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                                                                   Exhibit 10.36

                                LICENSE AGREEMENT

This License Agreement (the "Agreement") is made effective this 29th day of
December, 2005 by and between PAIN THERAPEUTICS, INC., a Delaware corporation
with a principal place of business at 416 Browning Way, South San Francisco, CA
94080 ("PTI") and KING PHARMACEUTICALS, INC., a Tennessee corporation with a
principal place of business at 501 Fifth Street, Bristol, TN 37620 ("King").
Each of King and PTI is sometimes referred to individually herein as a "Party"
and collectively as the "Parties."

                                    RECITALS

WHEREAS, PTI owns or controls certain intellectual property rights relating to
the preparation of tamper-resistant opioid formulations ("PTI Background
Technology," as further defined herein);

WHEREAS, PTI and King have entered into that certain Collaboration Agreement,
dated November 9, 2005 ("Collaboration Agreement"), pursuant to which PTI and
King have agreed to use the PTI Background Technology to develop one or more
pharmaceutical formulations of tamper-resistant opioids for use in humans
("Products," as further defined herein);

WHEREAS, King desires to obtain, and PTI is willing to grant, a license under
the PTI Background Technology to develop, manufacture and market Products upon
the terms and conditions set forth herein and in the Collaboration Agreement;

WHEREAS, the Parties anticipate that, in the conduct of the Collaboration
Agreement, certain intellectual property may be developed with applicability to
products in the Field (as defined herein), including Products, which
intellectual property may constitute King Program Technology, PTI Program
Technology or Joint Technology (each as defined herein); and

WHEREAS, the Parties desire to include any such developed intellectual property
in the rights licensed under this Agreement, such that PTI's right, title and
interest in any PTI Program Technology or Joint Technology will be included
within the license granted to King hereunder, and King's right, title and
interest in any King Program Technology or Joint Technology will be included in
the license granted to PTI hereunder.

NOW, THEREFORE, in consideration of the mutual promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1. DEFINITIONS

Capitalized words and phrases used in this Agreement have the meanings ascribed
to such terms in Annex A attached hereto.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.

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2. LICENSES AND DLA

2.1 LICENSES TO KING. Subject to the terms and conditions of this Agreement and
further subject to the pre-existing non-exclusive license granted by PTI to
Durect under the DLA, beginning on the Closing Date and thereafter during the
Term, PTI hereby grants to King the following licenses under PTI Technology and
PTI Patent Rights and under PTI's ownership interest in Joint Technology and
Joint Patent Rights, which licenses shall be exercisable only as set forth in
this Agreement or in the Collaboration Agreement and for the conduct of the
activities required or permitted in the performance of King's obligations and
exercise of its rights thereunder:


2.1.1 DEVELOPMENT. An exclusive license (a) in the U.S. Territory, beginning
immediately upon approval by the FDA of the NDA for each Product, to conduct
Product Development with respect to such Product, (b) in the ROW, beginning
immediately following the initiation of Phase II clinical trials for each
Product by PTI in the U.S. Territory, to conduct Product Development with
respect to such Product, (c) in the Territory, to conduct Development on Remoxy,
exercisable only pursuant to Section 3.4.6 of the Collaboration Agreement, and
(d) in the Territory, to conduct Development on Products, exercisable only in
the event that: (i) PTI suspends, closes or otherwise ceases to operate a
majority of its business relating to this Agreement and the Collaboration
Agreement, or (ii) in any case commenced by or against PTI under the Bankruptcy
Code (other than a case against PTI commenced with the participation, support,
or encouragement of King), upon entry of an appropriate order or findings by the
court presiding over such case, (A) PTI is in material breach of this Agreement
or the Collaboration Agreement and such breach is not cured within sixty (60)
days of the occurrence of the breach or (B) PTI rejects this Agreement or the
Collaboration Agreement. For purposes of clarity, except in connection with the
exercise of the licenses in clauses (c) and (d), King shall not have the right
to make changes in the formulation or dosage form of Product without PTI's prior
written consent, which consent shall be at PTI's sole discretion.

2.1.2 COMMERCIALIZATION. An exclusive license in the Territory to Market, use,
offer for sale, sell and import Products.

2.1.3 RIGHTS OF THE PARTIES TO MAKE PRODUCTS. An exclusive license in the
Territory, subject to the rights retained by PTI pursuant to Sections 2.2.1 and
2.2.5 hereof, to make Products. For the avoidance of doubt, notwithstanding
anything to the contrary in Sections 2.2.1 and 2.2.5 hereof and subject only to
Durect's right, pursuant to Section 5.5 of the DLA, to make and supply
GMP-qualified Excipient Ingredients (as defined in the DLA) in the making of
Products, King shall have the exclusive right, in the Territory, to make
Products for sale in the Territory and the exclusive right to sublicense Third
Parties to do so.

2.1.4 KING'S RIGHT TO SUBLICENSE. King's right to sublicense its rights to
conduct Product Development, Market, use, offer for sale, sell, and import
Products, and, with respect to Remoxy, to Develop pursuant to Section 3.4.6 of
the Collaboration Agreement in the ROW shall be subject to PTI's consent, not to
be unreasonably withheld; provided that such sublicense shall not diminish PTI's
rights hereunder.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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2.1.5 FURTHER RIGHTS WITH RESPECT TO AUSTRALIA AND NEW ZEALAND. The Parties
acknowledge and agree that PTI has not granted to King any licenses in Australia
and New Zealand. In the event PTI intends to enter into an agreement granting a
Third Party any rights to Develop and Market any products in the Field in
Australia or New Zealand under PTI Technology, PTI Patent Rights or PTI's
ownership interest in Joint Technology and Joint Patent Rights, which rights
are, in the judgment of the JOC, material or reasonably likely to become
material, to the Collaboration or to any Products, King shall have the right to
review such proposed agreement prior to its execution and provide its comments
to PTI, which comments PTI will consider in good faith. PTI will use
commercially reasonable efforts to ensure that such agreements contain (a) terms
and conditions prohibiting the export of Products from Australia or New Zealand,
except as to import/export trade between these two countries, commensurate in
scope with the obligations set forth in Section 2.6 hereof and (b) provisions
granting to PTI the right to use, in the Territory, all Technology and Patent
Rights developed by PTI or such Third Party, in whole or in part, through the
use of the PTI Patent Rights, PTI Technology, Joint Patent Rights or Joint
Technology, and the right to license or sublicense such rights to King, which
PTI rights shall be included within the licenses granted to King hereunder so
long as King agrees to assume those royalty, milestone and similar payment
obligations (if any) due to such Third Party in connection with King's, its
Affiliate's or Sublicensee's, use of such rights in the Territory.

2.2 LICENSES TO PTI. Subject to the terms and conditions of this Agreement, King
hereby grants to PTI the following licenses, exercisable only as set forth in
this Agreement or in the Collaboration Agreement and only for the conduct of the
activities required or permitted in the performance of PTI's obligations and
exercise of its rights thereunder:

2.2.1 IN THE TERRITORY. Beginning on the Closing Date and thereafter during the
Term, in the Territory, (a) a co-exclusive (with King only) license, with the
right to grant sublicenses only as expressly set forth in the Collaboration
Agreement, under King Technology and King Patent Rights to Develop Products, (b)
a non-exclusive license to make products in the Field, including Products, in
each case solely and exclusively for export to Australia and New Zealand,
subject to the limitations set forth in Section 5.2 of the Collaboration
Agreement, with the right to grant sublicenses subject to any applicable
requirements set forth in this Agreement, under King Technology and King Patent
Rights, solely to the extent any of the foregoing are Invented based on the use
of PTI Technology or PTI Patent Rights or developed or acquired by King
primarily for use in the Development, manufacture or Marketing of Products in
the Collaboration, and (c) a right to negotiate in good faith with King to
obtain a non-exclusive, royalty-bearing license, with other appropriate terms,
to make products in the Field, including Products, in each case solely and
exclusively for export to Australia and New Zealand, subject to the limitations
set forth in Section 5.2 of the Collaboration Agreement, with the right to grant
sublicenses subject to any applicable requirements set forth in this Agreement,
under any other King Technology and King Patent Rights not set forth in
subsection (b) hereof that are reasonably necessary to make products in the
Field, including Products.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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2.2.2 OUTSIDE THE TERRITORY. Beginning on the Closing Date and thereafter during
the Term, outside the Territory (a) a non-exclusive, royalty-free license to
Develop, make, use, sell, offer for sale, import and Market products in the
Field, including Products, with the right to grant sublicenses subject to the
terms set forth in Section 2.1.5 of this Agreement, under King Technology and
King Patent Rights, solely to the extent any of the foregoing are Invented by
King based on the use of PTI Technology or PTI Patent Rights or developed or
acquired by King primarily for use in the Development, making, or Marketing of
Products in the Collaboration, and (b) a right to obtain, on commercially
reasonable terms, a non-exclusive, royalty-bearing license, with other
appropriate terms, to Develop, make, use, sell, offer for sale, import and
Market products in the Field, including Products, with the right to grant
sublicenses subject to the terms set forth in Section 2.1.5 of this Agreement,
under any other King Technology and King Patent Rights that are reasonably
necessary to Develop, make, use, sell, offer for sale, import and Market
products in the Field, including Products.

2.2.3 POST-TERMINATION. In the event of the expiration of the Collaboration
Agreement or a termination of the Collaboration Agreement pursuant to Section
9.2.2 thereof (by King at will) or by PTI pursuant to Section 9.2.3 thereof as a
result of King's breach, beginning on the effective date of such termination or
expiration, (a) a non-exclusive, world-wide, royalty-free license to Develop,
make, use, offer for sale, sell, import and Market products in the Field,
including Products, (or, in the case of termination under Section 9.2.2(a) of
the Collaboration Agreement with respect to a particular Product, only to
Develop, make, use, offer for sale, sell, import and Market the Terminated
Product, as defined therein), including the right to grant sublicenses without
restriction, under King Technology and King Patent Rights, solely to the extent
any of the foregoing are Invented by King based on the use of PTI Technology or
PTI Patent Rights, or are developed or acquired by King primarily for use in the
Development, making or Marketing of Products in the Collaboration, and (b) a
right to obtain, on commercially reasonably terms, a non-exclusive, world-wide,
royalty-bearing license to Develop, make, use, offer for sale, sell, import and
Market products in the Field, including Products, (or, in the case of
termination under Section 9.2.2(a) of the Collaboration Agreement with respect
to a particular Product, only to Develop, make, use, offer for sale, sell,
import and Market the Terminated Product, as defined therein), with other
appropriate terms, including the right to grant sublicenses without restriction,
under any other King Technology and King Patent Rights that are reasonably
necessary to Develop, make, use, offer for sale, sell, import and Market
products in the Field, including Products, (or, in the case of termination under
Section 9.2.2(a) of the Collaboration Agreement with respect to a particular
Product, only to Develop, make, use, offer for sale, sell, import and Market the
Terminated Product, as defined therein). In the event of a termination of the
Collaboration Agreement by King pursuant to Section 9.2.3 thereof as a result of
PTI's breach, PTI shall have the right to obtain, on commercially reasonable
terms, a non-exclusive, world-wide, royalty-bearing license, with other
appropriate terms, to Develop, make, use, offer for sale, sell, import and
Market products in the Field, including Products, including the right to grant
sublicenses without restriction, under King Technology and King Patent Rights,
solely to the extent any of such King Technology and King Patent Rights are
Invented by King based on the use of PTI Technology or PTI Patent Rights, or are
developed or acquired by King primarily for use in the

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                       -4-

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Development, making or Marketing of Products in the Collaboration. Except as set
forth in this Section 2.2.3, Section 2.2.1 (with respect to Development of
Products in the U.S. Territory and making of Products for use outside the
Territory) or Section 2.2.5 (with respect to CTM), PTI shall have no right to
Develop, make, use, offer for sale, sell, import or Market Products in the
Territory.

2.2.4 [***]. Beginning on the Closing Date and during the Term hereof and, in
the event of the expiration of the Collaboration Agreement or a termination of
the Collaboration Agreement pursuant to Section 9.2.2 thereof (by King at will)
or by PTI pursuant to Section 9.2.3 thereof as a result of King's breach,
continuing after the effective date of such termination or expiration, (a) a
non-exclusive, world-wide, royalty-free license to develop, make, use, offer for
sale, sell, import and market (i) [***] that do not incorporate the SABER
Technology, and (ii) [***], with the right to grant sublicenses without
restriction, under King Technology and King Patent Rights that are reasonably
necessary to develop, make, use, offer for sale, sell, import and market [***],
solely to the extent any of such King Technology or King Patent Rights are
Invented by King based on the use of PTI Technology or PTI Patent Rights or are
or are developed or acquired by King primarily for use in the Development,
making or Marketing of Products in the Collaboration, and (b) a right to obtain,
on commercially reasonable terms, a non-exclusive, world-wide, royalty-bearing
license to develop, make, use, offer for sale, sell, import and market (i) [***]
that do not incorporate the SABER Technology, and (ii) [***], with other
appropriate terms, with the right to grant sublicenses without restriction,
under any other King Technology and King Patent Rights that are reasonably
necessary to develop, make, use, offer for sale, sell, import and market [***].
For the avoidance of doubt, the licenses and rights granted by King to PTI under
this Section 2.2.4 shall be exercisable by PTI only with respect to [***] that
do not incorporate the SABER Technology or that are [***].

2.2.5 TO MAKE CTM. PTI shall have, and hereby retains under the PTI Technology,
PTI Patent Rights and PTI's interest in the Joint Technology and Joint Patent
Rights, (a) the exclusive right to make CTM, solely for use by King or its
Affiliates or Sublicensees in novel formulations and dosage strengths for the
conduct of Product Development in the Territory, and (b) the exclusive right to
make CTM solely for use by PTI or its Sublicensees in the U.S. Territory in the
Development of Products. King hereby grants to PTI a limited, exclusive license
under the King Technology, King Patent Rights and King's interest in the Joint
Technology and Joint Patent Rights, to manufacture such CTM for use by PTI, King
and the Affiliates and permitted licensees and Sublicensees of each in the
Territory. The rights granted to and retained by PTI pursuant to this Section
2.2.5 shall be exercisable by PTI only as set forth under the Collaboration
Agreement and for the conduct of the activities required in the performance of
its obligations or exercise of its rights thereunder. PTI may sublicense its
rights to make CTM of Products for use in the Territory hereunder; provided that
King shall have the right to review, prior to execution, any such agreement that
either (x) requires payments by a Party to a Third Party of greater than [***]
over the life of the contract or (y) is, in the judgment of the JOC, otherwise
material, or reasonably likely to become material, to the Collaboration. King
shall have the right to provide its comments to PTI on such agreements, which
comments PTI will consider in good faith.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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2.3 JOINT TECHNOLOGY AND JOINT PATENT RIGHTS. Subject to the rights and licenses
granted hereunder, each Party shall have the unrestricted right to use, license
and otherwise exploit all Joint Technology and Joint Patent Rights, without
accounting to the other Party or obtaining any approval of the other Party with
respect thereto.

2.4 FULFILLMENT AND OBSERVANCE OF CERTAIN OBLIGATIONS UNDER THE DLA.
Notwithstanding anything to the contrary herein, King acknowledges and agrees
that PTI is subject to certain obligations under the DLA. In the event of any
conflict between the terms of (a) this Agreement or the Collaboration Agreement
and (b) the DLA, the terms of the DLA (to the extent valid and enforceable)
shall govern PTI's rights and obligations, and the rights and obligations of
King hereunder (and under the Collaboration Agreement) are, and shall be, in all
respects subject to the limitations placed on the rights granted to PTI under
the DLA. In furtherance of the grant of rights set forth in this Section 2, PTI
acknowledges that it is responsible for the fulfillment of its obligations under
the DLA, except to the extent King has agreed to assume any such obligations
pursuant to Sections 5 and 6 hereof or under the Collaboration Agreement. King
hereby agrees to use commercially reasonable efforts to abide by the provisions
of the DLA to the extent same are applicable to sublicensees, and to use
commercially reasonable efforts to fulfill King's obligations hereunder, and
under the Collaboration Agreement, to Market and conduct Product Development
(and, in the case of King's exercise of its rights under Section 3.4.6 of the
Collaboration Agreement, Development with respect to Remoxy). Additionally King
agrees to use commercially reasonable efforts to fulfill King's obligations
under this Agreement and the Collaboration Agreement in a manner so as to enable
PTI to remain in full compliance with PTI's obligations under the DLA, to the
extent King is obligated to do so under this Agreement or under the
Collaboration Agreement. King shall not knowingly cause PTI to be in breach of
or under the DLA. [***]. [***]. Similarly, PTI shall not exercise or fail to
exercise any of PTI's material rights or obligations under the DLA to the extent
such exercise or failure to exercise would alter the rights or obligations of
King under this Agreement or the Collaboration Agreement, without the prior
written consent of King, not to be unreasonably withheld. At the reasonable
request of King, PTI shall exercise such rights and make such requests with
respect to Products as are permitted under the DLA, and PTI hereby agrees to
permit one designee of King to participate in all regularly scheduled meetings
and, to the extent practicable, all unscheduled material meetings and telephone
discussions, of the Joint Development Team (as such term is defined in the DLA).
PTI will use commercially reasonable efforts to comply with all obligations and
duties under the DLA including any provisions

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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necessary to maintain in effect any rights sublicensed to King hereunder and the
exclusive nature of such rights, including the preservation of King's rights
hereunder in the event that PTI shall breach or default on its obligations under
the DLA. If PTI should at any time breach or default on the DLA [***], PTI shall
immediately notify King, [***]. If the DLA should terminate or expire for any
reason other than termination as a consequence of King's breach or default of
its obligations under this Agreement or the Collaboration Agreement, then King's
sublicensed rights thereunder shall continue in full force and effect provided
that King promptly agrees in writing to be bound by the applicable terms and
conditions of the DLA, and PTI shall take whatever reasonable steps and perform
whatever reasonable acts are reasonably necessary or helpful to ensure that
King's sublicense continues, mutatis mutandis, in full force and effect.

2.5 NO OTHER RIGHTS. King hereby receives no rights to utilize PTI Technology or
PTI Patent Rights except as expressly set forth herein. PTI hereby receives no
rights to utilize King Technology or King Patent Rights except as expressly set
forth herein.

2.6 REIMPORTATION. PTI hereby acknowledges and agrees that it has granted to
King hereunder exclusive rights to Market, distribute, offer for sale, sell, and
import Products, and manufacture or have manufactured Products for sale in the
Territory, in each case within the Territory, as set forth in Section 2.1
hereof. PTI acknowledges and agrees that PTI has no right to, and shall not, and
shall not grant any right or license to any of its Affiliates, licensees,
Sublicensees or other Third Parties, directly or indirectly, under the PTI
Patent Rights, the PTI Technology, the Joint Patent Rights, the Joint
Technology, the King Patent Rights or the King Technology in the Territory, to
(a) sell, distribute, have distributed, offer for sale, have sold, import or
have imported Products or (b) manufacture or have manufactured Products, except
to the extent expressly permitted in Section 2.2.1 or 2.2.5 hereof, and shall
not grant any such right to any Affiliate or Third Party outside the Territory
if PTI knows or has reason to know that such Third Party intends to undertake
any such activities in the Territory. PTI shall use commercially reasonable
efforts to prevent, in the Territory, the making of any Products by PTI or any
of its Affiliates, licensees, Sublicensees or other Third Parties (except to the
extent permitted in Section 2.2 hereof) and the selling, distribution, offer for
sale and importation of Products by PTI or any of its Affiliates, licensees,
Sublicensees or other Third Parties. In the event PTI fails to use such
commercially reasonably efforts, and any Products are sold, distributed, offered
for sale, or imported by PTI or any of its Affiliates, licensees, Sublicensees
or other Third Parties in the Territory, King shall be entitled to adjust its
royalty obligations payable pursuant to Sections 6.1.1 and 6.1.4 hereof in an
amount adequate to compensate King for lost profits incurred as a result of such
unauthorized sale, distribution, offer for sale or importation.

2.7 [***]. The Parties acknowledge and agree that PTI retains the exclusive
right to develop, make, use, offer for sale, sell, import and otherwise
commercialize [***]. Notwithstanding the foregoing, PTI agrees that it shall not
make, use, offer for sale, sell import or otherwise commercialize any [***]
which

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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incorporate the SABER Technology, other than [***]. [***]. If any [***] is sold
by PTI, its Affiliates or Sublicensees in any country in the Territory in which
a corresponding Product that contains the same opioid agonist as its API has
already received Regulatory Approval, then King's royalty obligations to PTI
pursuant to Sections 6.1.1 and 6.1.4 hereof with respect to Net Sales of and
sublicensing revenue derived from such Product in such country shall
automatically and immediately be reduced by [***] of their original amount (as
specified in Sections 6.1.1 and 6.1.4 of this Agreement, respectively). If any
[***] receives Regulatory Approval in any country in the Territory in which the
corresponding Product containing the same opioid agonist as its API has not
already received Regulatory Approval, then, at King's sole discretion, King may
elect either (a) not to conduct Product Development, seek Regulatory Approval,
or Market such corresponding Product in the relevant country in the Territory,
pursuant to Section 3.4.12 of the Collaboration Agreement, in which case,
notwithstanding anything to the contrary in this Agreement or the Collaboration
Agreement, King's diligence obligations hereunder and under the Collaboration
Agreement with respect to such corresponding Product in such country in the
Territory shall be waived and King shall have no obligation to designate a
replacement Product to be Developed or Marketed instead of such corresponding
Product in such country in the Territory or (b) to Market such corresponding
Product, in which case King's royalty obligations to PTI pursuant to Sections
6.1.1 and 6.1.4 hereof with respect to Net Sales of and sublicensing revenue
derived from such Product in such country or region shall automatically and
immediately be reduced by [***] of their original amount (as specified in
Section 6.1.1 and 6.1.4 of this Agreement, respectively). King's right to reduce
payments otherwise due to PTI pursuant to this Section 2.7 shall be effective
immediately upon the First Commercial Sale of the relevant [***] in the relevant
country or region and continue for so long as such [***] is being sold in such
country or region by PTI, its Affiliates, licensees or Sublicensees.
Notwithstanding anything herein or in the Collaboration Agreement to the
contrary, PTI shall at all times be and remain liable and responsible for any
and all royalty, milestone and other payments due to Durect under the DLA with
respect to any and all [***], and PTI shall be solely responsible and liable to
Durect with respect to the diligence obligations pertaining to the relevant
[***]. In the event King elects not to launch a Product pursuant to Section
2.7(a) hereof, PTI shall be solely responsible and liable to Durect with respect
to the diligence obligations pertaining to the relevant Product in the relevant
country or region.

3. INTELLECTUAL PROPERTY RIGHTS

3.1 DISCLOSURE. Each Party shall, through its Patent Coordinator, keep the other
Party reasonably informed regarding developed or acquired King Background
Technology or PTI Background Technology, as applicable, as well as all
Technology that is invented, made or developed in the course of carrying out the
Development and Marketing Program (or the manufacture of Products) by employees
or Consultants of such Party or its Affiliates, alone or jointly with employees
or Consultants of the other Party or its Affiliates. The provisions of this
Section 3 shall apply to rights in the Technology invented, made or developed by
or on behalf of PTI or King, or both, during the course of carrying out the
Development and Marketing Program (including the manufacture of Products in
connection therewith).

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


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3.2 OWNERSHIP. The terms and conditions of this Agreement, including this
Section 3 are expressly subject to the applicable terms and conditions of
(including restrictions and limitations and the pre-existing rights and
obligations of Durect pursuant to) the DLA, and to the extent the DLA expressly
requires the assignment of any of the PTI Technology, PTI Patent Rights, King
Technology, King Patent Rights, Joint Technology or Joint Patent Rights to
Durect, PTI and King hereby agree to assign same in accordance with the terms
and conditions of the DLA. To the extent not inconsistent with the terms of the
DLA, the ownership of Technology and Patent Rights shall be as follows:

3.2.1 PTI INTELLECTUAL PROPERTY RIGHTS. PTI shall have sole and exclusive
ownership of all right, title and interest on a world-wide basis in and to any
and all PTI Technology and PTI Patent Rights, with full rights to license or
sublicense, subject to the obligations to King as set forth herein.

3.2.2 KING INTELLECTUAL PROPERTY RIGHTS. King shall have sole and exclusive
ownership of all right, title and interest on a world-wide basis in and to any
and all King Technology and King Patent Rights, with full rights to license or
sublicense, subject to the obligations to PTI as set forth herein.

3.2.3 JOINT TECHNOLOGY RIGHTS. King and PTI shall jointly own all Joint
Technology and Joint Patent Rights, subject to the rights of, and the licenses
granted to, each Party hereunder. Subject to the rights of, and the licenses
granted to, each Party hereunder, the Parties hereby agree that as joint owners
of such rights, each Party may use or license or sublicense to any Affiliate or
Third Party or otherwise exploit all such rights for any or all purposes without
restriction outside the Field and neither Party shall have any obligation to
account to the other Party for profits or to obtain any approval of the other
Party with respect thereto.

3.2.4 PATENT COORDINATORS. PTI and King shall each appoint a patent coordinator
(each, a "Patent Coordinator" and, collectively, the "Patent Coordinators"),
reasonably acceptable to the other Party, who shall serve as such Party's
primary liaison with the other Party on matters relating to patent filing,
prosecution, maintenance and enforcement. Each Party may replace its Patent
Coordinator at any time by notice in writing to the other Party.

3.2.5 INVENTORSHIP. The JOC, with the advice of the Patent Coordinators and, in
the event of a dispute between the Parties, their legal counsel, shall determine
the inventorship of any subject matter arising hereunder according to the
principles set forth in this Section 3.2.5. Solely for purposes of determining
ownership of any PTI Patent Rights, King Patent Rights and Joint Patent Rights
and the rights and obligations of the Parties hereunder, the inventorship
standards contained in United States patent law shall apply. For the avoidance
of doubt, the inventorship set forth in any particular patent application or
patent within the PTI Patent Right, King Patent Right or Joint Patent Right
shall be made, as a legal matter, in accordance with the patent laws of the
relevant jurisdiction. The JOC, with the advice of the Patent Coordinators,
shall also, in the case of dispute, make the determination as to whether an
invention is King Technology, PTI Technology or Joint Technology. If the JOC
cannot resolve the dispute, it shall be

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resolved by independent patent counsel, not otherwise engaged by either Party,
selected by the Patent Coordinators. The reasonable expenses of such independent
patent counsel shall be shared equally by the Parties.

4. FILING, PROSECUTION AND ENFORCEMENT OF PATENT RIGHTS

4.1 DLA. The terms and conditions of this Section 4 are expressly subject to the
pre-existing rights and obligations of Durect pursuant to the DLA. To the extent
the DLA permits PTI or its Sublicensees (as such term is defined in the DLA) to
prepare, file, prosecute, maintain or enforce intellectual property rights, or
defend against a claim of infringement or misappropriation, PTI hereby grants
such rights to King as follows.

4.2 PATENT PROSECUTION. During the Term of this Agreement, with respect to any
Patent Rights arising hereunder:

4.2.1 PTI, acting through patent attorneys or agents of its choice, shall be
responsible for the preparation, filing, prosecution (including the application
for and conduct of any re-examination, reissue, term extension or similar
procedure) and maintenance of all patents and patent applications claiming the
PTI Patent Rights and the conduct of any interferences, the defense of any
oppositions or other similar procedures with respect thereto, and King shall
reimburse PTI for half of all documented reasonable costs actually incurred
directly in connection therewith in the Territory. At PTI's request, King shall
reasonably cooperate with and assist PTI in connection with such activities. PTI
agrees to consider in good faith any reasonable request King may make in
connection with such activities related to the PTI Patent Rights that are (a)
licensed by PTI from Durect pursuant to the DLA or (b) actually then being used
in the Development Program or are, in the judgment of the JOC, reasonably likely
to be used or useful in the Development, manufacture or Marketing of any
Products hereunder or under the Collaboration Agreement, in accordance with the
terms and conditions of Article XII of the DLA.

4.2.2 King, acting through patent attorneys or agents of its choice, shall be
responsible for the preparation, filing, prosecution (including the application
for and conduct of any re-examination, reissue, term extension or similar
procedure) and maintenance of all patents and patent applications claiming the
King Patent Rights and the Joint Patent Rights and the conduct of any
interferences, the defense of any oppositions or other similar procedures with
respect thereto, in each case at King's sole expense. At King's request, PTI
shall reasonably cooperate with and assist King in connection with such
activities.

4.2.3 Except as expressly provided in Section 8, neither Party makes any
warranty with respect to the validity, perfection or dominance of any patent or
other proprietary right or with respect to the absence of rights in Third
Parties which may be infringed by the manufacture or sale of any Product. Each
Party agrees to bring to the attention of the JOC any patent or patent
application it discovers which relates to the rights of either Party under this
Agreement.

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4.3 INFORMATION AND COOPERATION IN PROSECUTION. Each Party responsible for the
preparation, filing, prosecution and maintenance of Patent Rights as described
in Section 4.2 (the "Filing Party") shall keep the JOC regularly informed of the
status of the Patent Rights for which it is responsible in accordance with
Section 4.2, in each case to the extent such Patent Rights are (a) licensed by
PTI from Durect pursuant to the DLA or (b) actually then being used in the
Development Program or are, in the judgment of the JOC, reasonably likely to be
used or useful in the Development, manufacture or Marketing of any Products
hereunder or under the Collaboration Agreement. The Filing Party shall provide
the Patent Coordinator of the other Party with copies of all filings and
correspondence with the patent offices, administrative boards or courts which
the Filing Party sends or receives in connection with the activities described
in Section 4.2 with respect to such Patent Rights, within twenty (20) days of
receipt and at least twenty (20) days prior to filing, respectively, including
copies of each patent application, office action, response to office action,
declaration, information disclosure statement, request for terminal disclaimer,
request for patent term extension and request for reissue or reexamination. The
Filing Party shall give good faith consideration to the other Party's comments.
The Filing Party shall carefully follow the advice and direction of the JOC with
respect to strategy for the Patent Rights for which it is responsible.

4.4 ABANDONMENT. Subject to the pre-existing rights and obligations of Durect
pursuant to the DLA, to the extent applicable to those PTI Patent Rights
licensed by PTI from Durect thereunder or to DURECT Inventions (as such term is
defined in the DLA) developed by or on behalf of either Party under the
Collaboration, if a Filing Party decides to abandon or to allow to lapse any of
its Patent Rights described in this Agreement, the Filing Party shall inform the
other Party and the JOC at least forty-five (45) days prior to the effective
date of such decision, and the JOC shall decide what actions should be taken
with respect to such Patent Rights. If the JOC has not reached a decision
fifteen (15) days prior to such effective date, then the non-Filing Party shall
have the right, at the non-Filing Party's expense, to take any actions it deems
reasonably necessary and appropriate to prevent the abandonment or lapse of the
relevant Patent Rights, in the Filing Party's name, in order to maintain the
status quo. The Filing Party hereby authorizes the non-Filing Party to make,
constitute, and appoint any representative as the non-Filing Party may select,
in its sole discretion, as the true and lawful attorney-in-fact for the Filing
Party, with power to endorse the Filing Party's name on all applications,
documents, papers, and instruments necessary or desirable for the non-Filing
Party to give effect to the provisions of this Section 4.4 and the intent of the
Parties hereto. This power of attorney is coupled with an interest and is
supported by the consideration set forth in this Agreement. The Filing Party
hereby ratifies all that such attorney-in-fact may lawfully do or cause to be
done by virtue hereof. This power of attorney is irrevocable until the earlier
of the expiration of the last to expire of the PTI Patent Rights, King Patent
Rights and Joint Patent Rights and the termination of this Agreement. In
rendering its determination, the JOC shall decide how to respond to the
activities of such non-Filing Party, what the rights of the Parties shall be
with respect to the relevant Patent Rights, and how to allocate responsibility
for any costs incurred in connection with same.

4.5 ACTUAL OR THREATENED INFRINGEMENT.

4.5.1 In the event either Party becomes aware of any probable infringement or
unauthorized possession, knowledge or use of any Patent Right or Technology that
is (a)

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licensed by PTI from Durect pursuant to the DLA or (b) actually then being used
in the Development Program or, in the reasonable judgment of such Party,
reasonably likely to be used or useful in the Development, manufacture or
Marketing of any Products hereunder or under the Collaboration Agreement
(collectively, an "Infringement"), that Party shall notify the JOC and other
Party within thirty (30) days and shall provide each with full details (an
"Infringement Notice"). The JOC shall decide what actions are to be taken with
respect to such matters, subject to the provisions of this Section 4.5.

4.5.2 As between the Parties, King shall have the first right and option, but
not the obligation, to prosecute or prevent the Infringement in the Territory of
or relating to (a) King Patent Rights, King Technology, Joint Patent Rights or
Joint Technology, (b) PTI Patent Rights and PTI Technology (whether or not
licensed from Durect pursuant to the DLA) that are actually then being used in
the Development Program or, in the judgment of the JOC, reasonably likely to be
used or useful in the Development, manufacture or Marketing of any Products
hereunder or under the Collaboration Agreement or (c) any continuations,
divisionals, continuations-in-part (to the extent any of the asserted claims are
entitled to claim priority to the filing date of any of the PTI Patent Rights
identified in subsection (b) of this Section 4.5.2), patents of addition, and
substitutions of the PTI Patent Rights identified in subsection (b) of this
Section 4.5.2, together with all registrations, reissues, reexaminations or
extensions of any kind with respect to any of the foregoing PTI Patent Rights.
If King does not commence a suit, action or proceeding to prosecute, or
otherwise take steps to prevent or terminate such Infringement within one
hundred eighty (180) days from any Infringement Notice or, in the case of a
certification filed pursuant to 21 U.S.C. 355(j)(2)(A)(vii)(IV), twenty (20)
days, then PTI shall have the right and option to take such action as PTI will
consider appropriate to prosecute or prevent such Infringement, but only if,
with respect to King Patent Rights and King Technology, such King Patent Rights
and King Technology are actually then being used in the Development Program or
are, in the judgment of the JOC, reasonably likely to be used or useful in the
Development, manufacture or Marketing of any Products hereunder or under the
Collaboration Agreement. If the Party prosecuting an Infringement in accordance
with this Section 4.5 determines that it is necessary or desirable for the other
Party to join any such suit, action or proceeding, the other Party shall, upon
written notice from the prosecuting Party, referencing this Section 4.5, and at
the prosecuting Party's expense, execute all papers and perform such other acts
as may be reasonably required in the circumstances for the prosecuting Party to
exercise its rights under this Section 4.5, including for purposes of
maintenance of standing or to otherwise prosecute such Infringement.

4.5.3 At King's reasonable request, PTI agrees to consider in good faith any
reasonable request in connection with any suit, action or proceeding brought by
Durect and relating to those PTI Patent Rights and PTI Technology Rights that
are (a) licensed by PTI from Durect pursuant to the DLA or (b) actually then
being used in the Development Program or, in the judgment of the JOC, reasonably
likely to be used or useful in the Development, manufacture or Marketing of any
Products hereunder or under the Collaboration Agreement, in accordance with the
terms and conditions of Article XII of the DLA.

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4.5.4 ALLOCATION OF COSTS AND DAMAGES AWARD. Each Party shall have the right, at
its sole expense, to be represented by counsel of its own selection in any suit,
action or proceeding instituted in accordance with this Section 4.5 by the other
Party for Infringement. The Party initiating a suit, action or proceeding
pursuant to this Section 4.5 shall bear all other costs incurred by the Parties
in connection therewith, and all damages, costs or other monetary awards shall
first be used to reimburse such initiating Party, then to reimburse the other
Party for all reasonable attorneys' fees incurred in connection with such
Party's separate representation, and the remainder, if any, shall be shared
[***] to the Party initiating the suit and [***] to the other Party.

4.6 DEFENSE OF CLAIMS.

4.6.1 NOTICE AND CONDUCT OF ACTION. In the event that any suit, action or
proceeding is brought against PTI or King or any Affiliate or Sublicensee of
either Party alleging the infringement of the Technology, Patent Rights or other
intellectual property rights of a Third Party by reason of any Party's
activities performed in accordance with this Agreement or by reason of the
manufacture, use or sale of any Product in accordance herewith or with the
Collaboration Agreement, then, subject to the pre-existing rights of Durect
pursuant to the DLA, to the extent applicable to those PTI Patent Rights or PTI
Technology licensed by PTI from Durect thereunder or to DURECT Inventions (as
such term is defined in the DLA) developed by or on behalf of either Party under
the Collaboration, King shall assume control of the defense of any action, suit
or proceeding at its expense. Each Party will give the other Party prompt
written notice of the commencement of any such suit, action or proceeding or
claim of infringement and will furnish the other Party a copy of each
communication relating to the alleged infringement. King may join PTI as a party
to the suit, action or proceeding and PTI shall execute all documents and take
all other actions, including giving testimony, which may reasonably be required
in connection with the conduct of such suit, action or proceeding. In the event
PTI joins in any such action, suit or proceeding, PTI shall have the right to
separate counsel in such action, suit or proceeding. All costs and expenses
incurred in connection with any suit, proceeding or action under this Section
4.6 shall be borne solely and exclusively by King, including all attorneys fees;
provided that if PTI elects to obtain separate counsel, PTI shall bear the costs
of such separate representation unless in the reasonable opinion of PTI's
counsel, either (a) one or more significant defenses are available to PTI that
are not available to King or (b) a conflict or potential conflict exists between
PTI and King that would make separate representation advisable.

4.6.2 CONSEQUENCES OF ACTION. The Parties shall examine and discuss in good
faith the consequences of any actual or threatened suit, action or proceeding
alleging infringement of the Technology, Patent Rights or other intellectual
property rights of a Third Party with respect to activities under this Agreement
or the Collaboration Agreement. In the event any such suit, action or
proceeding, or threat thereof, results in an obligation on King to pay
royalties, milestones, damages, costs, expenses or any other financial
consideration to any Third Party, whether by court order, consent decree,
settlement or license agreement or otherwise, King shall be entitled to deduct
from such payments from the amounts owing to PTI hereunder, as follows: The
corresponding royalty amounts otherwise owing to PTI hereunder shall be reduced
by [***]

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[***] of such royalty payments to such Third Party; provided that in no event
will the royalty payments payable to PTI hereunder be reduced by more than [***]
of their original amount (as specified in Sections 6.1.1 and 6.1.4 of this
Agreement). The milestone amounts otherwise owing to PTI hereunder shall be
reduced by [***] of such milestone payments to such Third Party; provided that
if and when King's outstanding milestone obligations to PTI are insufficient to
permit full offset of the creditable Third Party milestone amounts, then King
shall be entitled to offset [***] of the remaining Third Party milestone amounts
against the royalty payments payable to PTI hereunder, until all of the
creditable Third Party milestone payments have been offset; provided that at no
time will the royalty payments payable by PTI hereunder be reduced by more than
[***] of their original amount (as specified in Sections 6.1.1 and 6.1.4 of this
Agreement).

4.7 COOPERATION IN LITIGATION. PTI and King shall each, and shall cause, to the
extent it has the right to do so, each of its Affiliates to, require each past
or present employee, consultant, representative, contractor, agent or other
individual under the custody or control of such Party (including any such
individual that is, or is identified as, an inventor of any of the PTI Patent
Rights, the King Patent Rights or the Joint Patent Rights) to cooperate with the
other Party, its attorneys, agents, successors and assigns, to litigate and to
otherwise protect any and all of the King Patent Rights, the PTI Patent Rights
and the Joint Patent Rights or to defend against any Third Party suit, in each
case as such other Party may request, including to (a) execute such documents,
sign all lawful papers, and make all rightful oaths as the party with primary
responsibility hereunder for the relevant litigation deems reasonably necessary
or appropriate in connection with same; (b) communicate any relevant facts known
or reasonably available to such Party or its Affiliates; (c) provide testimony
for and make available relevant documents, things, records, papers, information,
samples and specimens within its possession, custody and control, as requested;
and (d) generally do everything reasonably necessary to obtain and enforce
proper protection for the King Patent Rights, the PTI Patent Rights and the
Joint Patent Rights in accordance with this Agreement. No Party shall
compromise, litigate, settle or otherwise dispose of any suit, action or
proceeding under Section 4.5 or 4.6 without the advice and prior consent of the
JOC.

4.8 TRADEMARK PROSECUTION. King shall own all right, title and interest in and
to the Product Trademark and PTI hereby assigns same to King and shall execute
such assignment documents as King reasonably requests for purposes of recording
the foregoing assignment. King shall have the right, at its own expense, and
using mutually acceptable outside counsel, to file, prosecute, defend and
maintain before all trademark offices the Product Trademarks.

5. DILIGENCE

5.1 REASONABLE DILIGENCE BY KING. King shall use commercially reasonable efforts
and diligence to Market Products and shall allocate resources and personnel
thereto consistent with contemporaneous reasonable scientific and business
practices and judgments in the pharmaceutical industry for products with similar
commercial value, market potential and profitability, in accordance with the
terms and conditions of the Collaboration Agreement. King shall use commercially
reasonable efforts to Commercialize (as such term is defined in the DLA)
Products, in accordance with PTI's rights and obligations pursuant to Section
8.5 of the DLA as set forth herein and in the Collaboration Agreement.

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6. CONSIDERATION

6.1 PAYABLE BY KING. In consideration for the rights and licenses granted
herein, King shall pay PTI the following:

6.1.1 ROYALTIES ON KING'S NET SALES. Beginning with the First Commercial Sale
and except as provided in Section 6.1.2, King shall pay to PTI a running royalty
equal to fifteen percent (15%) of Net Sales of Product by King or its Affiliates
or Sublicensees in the Territory to the extent the sale of such Product, until
the total aggregate Net Sales of all Products sold by King or its Affiliates or
Sublicensees in the Territory equals $1 billion, inclusive. When the total
aggregate Net Sales of all Products sold by King or its Affiliates or
Sublicensees in the Territory exceeds $1 billion, then King shall thereafter,
for the Term of this Agreement and except as provided in Section 6.1.2, pay to
PTI a running royalty equal to twenty percent (20%) of Net Sales of Product by
King or its Affiliates or Sublicensees in the Territory.

6.1.2 NO PATENT COVERAGE. In the event that the sale of any Product is not (i)
covered by a Valid Claim of the PTI Patent Rights, or (ii) otherwise entitled to
market exclusivity, in each case at the time and in the country of its sale,
King and its Affiliates and Sublicensees shall be entitled to reduce the running
royalties on Net Sales of such Products in such country at a rate equal to [***]
of the royalty rate that would otherwise be owed with respect to such Net Sales
under Section 6.1.1 above.

6.1.3 AMOUNTS PAYABLE UNDER THE DLA. In accordance with the terms and conditions
of the DLA, King shall pay to PTI, and PTI shall pay to Durect (or, at PTI's
request, King shall pay directly to Durect), (a) those milestones owed by PTI to
Durect under Sections 9.2 and 9.3 of the DLA, to the extent not accrued prior to
the Closing Date, and (b) those royalties owed by PTI under Section 9.5 of the
DLA solely to the extent attributable to Net Sales (as defined in the DLA) by
King its Affiliates or Sublicensees of Licensed Product (as defined in the DLA)
in the Territory (as defined in this Agreement). In no event shall King be
liable to PTI for any royalty amounts owed by PTI to Durect on Net Sales (as
defined in the DLA) of Licensed Product (as defined in the DLA) by or on behalf
of PTI or an Affiliate, licensee or Sublicensee of PTI (other than King and
King's Affiliates, licensees and Sublicensees), to the extent PTI is permitted
to sell or have sold Licensed Product (as defined in the DLA) hereunder or under
the Collaboration Agreement, nor for any other payments payable by PTI to Durect
under the DLA. King's payment obligations pursuant to this Section 6.1.3 shall
continue only for so long as King's sublicensed rights under the DLA remain in
effect; provided that if any of King's sublicensed rights under the DLA become
non-exclusive for reasons other than a breach by King of its obligations
hereunder or under the Collaboration Agreement, then King and PTI shall
negotiate in good faith an appropriate reduction in King's financial obligations
hereunder and under the Collaboration Agreement.

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6.1.4 SUBLICENSING REVENUE. In the event King enters into an agreement
sublicensing to a Third Party the rights and licenses granted to it pursuant to
Section 2.1 hereof to Develop, Market, distribute, offer for sale, sell, import
or otherwise commercialize Products in the ROW, King shall pay to PTI [***] of
all up-front, milestones and other economic consideration received by King from
such Third Party in exchange for the grant of such rights, which up-front,
milestones and other payments shall be subject to Sections 6.2, 6.3 and 6.4
hereof.

6.2 RECORDS AND REPORTING. King shall maintain, and shall require that its
Affiliates, licensees and Sublicensees maintain, in accordance with GAAP,
complete and accurate books of account containing all particulars relevant to
King's, its Affiliates' and Sublicensees' sales of Products in sufficient detail
to allow calculation and verification of all royalties and other payments
payable to PTI hereunder. Such books of account, as well as all reasonably
necessary supporting data, shall be kept at the principal place of business of
King for the five (5) years following the end of the Calendar Year to which each
shall pertain, and shall be open for inspection by an independent certified
public accountant reasonably acceptable to King, upon reasonable notice during
normal business hours at PTI's expense, as the case may be, for the sole purpose
of verifying quarterly payment statements or compliance with this Agreement. In
the event the inspection determines that royalties due to PTI for any period
have been underpaid by five percent (5%) or more in any given Calendar Year,
then King shall pay for all costs of the inspection, as well as make any
payments required to remedy the overstatement. King will use commercially
reasonable efforts to ensure that PTI is granted the right to audit King's
Sublicensees' financial records, as provided herein; provided that, to the
extent that King does not obtain that right for PTI, King shall obtain for
itself such right and, at the request of PTI, King shall exercise such audit
right with respect to such Sublicensees and provide the results of such audit
for inspection by PTI pursuant to this Section 6.2. All royalty payments set
forth in this Agreement shall, if overdue, bear interest until payment at a per
annum rate of two percent (2%) above the prime rate published in The Wall Street
Journal, New York edition, on the due date. The payment of such interest shall
not foreclose PTI from exercising any other rights it may have as a consequence
of the lateness of any payment. All information and data reviewed in the
inspection shall be used only for the purpose of verifying royalties and shall
be treated as King's Confidential Information subject to the obligations of this
Agreement. No audit shall be conducted hereunder more frequently than once
during any twelve (12)-month period. The results of each audit, if any, shall be
binding on both Parties. Any dispute regarding the results of any such
inspection hereunder shall be subject to the dispute resolution provisions of
Section 2.3 of the Collaboration Agreement; provided that if King is the Party
with final decision-making authority over the subject matter in dispute, and the
CEO's are unable to reach agreement even after good faith discussions in
accordance with Section 2.3 of the Collaboration Agreement, then the dispute
shall not be subject to the sole discretion of either Party but shall be subject
to arbitrationpursuant to the provisions of Section 2.3.3 of the Collaboration
Agreement.

6.3 QUARTERLY PAYMENTS AND REPORTS. In each year the amount of royalty due shall
be calculated quarterly as of the end of each Calendar Quarter and shall be paid
quarterly within the forty-five (45) days next following such date. Every such
payment shall be supported by the accounting described herein. All royalties due
hereunder are payable in United States dollars. When Products are sold for
currency other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Products were
sold and

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then converted into equivalent United States funds. The exchange rate will be
that rate quoted in The Wall Street Journal, New York edition on the last
business day of the Calendar Quarter in which such sales were made.

6.4 ACCOUNTING REPORTS. With each quarterly payment, King shall deliver to PTI a
full and accurate accounting to include at least the following information:

6.4.1 Quantity of Product manufactured and sold, by country, by King, its
Affiliates and Sublicensees, (including the quantity of Product subject to a
royalty;

6.4.2 Total sales for each Product by King, its Affiliates and Sublicensees, by
country and, to the extent used in any royalty calculations during such quarter,
the exchange rate set forth herein;

6.4.3 Deductions applicable as provided herein or as otherwise agreed by the
Parties and all Net Sales calculations;

6.4.4 Total up-front payments, milestone payments and other payments and
compensation received by King from its Sublicensees in connection with the grant
of a sublicense of the rights and licenses granted to it pursuant to Section
2.1; and

6.4.5 Total royalties and other payments and compensation payable to PTI.

If no royalties or other payment or compensation is due to PTI in such Calendar
Quarter, King shall so report.

6.5 WITHHOLDING TAXES. All payments made by a Party hereunder shall be made to
the other Party free and clear of any Taxes. If a Party is required by law to
deduct or withhold any Taxes from any payment made hereunder, then such Party
shall (a) make such deductions and withholdings; (b) pay the full amount
deducted or withheld to the relevant taxing authority or other applicable
governmental authority; and (c) promptly provide the other Party with written
documentation of any such payment that, if applicable, shall be in a form
sufficient to satisfy the requirements of the United States Internal Revenue
Code relating to a claim by such other Party for a foreign tax credit in respect
of such Tax payment. If by law, regulations or fiscal policy of a particular
country in the Territory, remittance of royalty payments in United States
dollars is restricted or forbidden, written notice thereof shall promptly be
given by King to PTI, and such payment shall be made by the deposit thereof in
local currency to the credit of PTI in a recognized banking institution
designated by PTI. When in any country in the Territory, the law or regulations
prohibit both the transmittal and the deposit of payments, such payments shall
be suspended for as long as such prohibition is in effect and as soon as such
prohibition ceases to be in effect, all payments that King would have been under
an obligation to transmit or deposit but for the prohibition shall forthwith be
deposited or transmitted, to the extent allowable.

7. TERM AND TERMINATION

7.1 TERM. Unless otherwise terminated by operation of law or by acts of the
Parties in accordance with the terms of this Agreement, this Agreement shall
continue until the scheduled expiration (and not the earlier termination) of the
Collaboration Agreement (the

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"Term"), except to the extent any of the rights licensed by PTI from Durect
under the DLA and sublicensed to King hereunder expire or terminate earlier,
pursuant to the terms and conditions of the DLA.

7.2 TERMINATION. This Agreement shall be terminable only upon the conditions and
in the manner specified in the Collaboration Agreement, in conjunction with a
termination of the Collaboration Agreement, on a Product-by-Product basis or in
its entirety. For the avoidance of doubt, termination of the Collaboration
Agreement shall automatically terminate this Agreement.

7.3 ACCRUED OBLIGATIONS. Any termination of this Agreement for any reason does
not relieve either Party of any obligation or liability accrued prior to the
termination or rescind anything done by either Party, and the termination does
not affect in any manner any rights of either Party arising under this Agreement
prior to the termination.

7.4 TREATMENT UPON BANKRUPTCY.

7.4.1 ASSUMPTION AND ASSIGNMENT OF AGREEMENT.

7.4.1.1 Notwithstanding any other provision of this Agreement, the Collaboration
Agreement, or any other related agreements, each Party hereby consents to the
assumption of this Agreement by the other Party (the "Debtor Party") in any case
commenced by or against the Debtor Party under the Bankruptcy Code to the extent
that such consent is required under Section 365(c)(1) of the Bankruptcy Code,
but only if the Debtor Party is otherwise entitled to assume this Agreement
under the applicable requirements of the Bankruptcy Code. The sole purpose of
the foregoing consent is to overcome any restriction potentially imposed by
Section 365(c)(1) of the Bankruptcy Code on the Debtor Party's assumption of
this Agreement in a bankruptcy case concerning the Debtor Party. It is not
intended to limit any other rights of the other Party (the "Non-Debtor Party")
under this Agreement or any provision of the Bankruptcy Code, including Section
365(c)(1). The foregoing consent applies only to the assumption of this
Agreement by the Debtor Party and does not apply to the Debtor Party's
assignment of this Agreement or any rights hereunder to a Third Party.

7.4.1.2 Notwithstanding any other provision of this Agreement (including
Sections 7.4.1.3 and 12.9), the Collaboration Agreement, or any other related
agreements, the Non-Debtor Party hereby consents to the assignment of this
Agreement by the Debtor Party to a Third Party solely in connection with a sale
of all or substantially all of the Debtor Party's business or assets relating to
this Agreement and the Collaboration Agreement to such Third Party, pursuant to
an orderly sale process under Section 363 of the Bankruptcy Code or a confirmed
plan under Section 1129 of the Bankruptcy Code, that contemplates the continued
operation of the purchased business or assets and, if PTI is the Debtor Party,
the retention of the Existing Management Team, provided that such Third Party
promptly agrees in writing to be bound by the terms and conditions of this
Agreement and the Debtor Party is otherwise entitled to assign this Agreement
under the applicable requirements of the Bankruptcy Code. The sole purpose of
the foregoing consent is to overcome any restriction potentially imposed by
Section 365(c)(1) of the Bankruptcy Code on the Debtor Party's assignment of
this Agreement under the specific

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circumstances described in this Section 7.4.1.2. It is not intended to limit any
other rights of the Non-Debtor Party under this Agreement or any provision of
the Bankruptcy Code, including Section 365(c)(1), or to apply to the assignment
of this Agreement in any other context.

7.4.1.3 Notwithstanding any other provision of this Agreement (including Section
12.9), the Collaboration Agreement, or any other related agreements, but subject
to Section 7.4.1.2 above, the Debtor Party may only assign this Agreement to a
Third Party in any case commenced by or against it under the Bankruptcy Code
with the prior written consent of the Non-Debtor Party.

7.4.2 INTELLECTUAL PROPERTY RIGHTS. This Agreement and all rights related to and
licenses of intellectual property granted under this Agreement by one Party to
the other Party are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(35A) of the Bankruptcy Code. In addition
to any other rights, elections and remedies under this Agreement, any related
agreements, the Bankruptcy Code, or any other Applicable Law, upon a written
request under Section 365(n) of the Bankruptcy Code, the Non-Debtor Party shall
be entitled to complete access to any intellectual property of the Debtor Party
pertaining to the rights granted in the licenses under this Agreement, all
embodiments of such intellectual property and all documents, material, data,
records, analyses, and information related thereto (including all clinical data,
INDs, NDAs, Regulatory Approvals, Regulatory Filings, and all other
documentation reasonably useful in respect of Product in the Territory in the
Field). This Agreement, the Collaboration Agreement and any other related
agreements (to the extent such agreements do not constitute licenses of
intellectual property under the Bankruptcy Code) shall be considered agreements
supplementary (as such term is used in Section 365(n) of the Bankruptcy Code) to
this Agreement.

7.4.3 REJECTION IN BANKRUPTCY. Any rejection of this Agreement by the Debtor
Party pursuant to Section 365 of the Bankruptcy Code shall constitute a material
breach of this Agreement not subject to notice or cure. Upon any such rejection,
all rights, elections and remedies of the Non-Debtor Party to this Agreement
(including under Section 365 of the Bankruptcy Code) are expressly reserved.
Further, upon any such rejection, the Parties intend and agree that the
Non-Debtor Party may elect to retain its rights under this Agreement pursuant to
Section 365(n) of the Bankruptcy Code and that such election shall, among other
things, entitle the Non-Debtor Party to invoke and exercise all of its rights to
any intellectual property under this Agreement, the Collaboration Agreement, and
any other related agreements.

7.5 SURVIVAL. The terms and conditions of the following provisions shall survive
termination or expiration of this Agreement for as long as necessary to permit
their full discharge: Articles 9, 11 and 12, the definitions set forth in Annex
A, and Sections 2.2.3, 2.2.4, 3.2.1, 3.2.2, 3.2.3, 7.3, 7.5, 10.1, the
obligations of the Parties set forth in the first two sentences of Section 10.2,
and Sections 6.2, 6.3, 6.4 and 6.5 with respect to any final payments owing to
PTI under Section 6.1. Additionally, in the event of expiration of this
Agreement (but not the earlier termination), the licenses granted to King in
Section 2.1 with respect to PTI Technology

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and Joint Technology will survive on a non-exclusive, royalty-free, fully-paid
up basis. Except as otherwise provided in this Section 7.5, all rights and
obligations of the Parties under this Agreement shall terminate upon the
expiration or termination of this Agreement.

8. WARRANTIES

8.1 PTI represents and warrants to King that (a) to PTI's actual knowledge, PTI
owns or Controls all right, title and interest in and to the PTI Patent Rights,
free and clear of any encumbrances, liens, charges, adverse claims, pledges,
assignments, licenses, and covenants by PTI not to sue any Third Party; (b) to
PTI's actual knowledge, all patent applications within the PTI Patent Rights
have been duly prepared, filed, prosecuted and maintained in accordance with all
applicable laws, rules and regulations; (c) to PTI's actual knowledge there is
no litigation or proceeding pending or threatened concerning the validity or
enforceability of any of the PTI Patent Rights, BUT PTI EXPRESSLY DISCLAIMS ANY
WARRANTY THAT THE PTI PATENT RIGHTS ARE ACTUALLY VALID OR ENFORCEABLE; (d) PTI
has the lawful right to enter into this Agreement and to grant the licenses
granted hereunder without the consent or approval of another person or entity
that has not been obtained; (e) neither PTI, nor to PTI's actual knowledge,
Durect, is in material breach of the DLA and to PTI's actual knowledge the DLA
is valid, binding, enforceable and in full force and effect; and (f) to the
extent any government funding has been obtained or used in connection with the
research and development of any Products or any subject matter disclosed in any
of the PTI Patent Rights, including pursuant to any grants from the National
Institutes of Health, the terms and conditions of such funding agreements and
grants and all laws applicable thereto have been complied with in all material
respects.

8.2 King represents and warrants to PTI that it has the lawful right and
authority to enter into this Agreement without the consent or approval of
another person or entity.

9. INDEMNIFICATION

9.1 INDEMNIFICATION OF KING BY PTI. PTI shall indemnify, defend, and hold
harmless King, its Affiliates, and their respective directors, officers,
employees, and agents (the "King Indemnitees"), against any liability, damage,
loss, or expense (including reasonable attorneys' fees and expenses of
litigation) (collectively, "Losses") incurred by or imposed upon the King
Indemnitees, or any one of them, as a result of claims, causes of action, suits,
actions, demands, or judgments made against such King Indemnitees by Third
Parties, including claims for personal injury and claims of suppliers and PTI
employees (except in cases where such claims, suits, actions, demands, or
judgments result from a material breach by King of its representations or
warranties under this Agreement, gross negligence, or willful misconduct on the
part of King), in each case to the extent arising out of (a) the breach of any
representation or warranty of PTI under Article 8 hereof, (b) the gross
negligence or willful misconduct of PTI, its Affiliates, or their respective
employees or agents in the performance of any obligation under this Agreement,
and (c) any government funding received by PTI prior to the Effective Date of
the Collaboration Agreement in connection with the research or development of
any Products or any subject matter disclosed in any PTI Patent Rights, including
pursuant to any grants from the National Institutes of Health, and the failure
of PTI to comply in all material respects with the terms and conditions of such
funding agreements and grants, and with all Applicable Laws with

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respect thereto, including to obtain any necessary permits or waivers
thereunder. For purposes of clarity, it is understood and agreed that, except as
provided in this Section 9.1 or in Section 11.1 of the Collaboration Agreement,
PTI provides no indemnification to King with respect to product liabilities
claims relating to Products.

9.2 INDEMNIFICATION OF PTI BY KING. King shall indemnify, defend, and hold
harmless PTI, its Affiliates, and their respective directors, officers,
employees, and agents (the "PTI Indemnitees"), against any Losses incurred by or
imposed upon the PTI Indemnitees, or any one of them, as a result of claims,
causes of action, suits, actions, demands, or judgments made against such PTI
Indemnitees by Third Parties, including personal injury and claims of suppliers
and King employees (except in cases where such claims, suits, actions, demands,
or judgments result from a material breach by PTI of its representations or
warranties under this Agreement, gross negligence, or willful misconduct on the
part of PTI), in each case to the extent arising out of (a) the breach of any
representation or warranty of King under Article 8 hereof and (b) the gross
negligence or willful misconduct of King, its Affiliates, or their respective
employees or agents in the performance of any obligation under this Agreement.
For purposes of clarity, it is understood and agreed that, except as provided in
this Section 9.2 or the Section 11.2 of the Collaboration Agreement, King
provides no indemnification to PTI with respect to product liabilities claims
relating to Products.

9.3 CONDITIONS TO INDEMNIFICATION. A Party seeking indemnification under this
Article 9 (the "Indemnified Party") shall give prompt notice of the claim to the
other Party (the "Indemnifying Party") and, provided that the Indemnifying Party
is not contesting the indemnity obligation, shall permit the Indemnifying Party
to control any litigation relating to such claim and disposition of any such
claim. The Indemnifying Party shall act reasonably and in good faith with
respect to all matters relating to the settlement or disposition of any claim as
the settlement or disposition relates to Parties being indemnified under this
Article 9. The Indemnifying Party shall not settle or otherwise resolve any
claim without prior notice to the Indemnified Party and the consent of the
Indemnified Party (which consent shall not be unreasonably withheld,
conditioned, or delayed) if such settlement involves anything other than the
payment of money by the Indemnifying Party. The Indemnified Party shall
reasonably cooperate with the Indemnifying Party in its defense of any claim for
which indemnification is sought under this Article 9 and shall have the right to
be present in person or through counsel at all legal proceedings giving rise to
the right of indemnification. For purposes of clarity, it is understood that in
the event that a claim is eligible for indemnification under both this Article 9
and under Article 11 of the Collaboration Agreement, the Indemnified Party shall
be entitled to seek indemnification for such claim under either this Agreement
or the Collaboration Agreement, but not both.

9.4 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT OR THE COLLABORATION AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH
RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS, OR OTHER SUBJECT MATTER OF
THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE
FOREGOING. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY GUARANTEES TO THE OTHER CONCERNING THE SUCCESS OR POTENTIAL
SUCCESS OF THE ACTIVITIES CONTEMPLATED UNDER THIS AGREEMENT.

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9.5 LIMITED LIABILITY. EXCEPT WITH RESPECT TO A BREACH OF THE OBLIGATIONS IN
ARTICLE 10 OR WITH RESPECT TO AMOUNTS PAID TO THIRD PARTIES UNDER THE
INDEMNIFICATION OBLIGATIONS OF THIS ARTICLE 9, NEITHER PTI NOR KING WILL BE
LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OR (II) COST OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, OR SERVICES.

10. CONFIDENTIALITY; PUBLICITY

10.1 CONFIDENTIALITY.

10.1.1 CONFIDENTIALITY OBLIGATIONS. PTI and King each acknowledges and agrees
that the other Party's Confidential Information constitutes highly valuable and
proprietary confidential information and materials. PTI and King each agrees
that during the Term of this Agreement and for an additional five years (or, in
the case of any Confidential Information identified as a trade secret by the
Disclosing Party at the time of disclosure, for so long as such trade secret
Confidential Information is susceptible of remaining a trade secret), it will
use commercially reasonable efforts to keep confidential, and will use
commercially reasonable efforts to cause its employees, Consultants, Affiliates,
agents, advisors, and Sublicensees to keep confidential, all Confidential
Information of the other Party. Neither PTI nor King nor any of their respective
employees, Consultants, Affiliates, or Sublicensees shall use Confidential
Information of the other Party for any purpose whatsoever except as expressly
permitted in this Agreement or the Collaboration Agreement.

10.1.2 LIMITED DISCLOSURE. PTI and King each agree that any disclosure of the
other Party's Confidential Information to any officer, employee, Consultant,
agent, or Affiliate of PTI or King, as the case may be, shall be made only if
and to the extent necessary to carry out its rights and responsibilities under
this Agreement and the Collaboration Agreement, shall be limited to the maximum
extent possible consistent with such rights and responsibilities, and shall only
be made to persons who are bound by written confidentiality obligations to
maintain the confidentiality thereof and not to use such Confidential
Information except as expressly permitted by this Agreement or the Collaboration
Agreement. PTI and King each further agrees not to disclose or transfer the
other Party's Confidential Information to any Third Parties under any
circumstance without the prior written approval from the other Party (such
approval not to be unreasonably withheld), except as otherwise required by law,
and except as otherwise expressly permitted by this Agreement or the
Collaboration Agreement. Each Party shall take such action, and shall cause its
Affiliates and Sublicensees to take such action, to preserve the confidentiality
of the Disclosing Party's Confidential Information as the Receiving Party would
customarily take to preserve the confidentiality of its own Confidential
Information, using a level of care that shall not under any circumstances be

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less than reasonable and prudent care. If a court or other government authority
orders that the Receiving Party disclose Confidential Information, or proposes
such an order, the Receiving Party must notify the Disclosing Party immediately
after learning of the order, so as to provide the Disclosing Party an
opportunity to protect the information, and the Receiving Party must limit the
disclosure to the minimum that will comply with the order. Each Party, upon the
request of the other Party, will return all the Confidential Information
disclosed or transferred to it by the other Party pursuant to this Agreement,
including all copies and extracts of documents and all manifestations in
whatever form, within 60 days of the request or, if earlier, the termination or
expiration of this Agreement; provided however, that a Party may retain
Confidential Information of the other Party relating to any license or right to
use Technology that survives such termination and one copy of all other
Confidential Information may be retained in inactive archives solely for the
purpose of establishing the contents thereof.

10.1.3 EMPLOYEES AND CONSULTANTS. PTI and King each hereby agrees that all of
its employees, and all of the employees of its Affiliates, and any Consultants
to such Party or its Affiliates, in any case that participate in the activities
of the Development Program and who shall have access to Confidential Information
of the other Party shall be bound by written obligations to maintain the same in
confidence and not to use such information except as expressly permitted herein.
Each Party agrees to enforce confidentiality obligations to which its employees
and Consultants (and those of its Affiliates) are obligated. Each Party agrees
to have each employee or Consultant that participates in the Development Program
enter into a written agreement with such Party that includes an assignment to
such Party of all right, title, and interest in and to all work product and all
inventions arising during the course of his or her employment with or provision
of services to such Party, and all intellectual property rights attaching
thereto.

10.1.4 EQUITABLE RELIEF. PTI and King each acknowledges that a breach by it of
this Article 10 cannot reasonably or adequately be compensated in damages in an
action at law and that such a breach may cause the other Party irreparable
injury and damage. By reason thereof, each Party agrees that the other Party may
be entitled, in addition to any other remedies it may have under this Agreement
or otherwise, to preliminary and permanent injunctive and other equitable relief
to prevent or curtail any breach of Article 10 by the other Party; provided,
however, that no specification in this Agreement of a specific legal or
equitable remedy shall be construed as a waiver or prohibition against the
pursuing of other legal or equitable remedies in the event of such a breach.
Each Party agrees that the existence of any claim, demand, or cause of action of
it against the other Party, whether predicated upon this Agreement, or
otherwise, shall not constitute a defense to the enforcement by the other Party,
or its successors or assigns, of the covenants contained in Article 10.

10.2 PUBLICITY. Neither Party may publicly disclose the existence or terms of
this Agreement without the prior written consent of the other Party.
Notwithstanding the foregoing, each Party shall have the right to disclose the
existence or terms of this Agreement, or information relating to the Development
Program, Remoxy, or other Products, without the consent of the other Party (a)
to the extent the disclosure is required by law or by the requirements of any
nationally recognized securities exchange, quotation system, or over-the-

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counter market on which such Party has its securities listed or traded, (b) to
any investors, prospective investors, lenders, and other potential financing
sources who are obligated to keep such information confidential, or (c) to any
Third Party who is obligated by written confidentiality agreement to keep such
information confidential; provided, in each case, that the Party making such
disclosure shall use reasonable efforts to provide the other Party with as much
notice beforehand as is reasonable under the circumstances with respect to any
such disclosure. The Parties, upon the execution of this Agreement, will
mutually agree to a press release with respect to the Development Program for
publication. Once such press release or any other written statement is approved
for disclosure by both Parties, either Party may make subsequent public
disclosure of the contents of such statement without the further approval of the
other Party. Additionally from time-to-time PTI may wish to issue press releases
or make similar disclosures regarding the results or status of its research or
Product activities, the achievement of a regulatory or development milestone, or
any other material achievements under this Agreement or the DLA. Notwithstanding
anything to the contrary in Section 10.3 or this Section 10.2, PTI shall be free
to issue such press releases or make such disclosures, and shall have the right
to choose the wording and timing of any such press releases and disclosures;
provided that PTI agrees to provide King a draft copy of any such press release
or disclosure at least twelve (12) hours prior to its publication or disclosure,
which copy in any event must be provided during normal business hours, and
provided further that such disclosure does not mention King without King's prior
written consent. King shall have the right to inform PTI of any information
contained therein that King believes is inaccurate.

10.3 PUBLICATION. It is expected that each Party may wish to publish the results
of its research under this Agreement and the DLA in scientific journals or
through scientific conferences, which disclosures will be subject to the
obligations of this Section 10.3. At any time prior to the filing of an NDA for
a particular Product, PTI may publish the results of its research for such
Product in scientific journals or through scientific conferences; provided that
PTI complies with the provisions of this Section 10.3; and provided further that
such publication does not mention King without King's prior written consent. At
any time following the filing of an NDA for a particular Product, King may
publish the results of its research for such Product in scientific journals or
through scientific conferences; provided that King complies with the provisions
of this Section 10.3; and provided further that such publication does not
mention PTI without PTI's prior written consent. In order to safeguard patent
rights and other intellectual property, the Party wishing to publish in any
scientific journal or at any scientific conference the results of any research
being conducted by the Parties in the Development Program shall first submit a
draft of each proposed technical publication or an outline of each proposed
presentation for a scientific conference, with any related materials to be
published or distributed in connection therewith, to the other Party for review,
comment, and consideration of appropriate patent action at least thirty (30)
days prior to any submission for publication (or in the case of a disclosure in
connection with a scientific conference, at least fifteen (15) days prior to
such disclosure). Within fifteen (15) days of receipt of the prepublication
materials (or as soon as practicable in connection with an outline of an oral
presentation), the other Party will notify the Party seeking publication as to
whether a patent application shall be prepared and filed (in which case the
Party seeking publication shall delay submission until the first to occur of the
filing of a patent application and thirty (30) days from such notice provided by
the JOC) or whether such publication must be revised to eliminate Confidential
Information of a Party (in which case the Party seeking publication shall delete
from any proposed publication all such Confidential Information contained
therein).

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11. REMEDIES

Subject to the terms of this Agreement, the Parties are not excluded from
exercising or seeking any and all rights and remedies available, in law or in
equity, under Applicable Law.

12. MISCELLANEOUS

12.1 NOTICES. All notices or other communications that shall or may be given
pursuant to this Agreement shall be in writing and shall be deemed to be
effective (a) simultaneously with the transmission or delivery thereof, if sent
by facsimile transmission (followed by hard copy by mail), (b) when delivered,
if sent by United States registered or certified mail, return receipt requested,
or (c) on the next business day, if sent by overnight courier, in each case to
the Parties at the following addresses (or at such other addresses as shall be
specified by like notice) with postage or delivery charges prepaid:

If to King:                             If to PTI:

King Pharmaceuticals, Inc.              Pain Therapeutics, Inc.
501 Fifth Street                        416 Browning Way
Bristol, Tennessee 37620                South San Francisco, California 94080
Tel.: (423) 989-8000                    Tel.: (650) 825-3342
Fax: (423) 990-2566                     Fax: (650) 624-8222
Attention: General Counsel              Attention: President & CEO

With a copy to:                         With a copy to:

King Pharmaceuticals, Inc.              Wilson Sonsini Goodrich & Rosati
501 Fifth Street                        650 Page Mill Road
Bristol, Tennessee 37620                Palo Alto, California 94304-1050
Tel.: (423) 989-8000                    Tel.: (650) 493-9300
Fax: (423) 274-2602                     Fax: (650) 493-6811
Attention: Business Development         Attention: Michael O'Donnell

12.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
application of principles of conflicts of law.

12.3 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective legal representatives, successors,
and permitted assigns.

12.4 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.

12.5 AMENDMENT; WAIVER. This Agreement may be amended, modified, superseded, or
canceled, and any of the terms may be waived, only by a written instrument
executed by each

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Party or, in the case of waiver, by the Party or Parties waiving compliance. The
delay or failure of any Party at any time or times to require performance of any
provisions shall in no manner affect the rights at a later time to enforce the
same. No waiver by any Party of any condition or of the breach of any term
contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, shall be deemed to be, or considered as, a further or continuing
waiver of any such condition or of the breach of such term or any other term of
this Agreement.

12.6 NO THIRD PARTY BENEFICIARIES. No Third Party, including any employee of any
Party to this Agreement, shall have or acquire any rights by reason of this
Agreement.

12.7 PURPOSES AND SCOPE. The Parties hereto understand and agree that this
Development Program is limited solely to the Field in the Territory, and to the
activities, rights, and obligations as set forth in this Agreement. Nothing in
this Agreement shall be construed (a) to create or imply a general partnership
between the Parties, (b) to make either Party the agent of the other for any
purpose, (c) to alter, amend, supersede, or vitiate any other arrangements
between the Parties with respect to any subject matters not covered hereunder,
(d) to give either Party the right to bind the other, (e) to create any duties
or obligations between the Parties except as expressly set forth herein, or (f)
to grant any direct or implied licenses or any other right other than as
expressly set forth herein.

12.8 PERFORMANCE BY AFFILIATES. Each Party shall have the right to direct its
wholly-owned Affiliates to act in satisfaction of such Party's or Affiliate's
obligations hereunder or make an assignment to an Affiliate in accordance with
Section 12.9; provided that such Party shall remain liable and fully responsible
for the performance of such Affiliate hereunder.

12.9 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any obligation of a
Party hereunder may be assigned by either Party without the consent of the
other, except that, subject to Section 7.4.1, each Party may assign this
Agreement and the rights, obligations, and interests of such Party, in whole or
in part, to any of its Affiliates (subject to Section 12.8) or to any Third
Party that succeeds to all or substantially all of a Party's business or assets
relating to this Agreement and the Collaboration Agreement, whether by sale,
merger, operation of law, or otherwise; provided that such assignee or
transferee promptly agrees in writing to be bound by the terms and conditions of
this Agreement. Any attempted assignment in violation of this Section 12.9 shall
be null, void, and of no effect. This Agreement shall be binding upon and inure
to the benefit of all permitted successors-in-interest and assigns.

12.10 FORCE MAJEURE. In the event of the occurrence of a Force Majeure Event,
the Parties shall not be deemed in breach of their obligations to the extent of
the Force Majeure Event. The Party affected thereby shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.

12.11 INTERPRETATION.

12.11.1 The Parties hereto acknowledge and agree that: (i) each Party and its
counsel reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its revision; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting Party shall not be
employed in the interpretation of this

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Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to all Parties hereto and not in a favor of or against any
Party, regardless of which Party was generally responsible for the preparation
of this Agreement.

12.11.2 The headings contained in this Agreement are for reference purposes only
and will not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," or "including" are used in this
Agreement, they will be deemed to be followed by the words "without limitation."
Unless the context otherwise requires, (i) "or" is disjunctive but not
necessarily exclusive, (ii) words in the singular include the plural and vice
versa, and (iii) the use in this Agreement of a pronoun in reference to a Party
hereto includes the masculine, feminine, or neuter, as the context may require.
The Annex hereto will be deemed part of this Agreement and included in any
reference to this Agreement.

12.12 INTEGRATION; SEVERABILITY. This Agreement and the Collaboration Agreement
are the sole agreements with respect to the subject matter hereof and supersede
all other agreements and understandings between the Parties with respect to
same. If any provision of this Agreement is or becomes invalid or is ruled
invalid by any court of competent jurisdiction or is deemed unenforceable, such
provision or portion thereof will be modified or deleted in such a manner so as
to make this Agreement, as modified, legal and enforceable to the fullest extent
permitted under Applicable Law, and it is the intention of the Parties that the
remainder of the Agreement shall not be affected.

12.13 FURTHER ASSURANCES. Each of PTI and King agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including the filing
of such additional assignments, agreements, documents, and instruments, that may
be necessary or as the other Party hereto may at any time and from time to time
reasonably request in connection with this Agreement or to carry out more
effectively the provisions and purposes of, or to better assure and confirm unto
such other Party its rights and remedies under, this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                      -27-

<PAGE>

     IN WITNESS WHEREOF, both King and PTI have executed this Agreement, by
     their respective officers duly authorized, on the day and year written
     below.

KING PHARMACEUTICALS, INC.              PAIN THERAPEUTICS, INC.


By: /s/ Brian A. Markison               By: /s/ Remi Barbier
    ---------------------------------       ------------------------------------
    (Signature)                             (Signature)
Name: Brian A. Markison                 Name: Remi Barbier
Title: President and Chief Executive    Title: President & CEO
       Officer

Date: December 29, 2005                 Date: December 29, 2005

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.

<PAGE>

                                                                         ANNEX A

                        DEFINITIONS TO LICENSE AGREEMENT

1. "AFFILIATE" means any corporation, firm, partnership, or other entity that
directly or indirectly controls or is controlled by or is under common control
with a Party to this Agreement. For purposes of this definition, "control" means
ownership, directly or through one or more Affiliates, of (a) 50% or more of the
shares or voting rights in the case of a corporation or limited company, (b) 50%
or more of the shares of stock entitled to vote for the election of directors,
in the case of a corporation, (c) 50% or more of the equity or controlling
interests in the case of any other type of legal entity (including joint
ventures) or status as a general partner in any partnership, or (d) any other
arrangement whereby a Party controls or has the right to control the Board of
Directors or equivalent governing body of an entity.

2. "AGREEMENT" means this License Agreement, including all attached annexes, as
well as all amendments, supplements, and restatements thereof.

3. "API" means, with respect to a Product, the active pharmaceutical ingredient
used in the Product.

4. "APPLICABLE LAW" means applicable U.S. and foreign laws, rules, regulations,
guidelines, and standards, including those of the FDA and comparable foreign
Regulatory Authorities.

5. "BANKRUPTCY CODE" means the U.S. Bankruptcy Code, 11 U.S.C. Sections 101 et
seq.

6. "CALENDAR QUARTER" means, with respect to the first such Calendar Quarter,
the period beginning on the Closing Date and ending on the last day of the
calendar quarter within which the Closing Date falls and, thereafter, each
successive period of three consecutive calendar months ending on March 31, June
30, September 30, or December 31. In the event that the termination of this
Agreement does not fall on the last day of a Calendar Quarter, the "FINAL
CALENDAR QUARTER" shall mean the period from the last day of the most recent
Calendar Quarter through the applicable date of termination of this Agreement.

7. "CALENDAR YEAR" means each successive twelve (12)-month period commencing on
January 1 and ending on December 31; provided that the first such Calendar Year
shall begin on the Closing Date and end on December 31, 2005. In the event that
the termination of this Agreement does not fall on the last day of a Calendar
Year, the "FINAL CALENDAR YEAR" shall mean the period from the last day of the
most recent Calendar Year through the applicable date of termination of this
Agreement.

8. "CLOSING DATE" shall mean the earlier of: (a) the third day, unless the first
day falls on a weekend or holiday, in which case it shall be the next business
day, after the expiration or termination of all applicable waiting periods under
the HSR Act and the satisfaction of all the other conditions set forth in
Section 6.1.3 of the Collaboration Agreement or (b) the third day, unless the
first day falls on a weekend or holiday, in which case it shall be the next
business day, after the joint determination (by certification from each Party to
the other) that notification under the HSR Act is not required and the
satisfaction of all the other conditions set forth in Section 6.1.3 of the
Collaboration Agreement.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-1

<PAGE>

9. "CMC" means, with respect to a Product, the chemistry, manufacturing, and
controls information that would typically be, or is, included in an IND or NDA
for such Product.

10. "COLLABORATION" means the association of PTI and King established pursuant
to the Collaboration Agreement for the purpose of conducting the Development of
Products so as to accomplish the Development objectives of the Development
Program.

11. "COLLABORATION AGREEMENT" has the meaning set forth in the recitals hereof.

12. "CONFIDENTIAL INFORMATION" means all information, Technology, and
Proprietary Materials that are disclosed to a Party (the "Receiving Party") by
or on behalf of the other Party (the "Disclosing Party") hereunder or under this
Agreement or disclosed to any of the Receiving Party's employees, Consultants,
Affiliates, or Sublicensees, except to the extent that any such information (a)
as of the date of disclosure is known to the Receiving Party or its Affiliates,
as demonstrated by credible written documentation; (b) as of the date of
disclosure is in, or subsequently enters, the public domain, through no fault or
omission of the Receiving Party; (c) is obtained from a Third Party having a
lawful right to make such disclosure free from any obligation of confidentiality
to the Disclosing Party; or (d) is independently developed by or for the
Receiving Party without reference to or reliance upon any Confidential
Information of the Disclosing Party as demonstrated by credible written
documentation. It is further agreed that PTI Technology shall be deemed the
Confidential Information of PTI, King Technology shall be deemed the
Confidential Information of King, and Joint Technology shall be deemed the
Confidential Information of both Parties. During the Term hereof, neither Party
shall disclose any of its own Confidential Information in such a manner that
would reasonably be expected to adversely impact any intellectual property
rights or commercial interests of the Development Program or the Products,
unless such disclosure is subject to confidentiality obligations as strict as
those contained in the Collaboration Agreement or this Agreement.

13. "CONSULTANT" means a Third Party who has entered into or hereafter enters
into a written agreement with PTI or King or both to provide consulting services
that are material or are reasonably likely, in the judgment of the JOC, to
become material to the Development Program, which written agreement shall (a)
include an assignment of all right, title, and interest in and to all work
product and all inventions arising from the performance of such agreement, and
all intellectual property rights attaching thereto, to PTI or King, as
applicable, and (b) bind the relevant Third Party by obligations of
confidentiality and non-use with respect to all such work product, inventions,
Confidential Information, and intellectual property rights that are at least as
stringent as those set forth herein.

14. "CONTROL" or "CONTROLLED" means, (a) with respect to Technology (other than
Proprietary Materials) or Patent Rights, the possession by a Party of the
ability to grant a license or sublicense of such Technology or Patent Rights as
provided herein without the payment of additional consideration (other than any
additional consideration to be paid pursuant to the DLA) and without violating
the terms of any agreement or arrangement between such Party and any Third Party
and, (b) with respect to Proprietary Materials, the possession by a Party of the
ability to supply such Proprietary Materials to the other Party as provided
herein without the payment of additional consideration and without violating the
terms of any agreement or arrangement between such Party and any Third Party.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-2

<PAGE>

15. "[***]" means any dosage form that is covered by any patent or patent
application set forth on Schedule 22 to the Collaboration Agreement (the
"Existing Patents"), as well as any continuations, divisionals,
continuations-in-part (to the extent any claims thereof are entitled to claim
priority to the filing date of any of the Existing Patents), patents of
addition, and substitutions of the Existing Patents, together with all
registrations, reissues, reexaminations or extensions of any kind with respect
to any of the foregoing patents, in each case to the extent same are owned or
controlled by PTI. In the event PTI reasonably believes that any claims of a
continuation-in-part application of any of the Existing Patents, which claims
are not entitled to claim priority to the filings date of any of the Existing
Patents, cover only an incremental improvement to the subject matter described
and claimed in the Existing Patents, PTI shall have the right to request that
King permit such additional claims to be included within the definition of
[***], and King shall consider such request in good faith. Notwithstanding the
foregoing, with respect to United States Application Serial Nos. [***], and any
applications or patents that claim priority to either of same, to the extent
that any claims cover a dosage form of an opioid agonist alone or a method or
process of using or making such a dosage form, such claims shall not be within
the definition of [***], but shall be considered PTI Technology and PTI Patent
Rights (and such applications and issued patents will be included on the
schedule of PTI Patent Rights solely to such extent).

16. "[***]" means any dosage form of a [***] that (a) contains [***] as the only
opioid agonist API and (b) is covered by the rights granted to PTI under the
DLA.

17. "CTM" or "CLINICAL TRIAL MATERIALS" means any Product manufactured,
packaged, and labeled as required by Applicable Law to be used as an
investigational drug or placebo for use in the conduct of clinical trials in
humans.

18. "DEBTOR PARTY" has the meaning set forth in Section 7.4.1.1 of this
Agreement.

19. "DEVELOPMENT" or "DEVELOP" means, with respect to a Product, all research,
pre-clinical, pharmaceutical, clinical, and regulatory activities and all other
activities undertaken in order to obtain Regulatory Approval of such Product in
accordance with the Collaboration Agreement prior to Regulatory Approval of such
Product. These activities shall include, among other things: test method
development, CMC methods and reports (including formulation, process
development, development-stage manufacturing, manufacturing scale-up, technical
transfer, quality assurance, and quality control), pre-clinical pharmacology and
toxicology studies and associated reports, planning and conduct of clinical
studies, protocols, clinical study reports, statistical analysis plans, and
clinical quality assurance prior to obtaining Regulatory Approvals, obtaining
Regulatory Approvals, and regulatory affairs related to the foregoing.

20. "DEVELOPMENT PLANS" means the written plans (which shall include detailed
strategy, budget, and proposed timelines) describing the pre-clinical and
clinical Development activities and the regulatory activities, including a
general overview of the expected schedule of meetings, discussions, and
correspondence with Regulatory Authorities to be carried out for each Product
during each Calendar Year pursuant to the Collaboration Agreement, which plans
shall include the expected Regulatory Filings to be completed and maintained by
the Collaboration for

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-3

<PAGE>

each Product. The Development Plans will be amended from time to time to include
statistical analysis plans, protocols, case report forms, clinical study
reports, audit reports, and similar matters, as such matters are developed
during the Collaboration. Without limiting the foregoing, such plans shall
include, at a minimum, the activities required to remain in compliance with the
terms and obligations applicable to PTI under the DLA. Each Development Plan
will be set forth in a written document prepared by the Parties pursuant to
Section 3.4 of the Collaboration Agreement, and a separate Development Plan will
be generated and approved with respect to each Product.

21. "DEVELOPMENT PROGRAM" means, collectively, (a) the collaborative development
program in the Field conducted by PTI and King and (b) the marketing program in
the Field conducted by King, in each case, commencing on the date hereof and
conducted pursuant to the Collaboration Agreement and the Program Plans.

22. "DURECT LICENSE AGREEMENT" or "DLA" means the Development and License
Agreement, dated as of December 19, 2002, by and among PTI, DURECT Corporation
("DURECT"), and Southern BioSystems, Inc., a copy of which has been provided to
King, as it may be amended from time to time hereafter in accordance with
Section 2.4 of this Agreement.

23. "EFFECTIVE DATE" has the meaning set forth in the first paragraph of the
Collaboration Agreement.

24. "EXISTING MANAGEMENT TEAM" means not less than fifty percent (50%) of the
individuals who, as of the date that is one year prior to the commencement of
any case by or against PTI under the Bankruptcy Code, are designated as
"Officers" of PTI under Rule 16a-1(f) promulgated pursuant to the Securities
Exchange Act of 1934, as amended.

25. "FDA" means the United States Food and Drug Administration or any successor
agency.

26. "FIELD" means pharmaceutical formulations for use in humans that contain no
more than one opioid API formulated using the SABER Technology, in accordance
with the DLA.

27. "FILING PARTY" has the meaning set forth in Section 4.3 of this Agreement.

28. "FIRST COMMERCIAL SALE" means, with respect to any product, the first
arm's-length sale by King, its Affiliates, or Sublicensees to a Third Party for
end-use or consumption, including any sale to a wholesaler or distributor, of
such product in a country after the applicable Regulatory Authority has granted
Regulatory Approval. For purposes of this definition, any sale to an Affiliate
or Sublicensee will not constitute a First Commercial Sale.

29. "FORCE MAJEURE EVENT" means an event beyond the reasonable control of a
Party that prevents the performance, in whole or in part, by the Party of any of
its obligations hereunder, including by reason of any act of God, flood or other
inclement weather patterns, fire, explosion, earthquake, or war, terrorist act,
revolution, civil commotion, acts of public enemies, blockage or embargo, or the
like, or any injunction, law, order, ordinance, or requirement of any government
or of any subdivision, authority, or representative of any such government, if,
and only if, the Party affected shall have used commercially reasonable efforts
to avoid the effects of such occurrence and to remedy it promptly if it has
occurred.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-4

<PAGE>

30. "GAAP" means United States generally accepted accounting principles of the
Party performing the applicable work, consistently applied.

31. "GMP" means the minimum standards for methods to be used in, and the
facilities or controls to be used for, the manufacture, processing, packing, or
holding of a drug to assure that such drug meets the requirements of the Federal
Food, Drug and Cosmetic Act of 1938, or its foreign equivalent, as amended, as
to safety, and has the identity and strength and meets the quality and purity
characteristics that it purports or is represented to possess. In the U.S.
Territory, Good Manufacturing Practices are established through FDA regulations
(including 21 CFR Parts 210-211), FDA guidances, FDA current review and
inspection standards, and current industry standards.

32. "HSR ACT" means the Hart-Scott-Rodino Act of 1976, as amended.

33. "IND" means (a) an Investigational New Drug Application (as defined in 21
CFR Section 312.3) that is required to be filed with the FDA before beginning
clinical testing of a Product in human subjects, or any successor application or
procedure, or (b) any counterpart of a U.S. Investigational New Drug Application
that is required in any other country or region in the Territory before
beginning clinical testing of a Product in human subjects in such country or
region.

34. "INDEMNIFIED PARTY" has the meaning set forth in Section 9.3 of this
Agreement.

35. "INDEMNIFYING PARTY" has the meaning set forth in Section 9.3 of this
Agreement.

36. "INFRINGEMENT NOTICE" has the meaning set forth in Section 4.5.1 of this
Agreement.

37. "INVENT" or "INVENTED" means (a) with respect to patentable Technology, to
invent or discover, as such terms are used in 35 U.S.C. Section 101 and (b) with
respect to non-patentable Technology, to discover, make or otherwise develop.

38. "JOINT OVERSIGHT COMMITTEE" or "JOC" means the committee of PTI and King
representatives established pursuant to Section 2.1 of the Collaboration
Agreement to administer the affairs of the Development Program.

39. "JOINT PATENT RIGHTS" means Patent Rights claiming Joint Technology, as set
forth on Schedule 53 to the Collaboration Agreement, which may be amended from
time to time as necessary to accurately reflect the foregoing.

40. "JOINT TECHNOLOGY" means any Technology jointly Invented by employees of
King and PTI, or Consultants to King and PTI, during and in the conduct of the
Development Program.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-5

<PAGE>

41. "KING" has the meaning set forth in the first paragraph of this Agreement.

42. "KING BACKGROUND TECHNOLOGY" means any Technology that is useful in the
Field or that is actually used in the Development, making or Marketing of
Products and that is Controlled by King on the Closing Date.

43. "KING INDEMNITEES" has the meaning set forth in Section 9.1 of this
Agreement.

44. "KING PATENT RIGHTS" means all Patent Rights that are Controlled by King and
that claim King Technology, as set forth on Schedule 58 to the Collaboration
Agreement, which may be amended from time to time as necessary to accurately
reflect the foregoing.

45. "KING PROGRAM TECHNOLOGY" means any Technology that is (a) Invented by
employees of, or Consultants to, King, alone or jointly with Third Parties
(other than Consultants of PTI), in the conduct of the Development Program or
(b) useful in the Field or that is actually used in the Development,
manufacturing or Marketing of Products and that are acquired by King after the
Closing Date pursuant to a Third Party Agreement.

46. "KING TECHNOLOGY" means, collectively, King Background Technology and King
Program Technology.

47. "LOSSES" has the meaning set forth in Section 9.1 of this Agreement.

48. "MANUFACTURING/CMC PLANS" means the written CMC and manufacturing plans
(which shall include a detailed strategy, budget, and proposed timelines)
describing the API, synthesis, choice of manufacturers and Third Party
suppliers, expected manufacturing scale-up, manufacture, formulation, process
development, development-stage manufacture, clinical supplies manufacturing,
quality assurance/quality control development, stability, filling, packaging and
labeling, and shipping requirements for each Product (in accordance with
customary standards for a product of comparable market potential), including all
CMC, and the activities to be carried out by each Party during the applicable
Calendar Year. Each Manufacturing/CMC Plan will be set forth in a written
document prepared by the Parties pursuant to Section 3.5 of the Collaboration
Agreement, and a separate Manufacturing/CMC Plan will be generated and approved
with respect to each Product.

49. "MARKET" or "MARKETING" means any and all activities directed to the
marketing, detailing, and promotion of a Product for commercial sale and shall
include pre-launch and post-launch marketing, mandated and non-mandated
risk-management policies and procedures, market surveillance activities,
promoting, detailing, distributing (including the cost and distribution of
Product samples), offering to sell, and selling a Product, importing a Product
for sale, and any and all Product Development conducted after obtaining
marketing approval for any Product that is not performed as a condition to the
first Regulatory Approval for a Product. If a Phase IV trial is performed as a
condition to fulfill an obligation for Regulatory Approval for a Product, such
trial shall be considered a Development activity (but not Product Development).

50. "NDA" means a New Drug Application (or an abbreviated New Drug Application)
to market the Product in the Territory or similar application submitted to the
FDA, or its foreign equivalent submitted to any Regulatory Authority in the
Territory, and all supplements and amendments thereto.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-6

<PAGE>

51. "NET SALES" means the gross amount invoiced by King its Affiliates or
Sublicensees, to Third Parties for sale of Products, less, to the extent
deducted from such amount or on such invoice consistent with GAAP, the following
items: (a) quantity, trade or cash discounts, chargebacks, returns, allowances,
rebates (including any and all federal, state or local government rebates, such
as Medicaid rebates) and price adjustments, to the extent actually allowed; (b)
sales and other excise taxes and duties or similar governmental charges levied
on such sale, to the extent such items are included in the gross invoice price;
(c) amounts actually refunded due to rejected, spoiled, damaged, outdated or
returned Product; and (d) freight, shipment and insurance costs actually
incurred in transporting Product to a Third Party purchaser. If any Products are
sold to Third Parties in transactions that are not at arm's length between the
buyer and seller, or for consideration other than cash, then the gross amount to
be included in the calculation of Net Sales for such sales shall be the amount
that would have been invoiced had the transaction been conducted at arm's
length, which amount shall be determined, whenever possible, by reference to the
average selling price of the relevant Product in arm's-length transactions in
the country of sale at the time of sale. Net Sales shall not include amounts
invoiced for the supply, disposal of Product for, or use of Product, in clinical
or pre-clinical trials or as free samples (such samples to be in quantities
common in the industry for this sort of Product).

52. "NON-DEBTOR PARTY" has the meaning set forth in Section 7.4.1.1 of this
Agreement.

53. "PARTY" or "PARTIES" has the meaning set forth in the first paragraph of
this Agreement.

54. "PATENT COORDINATOR" has the meaning set forth in Section 3.2.4 of this
Agreement.

55. "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications (which for purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention and priority rights) in any country, including all provisional
applications, substitutions, continuations, continuations-in-part, divisions,
and renewals, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof.

56. "PHASE II" means a human clinical trial or trial program in any country that
is intended to evaluate the safety and efficacy of a Product's dose and dose
regimen in a specific indication the Product is intended to treat.

57. "PRODUCT" means (a) any dosage form of Remoxy, and (b) any other product in
the Field (i) that incorporates the SABER Technology and is covered by the
rights licensed to PTI under the DLA, and (ii) that is Developed or Marketed
pursuant to the Collaboration Agreement. For purposes of clarity, "Product"
includes those products within the Field that the Parties have agreed to Develop
and Market as of the Effective Date, as well as any and all other products in
the Field that King actually designates to be Developed or Marketed under the
Collaboration Agreement during the Term thereof.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-7

<PAGE>

58. "PRODUCT DEVELOPMENT" means (a) with respect to the U.S. Territory, the
conduct by King and its Affiliates of additional clinical studies of a Product
that has previously received Regulatory Approval from the FDA, which additional
clinical studies are conducted using CTM that is in the same formulation and
dosage form as the Product for which Regulatory Approval was previously
obtained, and (b) with respect to the ROW, the conduct by King, its Affiliates,
or its Sublicensees of clinical studies of a Product, which additional clinical
studies are conducted using CTM that is in the same formulation and dosage form
as the Product for which Regulatory Approval was previously obtained in the U.S.
Territory (or if Regulatory Approval has not yet been obtained in the U.S.
Territory, then using CTM in the same formulation(s) and dosage form(s) then
being utilized by PTI under the Development Plan for such Product in the U.S.
Territory). For purposes of clarity, Product Development shall include the right
(i) to use the clinical data generated in such clinical studies to seek
additional Regulatory Approvals for a Product and engage in associated
regulatory activities and (ii) to develop new indications for a Product with the
same formulation and dosage form and to develop additional support for the
Product generally.

59. "PRODUCT TRADEMARK(S)" means any trademarks and trade names, whether or not
registered, and any trademark applications, renewals, extensions or
modifications thereto in the Territory together with all goodwill associated
therewith, trade dress and packaging which are applied to or used with Products,
and any promotional materials relating thereto.

60. "PROGRAM PLANS" means the Development Plans, the Manufacturing/CMC Plans,
and the Yearly Brand Plans.

61. "PROPRIETARY MATERIALS" means any tangible chemical, biological or physical
research materials.

62. "PTI" has the meaning set forth in the first paragraph of this Agreement.

63. "PTI BACKGROUND TECHNOLOGY" means any Technology that is useful in the Field
or that is actually used in the Development, manufacturing or Marketing of
Products and that is Controlled by PTI on the Closing Date, expressly including
all rights licensed to PTI pursuant to the DLA.

64. "PTI INDEMNITEES" has the meaning set forth in Section 9.2 of this
Agreement.

65. "PTI PATENT RIGHTS" means all Patent Rights that are Controlled by PTI and
that claim PTI Technology, expressly including all rights licensed to PTI
pursuant to the DLA, all as set forth on Schedule 85 to the Collaboration
Agreement, which may be amended from time to time as necessary to accurately
reflect the foregoing.

66. "PTI PROGRAM TECHNOLOGY" means any Technology that is (a) Invented by
employees of, or Consultants to, PTI, alone or jointly with Third Parties (other
than Consultants of King), in the conduct of the Development Program or (b)
useful in the Field or that is actually used in the Development, manufacturing
or Marketing of Products and that are acquired by PTI after the Closing Date
pursuant to a Third Party Agreement.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-8

<PAGE>

67. "PTI TECHNOLOGY" means, collectively, PTI Background Technology and PTI
Program Technology.

68. "REGULATORY APPROVAL" means approval by the FDA or other Regulatory
Authority to market a product in a regulatory jurisdiction.

69. "REGULATORY AUTHORITY" means the FDA, the Drug Enforcement Administration,
or any counterpart of such agencies outside the United States, or other
national, supra-national, regional, state, or local regulatory agency,
department, bureau, commission, council, or other governmental entity with
authority over the distribution, importation, exportation, manufacture,
production, use, storage, transport, or clinical testing, pricing, or sale of a
Product, including any device incorporating the Product.

70. "REGULATORY FILINGS" means, collectively, any and all INDs and drug master
files, NDAs, applications for any device incorporating the Product, applications
for designation of a Product as an "Orphan Product(s)" under the Orphan Drug Act
or any other similar filings (including any foreign equivalents and further
including any related correspondence and discussions), and all data contained
therein, as may be required by or submitted to any Regulatory Authority for the
Regulatory Approval.

71. "REMOXY" means a drug product in the Field that contains oxycodone as its
opioid API and that is formulated using the SABER Technology.

72. "ROW" means all countries and jurisdictions in the Territory, other than the
U.S. Territory.

73. "SABER TECHNOLOGY" means the pharmaceutical formulation technology and
methods of use that are covered by the rights granted to PTI pursuant to the
DLA.

74. "SUBLICENSEE" means any Third Party to which a Party or both Parties grant a
sublicense of some or all of the rights granted to such Party under the
Collaboration Agreement or this Agreement, as permitted by the Collaboration
Agreement or this Agreement.

75. "TAXES" means, collectively, taxes, deductions, duties, levies, fees, or
charges (including any interest or penalties imposed thereon or related thereto.

76. "TECHNOLOGY" means and includes all inventions, discoveries, improvements,
trade secrets and proprietary methods and materials, including Proprietary
Materials, whether or not patentable, relating to the Field, including (a)
samples of, methods of production or use of, and structural and functional
information pertaining to, chemical compounds, proteins or other biological
substances and (b) data, formulations, techniques and know-how (including any
negative results).

77. "TERM" means the term of this Agreement as set forth in Section 7.1 of this
Agreement.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                    Annex A-9

<PAGE>

78. "TERRITORY" means worldwide, including the U.S. Territory, but excluding
Australia and New Zealand.

79. "TERMINATED PRODUCT" has the meaning set forth in Section 3.1.4 of the
Collaboration Agreement.

80. "THIRD PARTY" means any person or entity other than King and PTI and their
respective Affiliates.

81. "THIRD PARTY AGREEMENTS" has the meaning set forth in Section 3.8 of the
Collaboration Agreement.

82. "U.S. TERRITORY" means the United States, including Puerto Rico, and any
other U.S. protectorates, territories, and possessions.

83. "VALID CLAIM" means a claim of a pending patent application or an issued
unexpired patent which, in each case, shall not have been withdrawn, canceled or
disclaimed, or held unpatentable, invalid or unenforceable by a court or other
tribunal of competent jurisdiction in an unappealed or unappealable decision.

84. "YEARLY BRAND PLANS" means the written Marketing plans (which shall include
a detailed strategy and proposed timelines to be undertaken) describing the
activities to be carried out by King during each applicable Calendar Year
pursuant to the Collaboration Agreement. Each Yearly Brand Plan will be set
forth in a written document prepared by King and reviewed by the JOC pursuant to
Section 3.6 of the Collaboration Agreement, and a separate Yearly Brand Plan
will be generated and approved with respect to each Product.

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.


                                   Annex A-10

<PAGE>

                                                                       EXHIBIT B

                                 DURECT CONSENT

  PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.

<PAGE>
[PAIN THERAPEUTICS, INC. GRAPHIC]

                             PAIN THERAPEUTICS, INC.

November 2, 2005

Jim Brown, D.V.M.
President & CEO
DURECT Corporation
10240 Bubb Road
Cupertino, CA 95104

    RE: APPROVAL OF SUBLICENSEE

Dear Jim:

Pursuant to Section 8.3 of the Development and License Agreement entered into by
DURECT Corporation, Southern BioSystems, Inc., (collectively "Durect") and Pain
Therapeutics, Inc. ("PTI") dated as of December 19, 2002 (the "Agreement"), I
would like to inform you of PTI's intention to grant a sublicense to King
Pharmaceuticals, Inc. ("King") to make and sell Licensed Products in the
Territory (as such terms are defined in the Agreement).

Please sign below to indicate DURECT's approval of PTI's selection of King as a
Sublicensee (as such term is defined in the Agreement) and return this letter to
me by Friday, November 4th. A duplicate original is enclosed for your records.
Time is of the essence.

Best Regards,

/s/ Remi Barbier
--------------------------------------------------------------------------------
Remi Barbier

Agreed and accepted:

DURECT CORPORATION
------------------

/s/ Jim Brown, D.V.M.                       Nov. 3, 2005
------------------------------------------  ------------------------------------
Jim Brown, D.V.M.                           Date
President & CEO


                                  CONFIDENTIAL


 PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
  SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
 CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.