<PAGE>
                                                                    EXHIBIT 10.8
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                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
                               DURECT CORPORATION


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<PAGE>

                           TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              Page
                                                                              ----
<S>                                                                           <C>
1    ACCOUNTING AND OTHER TERMS..............................................  4
     --------------------------

2    LOAN AND TERMS OF PAYMENT...............................................  4
     -------------------------
     2.1  Credit Extensions..................................................  4
     2.2  Interest Rate, Payments............................................  5
     2.3  Fees...............................................................  6

3    CONDITIONS OF LOANS.....................................................  6
     -------------------
     3.1  Conditions Precedent to Initial Credit Extension...................  6
     3.2  Conditions Precedent to all Credit Extensions......................  6

4    CREATION OF SECURITY INTEREST...........................................  7
     -----------------------------
     4.1  Grant of Security Interest.........................................  7

5    REPRESENTATIONS AND WARRANTIES..........................................  7
     ------------------------------
     5.1  Due Organization and Authorization.................................  7
     5.2  Collateral.........................................................  7
     5.3  Litigation.........................................................  7
     5.4  No Material Adverse Change in Financial Statements.................  7
     5.5  Solvency...........................................................  8
     5.6  Regulatory Compliance..............................................  8
     5.7  Subsidiaries.......................................................  8
     5.8  Full Disclosure....................................................  8

6    AFFIRMATIVE COVENANTS...................................................  8
     ---------------------
     6.1  Government Compliance..............................................  8
     6.2  Financial Statements, Reports, Certificates........................  9
     6.3  Inventory; Returns.................................................  9
     6.4  Taxes..............................................................  9
     6.5  Insurance..........................................................  9
     6.6  Primary Accounts...................................................  9
     6.7  Loss; Destruction; or Damage.......................................  9
     6.8  Further Assurances................................................. 10

7    NEGATIVE COVENANTS...................................................... 10
     ------------------

8    EVENTS OF DEFAULT....................................................... 11
     -----------------
     8.1  Payment Default.................................................... 11
     8.2  Covenant Default................................................... 11
     8.3  Material Adverse Change............................................ 11
     8.4  Attachment......................................................... 11
     8.5  Insolvency......................................................... 11
     8.6  Other Agreements................................................... 12
     8.7  Judgments.......................................................... 12
     8.8  Misrepresentations................................................. 12

9    BANK'S RIGHTS AND REMEDIES.............................................. 12
     --------------------------
     9.1  Rights and Remedies................................................ 12
     9.2  Power of Attorney.................................................. 12
     9.3  Accounts Collection................................................ 13
</TABLE>

                                       2
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<TABLE>
<S>                                                                           <C>
     9.4  Bank Expenses...................................................... 13
     9.5  Bank's Liability for Collateral.................................... 13
     9.6  Remedies Cumulative................................................ 13
     9.7  Demand Waiver...................................................... 13

10   NOTICES................................................................. 13
     -------

11   CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER............................. 14
     -------------------------------------------

12   GENERAL PROVISIONS...................................................... 14
     ------------------
     12.1  Successors and Assigns............................................ 14
     12.2  Indemnification................................................... 14
     12.3  Time of Essence................................................... 14
     12.4  Severability of Provision......................................... 14
     12.5  Amendments in Writing, Integration................................ 14
     12.6  Counterparts...................................................... 15
     12.7  Survival.......................................................... 15
     12.8  Confidentiality................................................... 15
     12.9  Effect of Amendment and Restatement............................... 15
     12.10 Attorneys' Fees, Costs and Expenses............................... 15

13   DEFINITIONS............................................................. 15
     -----------
     13.1  Definitions....................................................... 15
</TABLE>

                                       3
<PAGE>

     This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated December 16,
1999, between SILICON VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive,
Santa Clara, California 95054 and DURECT CORPORATION ("Borrower"), whose address
is 10240 Bubb Road, Cupertino, California  95014.


                                    RECITALS


     A.  Bank and Borrower are parties to that certain QuickStart Loan and
Security Agreement, dated October 29, 1998, as amended (the "Original
Agreement").

     B.  Borrower and Bank desire in this Agreement to set forth their agreement
with respect to an equipment line and term  loan and to amend and restate in its
entirety without novation the Original Agreement in accordance with the
provisions herein.  This Agreement shall be construed to impart upon Bank a duty
to act reasonably at all times.


                                   AGREEMENT

      The parties agree as follows:

1     ACCOUNTING AND OTHER TERMS
      --------------------------

      Accounting terms not defined in this Agreement will be construed following
GAAP. Calculations and determinations must be made following GAAP.  The term
"financial statements" includes the notes and schedules.  The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document.

2     LOAN AND TERMS OF PAYMENT
      -------------------------

2.1   Credit Extensions.

      Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1 Equipment Advances.

      (a) Subject to the terms and conditions of this Agreement, Bank agrees to
lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances") in an aggregate amount not to exceed the Committed Equipment Line.
When repaid, the Equipment Advances may not be re-borrowed.  The proceeds of the
Equipment Advances will be used solely to reimburse Borrower for the purchase of
Eligible Equipment purchased prior to September 30, 1999.  Each Equipment
Advance shall be considered a promissory note evidencing the amounts due
hereunder for all purposes.  Bank's obligation to lend hereunder shall terminate
on the earlier of (i) the occurrence and continuance of an Event of Default, or
(ii) the Commitment Termination Date.   For purposes of this Section, the
minimum amount of each Equipment Advance is $750,000 and the maximum number of
Equipment Advances that will be made is 1.

      (a) (b) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed supplement in substantially the form attached as Exhibit C ("Loan
Supplement"), copies of invoices for the Financed Equipment, together with a UCC
Financing Statement covering the Equipment described on the Loan Supplement, and
such additional information as Bank may request at least five (5) Business Days
before the proposed funding date (the "Funding Date"). On each Funding Date,
Bank will specify in the Loan Supplement for each Equipment Advance, the Basic
Rate, the Loan Factor, and the Payment Dates. If Borrower satisfies the
conditions of each Equipment Advance specified herein, Bank will disburse such
Equipment Advance by

                                       4
<PAGE>

internal transfer to Borrower's deposit account with Bank. Each Equipment
Advance may not exceed 100% of the Original Stated Cost.

      (c) Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.

2.1.2 Term Loan.

      (a) Bank will continue to make a Term Loan available to Borrower, pursuant
to the Original Agreement.

      (b) Borrower will continue to pay its Term Loan obligations in a total of
30 equal installments of principal of $11,111.12 plus Interest (the "Term Loan
Payment"). Each Term Loan Payment is payable on the 29th of each month during
the term of the loan. Borrower's final Term Loan Payment, due on May 29, 2002,
includes all outstanding Term Loan principal and accrued interest.

2.2   Interest Rate, Payments.

2.2.1 Equipment Facility.

      Principal and Interest Payments On Payment Dates.   Borrower will repay
the Equipment Advances on the terms provided in the Loan Supplement.  Borrower
will make payments monthly of principal and accrued interest for each Equipment
Advance (collectively, "Scheduled Payments"), beginning one month following the
Funding Date with respect to such Equipment Advance and continuing thereafter
during the Repayment Period on the same day of each calendar month (each a
"Payment Date"), in an amount equal to the Loan Factor multiplied by the Loan
Amount for such Equipment Advance as of such Payment Date.  All unpaid principal
and accrued interest is due and payable in full on the last Payment Date with
respect to such Equipment Advance.  Payments received after 12:00 noon Pacific
time are considered received at the opening of business on the next Business
Day.   An Equipment Advance may only be prepaid in accordance with Sections
2.2.1(d) and 2.2.1(f).

      (b) Interest Rate.  Borrower will pay interest on the Payment Dates (as
described above) at the per annum rate of interest equal to the Basic Rate
determined by Bank as of the Funding Date for each Equipment Advance in
accordance with the definition of the Basic Rate.   Any amounts outstanding
during the continuance of an Event of Default shall bear interest at a per annum
rate equal to the Basic Rate plus five percent (5%) or the maximum permitted by
law.  If any change in the law increases Bank's expenses or decreases its return
from the Equipment Advances, Borrower will pay Bank upon request the amount of
such increase or decrease.

      (c) Final Payment.  On the Maturity Date with respect to each Equipment
Advance, Borrower will pay, in addition to the unpaid principal and accrued
interest and all other amounts due on such date with respect to such Equipment
Advance, an amount equal to the Final Payment.

      (d) Prepayment Upon an Event of Loss.  If any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment Advance with respect to such Financed Equipment pursuant to Section
6.7, then such Equipment Advance shall be prepaid to the extent and in the
manner provided in such section.

                                       5
<PAGE>

      (e) Mandatory Prepayment Upon an Acceleration.  If the Equipment Advances
are accelerated following the occurrence of an Event of Default or otherwise
(other than following an Event of Loss), then Borrower will immediately pay to
Bank (i) all unpaid Scheduled Payments (including principal and interest) with
respect to each Equipment Advance, (ii) all remaining Scheduled Payments
(including principal and interest unpaid) (iii) all accrued unpaid interest,
including the default rate of interest, to the date of the prepayment, (iv) the
Final Payment and (v) all other sums, if any, that shall have become due and
payable with respect to any Equipment Advance.

      (f) Permitted Prepayment of Loans.  Borrower shall have the option to
prepay all, but not less than all, of the Equipment Advances advanced by Bank
under this Agreement, provided Borrower (i) provides written notice to Bank of
                      --------
its election to prepay the Equipment Advances at least ten (10) days prior to
such prepayment, and (ii) pays, on the date of the prepayment, discounted by 7%
per annum (A) all unpaid principal and interest accrued to the date of the
prepayment; (B) the Final Payment; and (C) all other sums, if any, that shall
have become due and payable hereunder with respect to this Agreement.

2.2.2 Term Loan.

      (a) Interest Rate. The Term Loan accrues interest at a per annum rate of
1.25 percentage points above the Prime Rate. After an Event of Default,
Obligations accrue interest at 5 percent above the rate effective immediately
before the Event of Default. The interest rate increases or decreases when the
Prime Rate changes. Interest is computed on a 360 day year for the actual number
of days elapsed.

      (b) Payments received after 12:00 noon Pacific time are considered
received at the opening of business on the next Business Day. When a payment is
due on a day that is not a Business Day, the payment is due the next Business
Day and additional fees or interest accrue.

2.2.3 Request to Debit Accounts.

      Bank may debit any of Borrower's deposit accounts including Account Number
3300076017 for principal and interest payments or any amounts Borrower owes Bank
when due.  Bank will notify Borrower when it debits Borrower's accounts.  These
debits are not a set-off.

2.3   Fees.

      Borrower will pay:

      Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and
reasonable expenses) incurred through and after the date of this Agreement, are
payable when due.

3     CONDITIONS OF LOANS
      -------------------

3.1   Conditions Precedent to Initial Credit Extension.

      Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements and documents that it
reasonably requires and fees that it requires; provided, however, that fees
shall not exceed $5,000.

3.2   Conditions Precedent to all Credit Extensions.

      Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

      (a) timely receipt of any Payment/Advance Form; and

                                       6
<PAGE>

      (b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
of Section 5 remain materially true.

4     CREATION OF SECURITY INTEREST
      -----------------------------

4.1   Grant of Security Interest.

      Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents.  Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral.  Bank may place a "hold" on any deposit account pledged as
Collateral. If this Agreement is terminated, Bank's lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
Notwithstanding the foregoing, at such time as the Term Loan is paid in full,
Bank will release the Negative Pledge Agreement and its interest in all
Collateral, except for any and all Equipment (including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements, wherever located) financed by Equipment Advances.

5     REPRESENTATIONS AND WARRANTIES
      ------------------------------

      Borrower represents and warrants as follows:

5.1   Due Organization and Authorization.

      Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change.

      The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which or by which it
is bound in which the default could cause reasonably be expected to cause a
Material Adverse Change.

5.2   Collateral.

      Borrower has good title to the Collateral, free of Liens except Permitted
Liens.  All Inventory is in all material respects of good and marketable
quality, free from material defects.

5.3   Litigation.

      Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.

5.4   No Material Adverse Change in Financial Statements.

      All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations.  There has not been any material deterioration in Borrower's

                                       7
<PAGE>

consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5   Solvency.

      The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

5.6   Regulatory Compliance.

      Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act.  Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.  To
its knowledge, Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to cause a Material Adverse
Change.  None of Borrower's or any Subsidiary's properties or assets has been
used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by
previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally.  Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP.  Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted, except where the failure to do so
could not reasonably be expected to cause a Material Adverse Change.

5.7   Subsidiaries.

      Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.

5.8   Full Disclosure.

      No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading.  It
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results.

6     AFFIRMATIVE COVENANTS
      ---------------------

      Borrower will do all of the following:

6.1   Government Compliance.

      Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a material adverse effect on Borrower's business or operations.  Borrower
will comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, noncompliance with which could have a
material adverse

                                       8
<PAGE>

effect on Borrower's business or operations or would reasonably be expected to
cause a Material Adverse Change.

6.2   Financial Statements, Reports, Certificates.

      (a) Borrower will deliver to Bank: (i) as soon as available, but no later
than 30 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period, in a form and certified by a Responsible Officer acceptable
to Bank; (ii) as soon as available, but no later than 90 days after the last day
of Borrower's fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) a prompt report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of $100,000 or more; and (iv)
budgets, sales projections, operating plans or other financial information Bank
reasonably requests.

      (b) Bank has the right to audit Borrower's Collateral at Borrower's
expense, but the audits will be conducted no more often than every quarter
unless an Event of Default has occurred and is continuing.

6.3   Inventory; Returns.

      Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.

6.4   Taxes.

      Borrower will make, and cause each Subsidiary to make, timely payment or
filing of extensions of all material federal, state, and local taxes or
assessments and will deliver to Bank, on demand, appropriate certificates
attesting to the payment.

6.5   Insurance.

      Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are reasonably customary for companies similar to
Borrower and Borrower's industry. All property policies will have a lender's
loss payable endorsement showing Bank as an additional loss payee and all
liability policies will show the Bank as an additional insured and all policies
will provide that the insurer must give Bank at least 20 days notice before
canceling its policy. At Bank's request, Borrower will deliver certified copies
of policies and evidence of all premium payments. Subject to Section 6.7(a)
below, so long as no Event of Default has occurred and is continuing, Borrower
shall have the option of applying the proceeds of any casualty policy to the
replacement or repair of destroyed or damaged property; provided that, after the
occurrence and during the continuance of an Event of Default, all proceeds
payable under any such casualty policy shall, at the option of Bank, be payable
to Bank on account of the Obligations.

6.6   Primary Accounts.

      Borrower will maintain its primary depository and operating accounts with
Bank.

6.7   Loss; Destruction; or Damage.

                                       9
<PAGE>

      Borrower will bear the risk of the Financed Equipment being lost, stolen,
destroyed, or damaged.  If during the term of this Agreement any item of
Financed Equipment is lost, stolen, destroyed, damaged beyond repair, rendered
permanently unfit for use, or seized by a governmental authority for any reason
for a period equal to at least the remainder of the term of this Agreement (an
"Event of Loss"), then in each case, Borrower:

      (a) prior to the occurrence of an Event of Default, at Borrower's option,
will (i) pay to Bank on account of the Obligations all accrued interest to the
date of the prepayment, plus all outstanding principal, plus the Final Payment;
or (ii) repair or replace any Financed Equipment subject to an Event of Loss
provided the repaired or replaced Financed Equipment is of equal or like value
to the Financed Equipment subject to an Event of Loss and provided further that
Bank has a first priority perfected security interest in such repaired or
replaced Financed Equipment.

      (b) during the continuance of an Event of Default, on or before the
Payment Date after such Event of Loss for each such item of Financed Equipment
subject to such Event of Loss, Borrower will, at Bank's option, pay to Bank an
amount equal to the sum of:  (i) all accrued and unpaid Scheduled Payments (with
respect to such Equipment Advance related to the Event of Loss) due prior to the
next such Payment Date, (ii) all Regularly Scheduled Payments (including
principal and interest), (iii) the Final Payment plus (iv) all other sums, if
any, that shall have become due and payable, including interest at the Default
Rate with respect to any past due amounts.

      (c) On the date of receipt by Bank of the amount specified above with
respect to each such item of Financed Equipment subject to an Event of Loss,
this Agreement shall terminate as to such Financed Equipment.  If any proceeds
of insurance or awards received from governmental authorities are in excess of
the amount owed under this Section, Bank shall promptly remit to Borrower the
amount in excess of the amount owed to Bank.

6.8   Further Assurances.

      Borrower will execute any further instruments and take further action as
Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.

7     NEGATIVE COVENANTS
      ------------------

      Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:

      (i) Enter into any transaction outside the ordinary course of business
except for the sale of capital stock to venture investors, provided that
Borrower promptly delivers written notification to Silicon of any such sale;
(ii) Sell or transfer any Collateral, except in the ordinary course of business;
(iii) pay or declare any dividends on Borrower's stock (except for dividends
payable solely in stock of Borrower); (iv) Redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's stock other than the
repurchase of the Borrower's stock upon termination of the employee, consultant
or director's relationship with Borrower pursuant to the repurchase provisions
of the stock purchase agreement with Borrower; provided, however, such payments
shall not exceed $30,000 in any fiscal year and provided further no Event of
Default exists, is continuing or would result from such action; (v) Change its
name or the chief executive office or principal place of business, move or
dispose of any interest in the Collateral, permit any lien or security interest
to attach to the Collateral, or enter into any transaction outside the ordinary
course of Borrower's business; (vi) Become an "investment company" or a company
controlled by an "investment company," under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Advance for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to

                                       10
<PAGE>

comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could have a material adverse effect on Borrower's
business or operations or cause a Material Adverse Change, or permit any of its
Subsidiaries to do so; (vii) Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness; (viii) Create, incur, or allow any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted here, subject to Permitted Liens.

8     EVENTS OF DEFAULT
      -----------------

      Any one of the following is an Event of Default:

8.1   Payment Default.

      If Borrower fails to pay any of the Obligations within 3 days after their
due date.  During the additional period the failure to cure the default is not
an Event of Default (but no Credit Extension will be made during the cure
period);

8.2   Covenant Default.

      If Borrower violates any covenant in Section 7 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within 10 days after it occurs, or if the default cannot be cured within
10 days or cannot be cured after Borrower's attempts within 10 day period, and
the default may be cured within a reasonable time, then Borrower has an
additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period);

8.3   Material Adverse Change.

      If there (i) occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral (other than normal depreciation) which is not covered by adequate
insurance or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations.

8.4   Attachment.

      If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice.  These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);

8.5   Insolvency.

      If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);

                                       11
<PAGE>

8.6   Other Agreements.

      If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change or if a default exists or
is declared in the Master Lease Agreement between Borrower as Lessee and Bank as
Lessor;

8.7   Judgments.

      If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or

8.8   Misrepresentations.

      If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

9     BANK'S RIGHTS AND REMEDIES
      --------------------------

9.1   Rights and Remedies.

      When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:

      (a)  Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);

      (b)  Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;

      (c)  Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;

      (d)  Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;

      (e)  Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;

      (f)  Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral; and

      (g)  Dispose of the Collateral according to the Code.

9.2   Power of Attorney.

      Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to:  (i) endorse Borrower's
name on any checks or other

                                       12
<PAGE>

forms of payment or security; (ii) sign Borrower's name on any invoice or bill
of lading for any Account or drafts against account debtors, (iii) make, settle,
and adjust all claims under Borrower's insurance policies; (iv) settle and
adjust disputes and claims about the Accounts directly with account debtors, for
amounts and on terms Bank determines reasonable; and (v) transfer the Collateral
into the name of Bank or a third party as the Code permits. Bank may exercise
the power of attorney to sign Borrower's name on any documents necessary to
perfect or continue the perfection of any security interest regardless of
whether an Event of Default has occurred. Bank's appointment as Borrower's
attorney in fact, and all of Bank's rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank's obligation to provide Credit Extensions terminates.

9.3   Accounts Collection.

      When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank's security interest in the funds and verify the
amount of the Account.  Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.

9.4   Bank Expenses.

      If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent.  Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral.  No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.

9.5   Bank's Liability for Collateral.

      If Bank complies with reasonable banking practices and Section 9-207 of
the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral.

9.6   Remedies Cumulative.

      Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.

9.7   Demand Waiver.

      Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

10    NOTICES
      -------

      All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery

                                       13
<PAGE>

service, by certified mail, postage prepaid, return receipt requested, or by
telefacsimile to the addresses set forth at the beginning of this Agreement. A
party may change its notice address by giving the other party written notice.

11    CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER
      -------------------------------------------

      California law governs the Loan Documents without regard to principles of
conflicts of law.  Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12    GENERAL PROVISIONS
      ------------------

12.1  Successors and Assigns.

      This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.

12.2  Indemnification.

      Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against:  (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

12.3  Time of Essence.

      Time is of the essence for the performance of all obligations in this
Agreement.

12.4  Severability of Provision.

      Each provision of this Agreement is severable from every other provision
in determining the enforceability of any provision.

12.5  Amendments in Writing, Integration.

      All amendments to this Agreement must be in writing and signed by Borrower
and Bank.  This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.

                                       14
<PAGE>

12.6  Counterparts.

      This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

12.7  Survival.

      All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding.  The
obligations of Borrower in Section 12.2 to indemnify Bank will survive until all
statutes of limitations for actions that may be brought against Bank have run.

12.8  Confidentiality.

      In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement.  Confidential information does not include information
that either: (a) is in the public domain or in Bank's possession when disclosed
to Bank, or becomes part of the public domain after disclosure to Bank; or (b)
is disclosed to Bank by a third party, if Bank does not know that the third
party is prohibited from disclosing the information.

12.9  Effect of Amendment and Restatement.

      This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement.  All credit extensions or loans
outstanding under the Original Agreement are and shall continue to be
outstanding under this Agreement.  All security interests granted under the
Original Agreement are hereby confirmed and ratified and shall continue to
secure all Obligations under this Agreement.

12.10 Attorneys' Fees, Costs and Expenses.

      In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13    DEFINITIONS
      -----------

13.1  Definitions.

      In this Agreement:

      "Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

      "Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

                                       15
<PAGE>

      "Bank Expenses" are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

      "Basic Rate" is, as of the Funding Date, the per annum rate of interest
(based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note
yield to maturity for a term equal to the Treasury Note Maturity as quoted in
The Wall Street Journal on the day the Loan Supplement is prepared, plus (b) the
Loan Margin.

      "Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

      "Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

      "Closing Date" is December 31, 1999.

      "Code" is the California Uniform Commercial Code.

      "Collateral" is the property described on Exhibit A.
                                                ---------

      "Commitment Termination Date" is the Closing Date.

      "Committed Equipment Line" is a Credit Extension of up to $750,000.

      "Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices;  but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

      "Credit Extension" is each Equipment Advance, Term Loan, or any other
extension of credit by Bank for Borrower's benefit.

      "Eligible Equipment" is general purpose computer equipment, manufacturing
and laboratory equipment, test and laboratory equipment, furnishings that
complies with all of Borrower's representations and warranties to Bank and which
is acceptable to Bank in all respects.  All Equipment financed with the proceeds
of Equipment Advances shall be new, provided that Bank, in its sole discretion,
may finance used equipment.

      "Equipment" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

      "Equipment Advance" is defined in Section 2.1.1.

      "ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.

                                       16
<PAGE>

      "Final Payment" is a payment (in addition to and not a substitution for
the regular monthly payments of principal plus accrued interest) due on the
Maturity Date for such Equipment Advance equal to the Loan Amount for such
Equipment Advance multiplied by the Final Payment Percentage.

      "Final Payment Percentage" is, for each Equipment Advance, 10%.

      "Financed Equipment" is defined in the Loan Supplement.

      "Funding Date" is any date on which an Equipment Advance is made to or on
account of Borrower.

      "GAAP" is generally accepted accounting principles.

      "Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

      "Insolvency Proceeding" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

      "Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

      "Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

      "Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

      "Loan Amount" is the aggregate amount of the Equipment Advance.

      "Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

      "Loan Factor" is the percentage which results from amortizing the
Equipment Advance over the Repayment Period, using the Basic Rate as the
interest rate. As an example, based on a treasury note yield of 6.10% for a
Treasury Note Maturity as published August 10, 1999, two (2) Loan Factors are
derived: (i) the Loan Factor for the first 12 months of the Repayment Period is
1.50%; and (ii) the Loan Factor for the remaining 30 months in the Repayment
Period is 3.40%

      "Loan Margin" is a negative -303.61 basis points increasing to a positive
+849.24 basis points beginning January 1, 2001.

      "Loan Supplement" is attached as Exhibit C

                                       17
<PAGE>

       "Material Adverse Change" is defined in Section 8.3.

       "Maturity Date" is, with respect to each Equipment Advance, the last day
of the Repayment Period for such Equipment Advance, or if earlier, the date of
acceleration of such Equipment Advance by Bank following an Event of Default.

       "Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

       "Original Agreement" has the meaning set forth in recital paragraph A.

       "Original Stated Cost" is (i), the original cost to the Borrower of the
item of new Equipment net of any and all freight, installation, tax or (ii) the
fair market value assigned to such item of used Equipment by mutual agreement of
Borrower and Bank at the time of making of the Equipment Advance.

       "Permitted Indebtedness" is:

      (a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;

      (b) Indebtedness existing on the Closing Date and shown on the Schedule;

      (c) Subordinated Debt;

      (d) Indebtedness to trade creditors incurred in the ordinary course of
business; and

      (e) Indebtedness secured by Permitted Liens.

      "Permitted Investments" are:

      (a) Investments shown on the Schedule and existing on the Closing Date;
and

      (b) (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its
creation and having the highest rating from either Standard & Poor's Corporation
or Moody's Investors Service, Inc., and (iii) Bank's certificates of deposit
issued maturing no more than 1 year after issue.

      "Permitted Liens" are:

      (a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;

      (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
                                                   --
any of Bank's security interests;

      (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
                                          --
property and improvements and the proceeds of the equipment;

                                       18
<PAGE>

      (d) Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any license or
sublicense, if the licenses and sublicenses permit granting Bank a security
            --
interest;

      (e) Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property;

      (f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
                                                            ---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.

      "Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

      "Prime Rate" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.

      "Repayment Period" as to the Equipment Advances, is 42 months.

      "Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

      "Schedule" is any attached schedule of exceptions.

      "Subordinated Debt" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.

      "Subsidiary" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.

      "Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
                              -----
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
                      ---

      "Term Loan" a loan of $333,333 (originally $400,000 advanced under the
Original Agreement).

      "Term Loan Maturity Date" is May 29, 2002.

      "Total Liabilities" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

      "Treasury Note Maturity" is 42 months.

                                       19
<PAGE>

BORROWER:

Durect Corporation


By: /s/ Thomas A. Schreck
    ---------------------

Title: Chief Financial Officer
       -----------------------


BANK:

SILICON VALLEY BANK


By: /s/ Kathryn Lungaro
    -------------------

Title: Senior Vice President
       ---------------------
<PAGE>

                                 EXHIBIT A
                                 ---------


     The Collateral consists of all of Borrower's right, title and interest in
and to the following:

     All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

     All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

     All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, leases, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims, computer
programs, computer discs, computer tapes, literature, reports, catalogs, design
rights, income tax refunds, payments of insurance and rights to payment of any
kind;

     All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

     All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing; and

     All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

     Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyrights, copyright applications, copyright registration and like
protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and continuations-in-
part of the same, trademarks, servicemarks and applications therefor, whether
registered or not, and the goodwill of the business of Borrower connected with
and symbolized by such trademarks, any trade secret rights, including any rights
to unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; or any
claims for damage by way of any past, present and future infringement of any of
the foregoing (collectively, the "Intellectual Property"), except that the
Collateral shall include the proceeds of all the Intellectual Property that are
accounts, (i.e. accounts receivable) of Borrower, or general intangibles
consisting of rights to payment, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in such accounts and general
intangibles of Borrower that are proceeds of the Intellectual Property, then the
Collateral shall automatically, and effective as of the Closing Date, include
the Intellectual Property to the extent necessary to permit perfection of Bank's
security interest in such accounts and general intangibles of Borrower that are
proceeds of the Intellectual Property.
<PAGE>

                                   EXHIBIT B
                                   ---------

                  LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

             DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.


TO: CENTRAL CLIENT SERVICE DIVISION      DATE: __________________________

FAX#:  (408) 496-2426                    TIME: __________________________


________________________________________________________________________________

FROM:  Durect Corporation
       ------------------------------------------------------------------------
                           CLIENT NAME (BORROWER)

REQUESTED BY:
              -----------------------------------------------------------------
                         AUTHORIZED SIGNER'S NAME


AUTHORIZED SIGNATURE:
                     ----------------------------------------------------------

PHONE NUMBER:
             ------------------------------------------------------------------

FROM ACCOUNT # _________________________   TO ACCOUNT #  ______________________


REQUESTED TRANSACTION TYPE          REQUESTED DOLLAR AMOUNT
--------------------------          -----------------------

PRINCIPAL INCREASE (ADVANCE)        $ _________________________________________
PRINCIPAL PAYMENT (ONLY)            $ _________________________________________
INTEREST PAYMENT (ONLY)             $ _________________________________________
PRINCIPAL AND INTEREST (PAYMENT)    $ _________________________________________


OTHER INSTRUCTIONS:
                   ------------------------------------------------------------

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

All Borrower's representations and warranties in the Amended and Restated Loan
and Security Agreement are true, correct and complete in all material respects
on the date of the telephone request for and Advance confirmed by this Borrowing
Certificate; but those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as of
that date.

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                                 BANK USE ONLY

TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

----------------------------------         ------------------------------------
          Authorized Requester                             Phone #

----------------------------------         ------------------------------------
          Received By (Bank)                               Phone #


                      ----------------------------------
                          Authorized Signature (Bank)

________________________________________________________________________________

<PAGE>

                                   EXHIBIT C
                                   ---------

                       FORM OF LOAN AGREEMENT SUPPLEMENT

                       LOAN AGREEMENT SUPPLEMENT No. [ ]


LOAN AGREEMENT SUPPLEMENT No. [ ], dated ______________, 199____ ("Supplement"),
to the Loan and Security Agreement dated as of ______________, 199____ (the
"Loan Agreement) by and between the undersigned ("Borrower"), and Silicon Valley
Bank ("Bank").

Capitalized terms used herein but not otherwise defined herein are used with the
respective meanings given to such terms in the Loan Agreement.

To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral.  The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto.

The proceeds of the Loan should be transferred to Borrower's account with Bank
set forth below:

          Bank Name:    Silicon Valley Bank
          Account No.:


Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date.  No Event of Default has occurred and is continuing under
the Loan Agreement.  This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

This Supplement is delivered as of this day and year first above written.

SILICON VALLEY BANK                   DURECT Corporation
                                      -------------------------------------


By: /s/ Kathryn Lungaro               By: /s/ Felix Theeuwes
   ----------------------------          --------------------------------------
   Name: Kathryn Lungaro                 Name: Felix Theewes
        --------------------------       ------------------------------------
   Title: Senior Vice President          Title: Chief Scientific Officer &
         -------------------------       ------------------------------------
                                         Chairman
                                         ------------------------------------

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
<PAGE>

                              Annex A to Exhibit C
                              --------------------

The Financed Equipment being financed with the Equipment Advance which this Loan
Agreement Supplement is being executed is listed below.  Upon the funding of
such Equipment Advance, this schedule automatically shall be deemed to be a part
of the Collateral.

Description of Equipment:     Make     Model       Serial #       Invoice #

                                       2
<PAGE>

                              Annex B to Exhibit C
                              --------------------


                         LOAN TERMS SCHEDULE #________

Loan Funding Date:  ______________, 199__

Original Loan Amount:  $______________

Basic Rate:  ____________%

Loan Factor: ______________%

Scheduled Payment Dates and Amounts, subject to prepayment as described in
Section 2.2.1(d)*:

     ______ payment of $_______ due monthly from ______ through ________

     ______ payment of $_______ due monthly from ______ through ________

     One (1) payment of $_______ due ______________

Maturity Date:  ______________

Final Payment:  An additional amount equal to the Final Payment Percentage
                multiplied by the Loan Amount then in effect, shall be paid on
                the Maturity Date with respect to such Loan.

Payment No.         Payment Date

1
2
3
4
 ...
35
[36]
 ...

*/   The amount of each Scheduled Payment will change as the Loan Amount
     changes.


                              SILICON VALLEY BANK

                      PRO FORMA INVOICE FOR LOAN CHARGES



BORROWER:        Durect Corporation

LOAN OFFICER:    Lois Fisher

                                       3
<PAGE>

DATE:        December 16, 1999

             Documentation Fee     1,500.00
             Legal Fee               500.00

             TOTAL FEE DUE        $2,000.00
             -------------        =========


Please indicate the method of payment:

  {  } A check for the total amount is attached.

  {  } Debit DDA # __________________ for the total amount.

  {  } Loan proceeds

Borrower:

By:

(Authorized Signer)



_________________________________________________
Silicon Valley Bank                  (Date)
Account Officer's Signature

                                       2
<PAGE>

                           NEGATIVE PLEDGE AGREEMENT

  This Negative Pledge Agreement is made as of December 16, 1999 by and between
Durect Corporation ("Borrower") and Silicon Valley Bank ("Bank").

In connection with, among other documents, the Loan and Security Agreement (the
"Loan Documents") being concurrently executed herewith between Borrower and
Bank, Borrower agrees as follows:

     1.   Borrower shall not sell, transfer, assign, mortgage, pledge, lease,
          grant a security interest in, or encumber any of Borrower's
          intellectual property, including, without limitation, the following:

          a.   Any and all copyright rights, copyright applications, copyright
               registrations and like protections in each work or authorship and
               derivative work thereof, whether published or unpublished and
               whether or not the same also constitutes a trade secret, now or
               hereafter existing, created, acquired or held;

          b.   All mask works or similar rights available for the protection of
               semiconductor chips, now owned or hereafter acquired;

          c.   Any and all trade secrets, and any and all intellectual property
               rights in computer software and computer software products now or
               hereafter existing, created, acquired or held;

          d.   Any and all design rights which may be available to Borrower now
               or hereafter existing, created, acquired or held;

          e.   All patents, patent applications and like protections including,
               without limitation, improvements, divisions, continuations,
               renewals, reissues, extensions and continuations-in-part of the
               same, including without limitation the patents and patent
               applications;

          f.   Any trademark and servicemark rights, whether registered or not,
               applications to register and registrations of the same and like
               protections, and the entire goodwill of the business of Borrower
               connected with and symbolized by such trademarks, including
               without limitation;

          g.   Any and all claims for damages by way of past, present and future
               infringements of any of the rights included above, with the
               right, but not the obligation, to sue for and collect such
               damages for said use or infringement of the intellectual property
               rights identified above;

          h.   All licenses or other rights to use any of the Copyrights,
               Patents, Trademarks or Mask Works, and all license fees and
               royalties arising from such use to the extent permitted by such
               license or rights; and

          i.   All amendments, extensions, renewals and extensions of any of the
               Copyrights, Trademarks, Patents, or Mask Works; and

          j.   All proceeds and products of the foregoing, including without
               limitation all payments under insurance or any indemnity or
               warranty payable in respect of any of the foregoing;

     2.   It shall be an event of default under the Loan Documents between
          Borrower and Bank if there is a breach of any term of this Negative
          Pledge Agreement.

     3.   Capitalized terms used but not otherwise defined herein shall have the
          same meaning as in the Loan Documents.
<PAGE>

BORROWER:

Durect Corporation


By: /s/ Thomas A. Schreck
  -------------------------------
Name: Thomas A. Schreck
      ---------------------------
Title: Chief Financial Officer
       --------------------------


BANK:

SILICON VALLEY BANK


By: /s/ Kathryn Lungaro
   ------------------------------
Name:  Kathryn Lungaro
     ----------------------------
Title: Senior Vice President
      ---------------------------

                                       2
<PAGE>

                         CORPORATE BORROWING RESOLUTION

Borrower:  Durect Corporation            Bank:  Silicon Valley Bank
           10240 Bubb Road                      3003 Tasman Drive
           Cupertino, CA 95014                  Santa Clara, CA 95054-1191

I, the Secretary or Assistant Secretary of Durect Corporation ("Borrower"),
CERTIFY that Borrower is a corporation existing under the laws of the State of
Delaware.

I certify that at a meeting of Borrower's Directors (or by other authorized
corporate action) duly held the following resolutions were adopted.

It is resolved that any one of the following officers of Borrower, whose name,
title and signature is below:

      NAMES              POSITIONS                          ACTUAL SIGNATURES
      -----              ---------                          -----------------
Thomas A. Schreck  Chief Financial Officer               /s/ Thomas A. Schreck
------------------ ----------------------------------- -------------------------
James E. Brown     President & Chief Executive Officer   /s/ James E. Brown
------------------ ----------------------------------- -------------------------
Felix Theeuwes     Chairman & Chief Scientific Officer   /s/ Felix Theeuwes
------------------ ----------------------------------- -------------------------
------------------ ----------------------------------- -------------------------
may act for Borrower and:

     Borrow Money.  Borrow money from Silicon Valley Bank ("Bank").

     Execute Loan Documents.  Execute any loan documents Bank requires.

     Grant Security.  Grant Bank a security interest in any of Borrower's
     assets.

     Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
     promissory notes, or other indebtedness in which Borrower has an interest
     and receive cash or otherwise use the proceeds.

     Letters of Credit.  Apply for letters of credit from Bank.

     Foreign Exchange Contracts.  Execute spot or forward foreign exchange
     contracts.

     Issue Warrants.  Issue warrants for Borrower's stock.

     Further Acts.  Designate other individuals to request advances, pay fees
     and costs and execute other documents or agreements (including documents or
     agreement that waive Borrowers right to a jury trial) they think necessary
     to effectuate these Resolutions.

Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.

I certify that the persons listed above are Borrower's officers with the titles
and signatures shown following their names and that these resolutions have not
been modified are currently effective.

                                      -1-
<PAGE>

CERTIFIED TO AND ATTESTED BY:

X /s/ Mark B. Weeks
  -----------------------------------------------
 *Secretary or Assistant Secretary

X _______________________________________________________
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.

                                      -2-