govern with respect to all disclosures of Information (as such
term is defined in the CDA) made by the parties hereunder. The parties agree
that the Information exchanged by the parties hereunder may be used as necessary
for conducting the activities under this Agreement in addition to use for the
Purpose (as such term is defined in the CDA).

 

  (d) The parties may modify or amend the provisions hereof only by an
instrument in writing duly executed by both of the parties.

 

  (e) Patheon may not assign or otherwise transfer its rights or obligations
hereunder without the prior written consent of AcelRx, this consent not to be
unreasonably withheld. AcelRx may assign or otherwise transfer its rights or
obligations hereunder without approval from Patheon. But AcelRx will give
Patheon prior written notice of any assignment, any assignee will covenant in
writing with Patheon to be bound by the terms of this Agreement, and AcelRx will
remain liable hereunder.

 

  (f) This Agreement may be signed by facsimile or in two counterparts, each of
which when executed and delivered or transmitted, will be considered an original
and both of which together will constitute one and the same instrument.

 

  (g) The “Background” section of this document is expressly incorporated into
the Agreement.

 

  (h) The parties hereto are independent contractors, and nothing contained in
this Agreement is intended, and will not be construed, to place the parties in
the relationship of partners, principal and agent, employer/employee or joint
venturer. Neither party will have any right, power or authority to bind or
obligate the other, nor will either hold itself out as having such right, power
or authority.

 

  (i) If any one or more provisions of this Agreement will be found to be
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby, provided the surviving agreement materially comports with the
parties’ original intent. The parties will make a good faith effort to replace
any such provision with a valid and enforceable one such that the objectives
contemplated by the parties when entering this Agreement may be realized.

 

  (j) Waiver or forbearance by either party hereto of any of its rights under
this Agreement or applicable law in any one or more instances must be in writing
and signed by the waiving party and will not be deemed to constitute a waiver or
forbearance of any other right or a further or continuing waiver of such rights.

[Signature page to follow]

 

- 9 –

--------------------------------------------------------------------------------

IN WITNESS WHEREOF the duly authorized representatives of the parties have
executed this Agreement.

 

AcelRx Pharmaceuticals, Inc.     Patheon Pharmaceuticals Inc. By:   /s/ James
Welch     By:   /s/ Stuart Grant Name:   James Welch     Name:   Stuart Grant
Title:   Chief Financial Officer     Title:   Chief Financial Officer

 

- 10 –

--------------------------------------------------------------------------------

SCHEDULE A

 

Dedicated Equipment

   Investment     AcelRx
Provided  

[*]

     —          X   

[*]

     —          X   

[*]

     —          X   

[*]

     —          X   

[*]

     —          X   

[*]

     —          X   

[*]

     —          X   

Modifications to existing equipment and [*]

   $ [ *]   

[*]

   $ [ *]   

In process testing equipment

   $ [ *]   

Equipment Containment Level Verification IH Study

   $ [ *]   

Equipment Qualification Cost. This cost will be charged on a time and materials
basis, and is estimated to be equal to [*]of the cost of all manufacturing
equipment listed in this Schedule A, including equipment provided by AcelRx.

   $ [ *]   

[*] Design and Qualification Support (Excluding travel expenses to be billed
separately)

   $ [ *]      

 

 

   

 

 

 

Total Dedicated Equipment

   $ [ *]      

 

 

   

 

 

 

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

SCHEDULE B

 

Renovated space for process room and corridor with white zone finishes, Cat3B
gowning, material airlock, CII Security

   $ [* ] 

Utility modifications: existing unit HVAC once thru air, THP monitoring,
Compressed air piping, piped Chilled water, piped Purified water, piped city
water, Portable Cat3b central vacuum, portable CAT3b dust collection, Misting
shower, 230V and 110V power, bottled nitrogen

   $ [* ] 

Engineering Cost. This cost will be charged on a time and materials basis, and
is estimated to be equal to [*] of the total cost of the first two line items in
this table.

   $ [* ] 

Facility Qualification Cost. This cost will be charged on a time and materials
basis, and is estimated to be equal to [*]of the total cost for the first two
line items in this table.

   $ [* ] 

Contingency. This cost covers charges for items that have not yet been
determined, and is estimated to be equal to [*] of the total cost for the first
two line items in this table.

   $ [* ] 

[*] line Facility Support

   $ [* ]    

 

 

 

Total Phase I

   $ [* ]    

 

 

 

Phase II (estimated)

  

[*] Facility Modifications

   $ [* ] 

Mfg facility - 5-2 Phase 2

One additional process room, equipment wash, clean equipment room, Airlock
modifications and security

   $ [* ] 

Utility modifications

HVAC unit, THP, Utilities (CA, Purified water, CQ, CV, dust collection, elec,
and N2)

   $ [* ] 

Engineering Cost ([*])

   $ [* ] 

Qualification Cost ([*])

   $ [* ] 

Contingency ([*])

   $ [* ]    

 

 

 

Total Phase II

   $ [* ]    

 

 

 

Total Facility Modifications

   $ [* ]    

 

 

 

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.