Document:

Development & License Agreement

 
Exhibit 10.32

 
DEVELOPMENT AND LICENSE AGREEMENT

 
This DEVELOPMENT AND LICENSE AGREEMENT (the
“Agreement”) is entered into as of October 18, 2002 (the “Effective Date”) by and among DURECT Corporation, a corporation organized and existing under the laws of Delaware and having its principal office at 10240
Bubb Road, Cupertino, California 95014, and Southern BioSystems, Inc., (“SBS”) a corporation organized and existing under the laws of Alabama and having its principal office at 756 Tom Martin Drive, Birmingham, Alabama 35211, a
wholly-owned subsidiary of DURECT Corporation (DURECT Corporation and SBS together, “DURECT”), and BioPartners, GmbH, a corporation organized and existing under the laws of Switzerland and having its principal office at Baarermatte, 6340
Baar, Switzerland, (“BioPartners”) (DURECT and BioPartners hereinafter to be collectively referred to as the “Parties” and singly as a “Party”). 
 
RECITALS 
 
WHEREAS, DURECT is engaged in the research, development and manufacture of controlled-release drug delivery products; 
 
WHEREAS, BioPartners is engaged in the research, development
and commercialization of advanced biopharmaceutical products; 
 
WHEREAS, DURECT possesses the right to license proprietary rights to a controlled-release technology that uses a high-viscosity base component to provide controlled release of active ingredients known as the SABERTM Delivery System; 
 
WHEREAS, the Parties to this Agreement desire to collaborate in the development of the Drug Product (as hereinafter defined) based on the
SABERTM Delivery System within the Field (as hereinafter defined); 
 
WHEREAS DURECT wishes to license certain of such proprietary
rights to the SABERTM Delivery System to BioPartners so that BioPartners may develop and commercialize the Drug
Product in the Territory. 
 
NOW, THEREFORE, for
and in consideration of the foregoing premises and the mutual covenants set forth herein and other valuable consideration, it is agreed by and between the Parties as follows: 
 
ARTICLE I 
 
DEFINITIONS 
 
For the purposes of this Agreement, the following words and phrases, whether used in the singular or plural, shall have the following
meanings: 
 
“Accounting Period” means a
calendar quarter commencing on the first day of an 

 

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Accounting Period, respectively January 1, April 1, July 1 and October 1, each being the first day, and finishing on the last day of an
Accounting Period, respectively March 31, June 30, September 30 and December 31, each being the last day. 
 
“Act” means the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq., as such may be amended from time to
time. 
 
“Affiliate” means any
corporation or other business entity which controls, is controlled by or is under common control with a Party. For purposes of this Section 1.3, “control” means, as of or subsequent to the Effective Date, direct or indirect ownership of
more than fifty percent (50%) of the voting interest or income interest in a corporation or business entity, or such other relationship as in fact constitutes the actual control over the management, business and affairs of such corporation or
business entity. 
 
[* * *] 
 
“BioPartners Inventions” shall have the meaning set
forth in Section 12.5(b). 
 
“BioPartners
Patent Rights” means: (i) all Patents, if any, relating solely to the Drug Substance, which are owned by or licensed to BioPartners or its Affiliates as of the Effective Date or during the Term and (ii) all Patents covering BioPartners
Inventions. 
 
“BioPartners Technology”
means: (i) any and all Technical Information related solely to the Drug Substance, which is owned, possessed, developed or acquired by or licensed to BioPartners or its Affiliates as of the Effective Date or during the Term and (ii) all BioPartners
Inventions. 
 
“Business Day” means a day
on which banks are open for business in New York City. 
 
“Cap” has the meaning set forth in Section 3.1(b). 
 
“Clinical Program” has the meaning set forth in Section 4.1 
 
“Clinical Program Milestone” means an event relating to the clinical development of the Drug Product as set forth in Section
4.2. 
 
“Confidential Information” has
the meaning set forth in Section 13.1. 
 
“Current Good Manufacturing Practices” or “cGMP’s” means the requirements of the FDA with regard to the manufacture of drugs and finished pharmaceuticals as set forth in 21 CFR 210 and 211, as amended from
time to time or any equivalent law in the Territory. 
 
“Drug Product” means the human pharmaceutical injectable formulation of the Drug Substance in combination with the SABERTM Delivery System for use in the Field. 
 
“Drug Product Registration” means an NDA approved by the FDA in the United States or any other government approval required by a government or regulatory authority of a 

 

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country in the Territory necessary to permit the development, manufacture, marketing, import, use and sale of the Drug Product in such
country. 
 
“Drug Substance” means the
protein alpha-interferon, including any analog, or derivative thereof which: (a) has chemical structural similarity to, (b) binds to the same receptor as, and (c) has the same or substantially the same pharmacological function as alpha-interferon.

 
“DURECT Inventions” shall have the
meaning set forth in Section 12.5(a). 
 
“DURECT Patent Rights” means: (i) the Patents related to the SABERTM Delivery System in
the Territory, including those Patents listed in Exhibit VII, which are owned by or licensed to DURECT or its Affiliates as of the Effective Date or during the Term and and (ii) all Patents covering DURECT Inventions, to which DURECT has the right
to grant licenses or sublicenses hereunder. 
 
“DURECT Research Expenses” means DURECT’s fully-allocated development costs of performing the activities of the Research Program as calculated in accordance with GAAP and SBS’s standard accounting practices.

 
“DURECT Technology” means: (i) any and
all Technical Information related to the SABERTM Delivery System, which is owned, possessed, developed or acquired
by or licensed to DURECT or its Affiliates as of the Effective Date or during the Term and (ii) all DURECT Inventions, to which DURECT has the right to grant licenses or sublicenses hereunder. 
 
“Effective Date” has the meaning set forth in the
preamble. 
 
“Excluded Territory” means
all the countries of [* * *] and their respective territories and possessions, except for the countries set forth on Exhibit V and their respective territories and possessions. 
 
“FDA” means the United States Food and Drug Administration. 
 
“Field” means the use of the Drug Product for the
therapeutic areas of [* * *]. 
 
“First
Commercial Sale” means, with respect to the Drug Product in any country in the Territory, the first arms-length sale of the Drug Product to a Third Party purchaser in such country of commercial quantities of the Drug Product by BioPartners or
any of its Sublicensees or Affiliates (i) which is after the Drug Product Registration and commercial launch of the Drug Product in such country and (ii) which transfers title to the Drug Product to such Third Party purchaser; provided, however,
that the First Commercial Sale shall not be deemed to have occurred if the sale is made to a Sublicensee or Affiliate (unless such Sublicensee or Affiliate is purchasing the Drug Product as an end user). 
 
“GAAP” means United States generally accepted
accounting principles consistently applied. 
 

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“IND” means any Investigational New Drug Application filed with the FDA to initiate the conduct of human clinical trials with a drug pursuant to the Act and the regulations promulgated thereunder, including any amendments
or supplements thereto. 
 
“Invention”
means any Technical Information which is created, made or developed by a Party as a result of or in connection with the subject matter of this Agreement and any patent applications or patents based thereon. 
 
“Joint Development Team” or “JDT” has the
meaning set forth in Section 7.1. 
 
“Losses” has the meaning set forth in Section 11.1. 
 
“Major Market” means one of [* * *]. 
 
“NDA” means a New Drug Application filed with the FDA for marketing approval for a drug pursuant to the Act and the regulations
promulgated thereunder, including any amendments or supplements thereto. 
 
“Net Sales” means the gross amount invoiced for all arm’s length sales of the Drug Product by BioPartners and its Sublicensees and Affiliates to Third Parties in the Territory, other than transfers among
BioPartners and its Sublicensees or Affiliates (unless such Sublicensee or Affiliate is purchasing the Drug Product as an end user), less deductions in their normal and customary accounts as determined in accordance with GAAP for (a) actual trade,
quantity and cash discounts, rebates and administrative fees (including, without limitation, U.S. Medicaid and Medicare programs and other private or governmental sponsored rebates and administrative fees paid to purchasing groups), credits,
allowances, refunds and retroactive price reductions, including chargebacks; (b) any tax or government charge (other than income tax) levied on the sale, transportation or delivery of the Drug Product and borne by the seller thereof; and (c) any
charges for freight, postage, shipping, import or export taxes which are borne by the seller, or insurance or charges for returnable containers which are borne by the seller. 
 
“Option Period” has the meaning set forth in Section 8.7. 
 
“Other Product” means a human pharmaceutical
injectable formulation of [* * *]. 
 
“Patents” means any and all patent and patent applications (and equivalents thereof) throughout the Territory, and any and all improvements thereon, including any and all divisions, continuations, provisional applications,
continuations-in-part, continued prosecution applications, requests for continued examination, additions, renewals, extension, re-examinations, reissues, supplementary protection certificates and all U.S. and foreign counterparts of the foregoing.

 
“Party” or “Parties” has the
meaning set forth in the Preamble above. 
 
“Phase I Clinical Trial” means the initial introduction of the Drug Product as an investigational new drug into humans designed to determine the metabolism and pharmacologic actions of the Drug Product in humans, the side
effects associated with increasing doses and, if 

 

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possible, to gain early evidence on effectiveness, and also includes studies of drug metabolism, structure-activity relationships and
mechanism of action in humans. 
 
“Phase II
Clinical Trial” means a controlled or uncontrolled clinical study conducted to evaluate the effectiveness of the Drug Product for a particular indication or indications in patients with the disease or condition under study and to determine the
common short-term side effects and risks associated with the Drug Product. 
 
“Phase III Clinical Trial” means an expanded controlled or uncontrolled clinical trial performed after preliminary evidence suggesting effectiveness of the Drug Product has been obtained, in
order to gather the additional information about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the Drug Product and to provide an adequate basis for physician labeling. 
 
“Regulatory Authority” means the FDA in the United
States and any government or regulatory authorities in any country in the Territory that is a counterpart to the FDA and holds responsibility for granting Drug Product Registrations and other marketing approvals for the Drug Product in such country.

 
“Research Program” has the meaning set
forth in Section 2.1. 
 
“Research Program
Information” means any Technical Information developed or obtained by either Party or their subcontractors or Sublicensees under or in connection with the Research Program. 
 
“Research Program Plan” has the meaning set forth in Section 2.2(a). 
 
“Research Program Milestone” has the meaning set
forth in Section 2.2(a) and shall be as defined in Exhibit IX. 
 
“Research Program Milestone Payment” has the meaning set forth in Section 3.2. 
 
“Research Program Phase” has the meaning set forth in Section 2.2(a). 
 
“SABERTM Delivery System” means DURECT’s SABERTM delivery system for imparting controlled release of drug active ingredients in the Field.  
 
“SABERTM Ingredients” has the meaning set forth in Section 5.1. 
 
“Sublicensees” has the meaning set forth in Section 8.3. 
 
“Technical Information” means any and all information (including medical, toxicological, pharmacological and clinical), trade
secrets, know-how, ideas, concepts, discoveries, disclosure claims, formulas, formulations, processes, methods, procedures, designs, compositions of matter, specifications, drawings, techniques, results, technologies, compounds, research, data,
inventions, discoveries, whether or not patentable. 
 

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“Term” means the term of the Agreement as set forth in Section 15.1. 
 
“Territory” means all countries of the world and their respective territories and possessions, except: (i) the Excluded Territory and (ii) any country with respect to which the license
granted to BioPartners under Article VIII has been terminated in accordance with the terms and conditions of this Agreement. 
 
“Testing Laboratory” has the meaning set forth in Section 5.2(g). 
 
“Third Party” means any person or entity other than DURECT, BioPartners, or any of their
Affiliates. 
 
“Total Credit Amount” has
the meaning set forth in Section 3.1(b). 
 
“United States” or U.S. means the United States of America and its territories and possessions. 
 
“Work Plan” means a detailed outline of all activities to be performed by DURECT with respect to a Research Program Phase and
the budget allocated to the performance of such activities as shall be developed and approved by the Joint Development Team in accordance with Section 2.2. 
 
Unless specified to the contrary, references to Articles, Sections and/or Exhibits mean the particular Articles, Sections and/or Exhibits
to this Agreement. Whenever used in this Agreement: 
 
(i) the words “include” or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation”; 
 
(ii) the word “day” means a calendar day unless otherwise specified; 
 
(iii) the word “law” (or “laws”) means
any applicable, legally binding statute, ordinance, resolution, regulation, code, guideline, rule, order, decree, judgment, injunction, mandate or other legally binding requirement of a government entity; 
 
(iv) the word “notice” shall mean notice in
writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement; and 
 
(v) the words “commercially reasonable efforts” shall mean the standard that a reasonable business
person would use for similar products of similar potential at a similar stage of development in the Territory. 
 

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ARTICLE II

 
RESEARCH PROGRAM 
 
2.1 Research Program. 
 
DURECT agrees to collaborate with BioPartners to conduct a
research program with respect to the Drug Product to achieve the following overall objectives (the “Research Program”): 
 

	 	(i)	 	[* * *]; and 

 

	 	(ii)	 	[* * *]. 

 
2.2 Research Program Plan. 
 
(a) Within thirty (30) days after the Effective Date of this Agreement, the Parties shall agree to a written research plan which shall set
forth all activities to be performed by DURECT under the Research Program and the budget associated with such activities (“Research Program Plan”), a draft of which, in the form existing as of the Effective Date, is attached hereto as
Exhibit IV. The Research Program Plan shall be divided into no more than [* * *] phases of work to be performed by DURECT (each a “Research Program Phase”) and shall define for each such Research Program Phase a single, objectively
measurable milestone to be achieved by DURECT, the achievement of which shall signify the completion of all the activities to be performed by DURECT during such Research Program Phase (each a “Research Program Milestone”). The
administration and review of all activities performed by DURECT under the Research Program Plan shall be the responsibility of the JDT as set forth under Section 7.3. All amendments to the Research Program Plan, including increases or decreases to
the budget, shall be agreed to by the Parties in writing. The Research Program Plan, and any subsequent amendments thereto, shall be attached hereto as an exhibit and incorporated herein by reference. 
 
(b) For each Research Program Phase identified under the
Research Program Plan, the JDT shall develop and approve a written plan of work for such Research Program Phase (“Work Plan”) not later than sixty (60) days prior to the date on which work is anticipated to begin with respect to such
Research Program Phase. Each such Work Plan shall include: (i) the activities to be performed by DURECT during such Research Program Phase; (ii) the Research Program Milestone to be achieved by DURECT identical with that set forth in the Research
Program Plan; (iii) the criteria to be achieved by DURECT to demonstrate satisfaction of the Research Program Milestone; (iv) the target date by which DURECT shall achieve the Research Program Milestone with agreement that the Parties shall agree in
good faith to adjustments of the specified dates of completion for the Research Program Milestones to take into account delays which are due to factors which are out of the reasonable control of DURECT and BioPartners; and (v) the budget allocated
to such Research Program Phase from the overall Research Program budget set forth in the Research Program Plan. Upon completion of a Research Program Phase as determined by the JDT and as indicated by achievement of the associated Research Program
Milestone and DURECT’s disclosure to BioPartners of all Research Program Information 

 

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developed under such Research Program Phase and delivery of the appropriate pharmaceutical development report, DURECT shall then commence
work on the next Research Program Phase until all Research Program Phases in the Research Program are completed or the Research Program is terminated earlier pursuant to Section 2.6. 
 
2.3 DURECT’s Responsibilities. 
 
(a) DURECT shall be responsible for performance of all activities under the Research Program Plan and shall
use diligent and commercially reasonable efforts to perform such activities and to achieve the Research Program Milestones. DURECT shall conduct all such activities in accordance with the terms and conditions of this Agreement and all applicable law
in the Territory. 
 
(b) Subject to Section 3.1,
DURECT agrees to procure or furnish suitable laboratory facilities and equipment for the work to be performed in connection with the Research Program. 
 
(c) DURECT shall provide the JDT, and through the JDT to BioPartners, written progress reports on a [* * *] basis summarizing the
progress of its activities relating to the Research Program within [* * *] days after the end of [* * *]. DURECT shall promptly provide to the JDT, and through the JDT to BioPartners, any Research Program Information developed,
conceived of or acquired by DURECT. 
 
(d) DURECT
shall promptly inform the JDT in the event that it believes that it is unable to develop a formulation of the Drug Product that meets the specifications set forth on Exhibit VIII or if it is unable to achieve a Research Program Milestone by the
target completion date determined by the JDT as set forth under a Work Plan. 
 
(e) Within [* * *] days after completion of the Research Program as shall be determined by the JDT, DURECT shall supply BioPartners with a [* * *]. 
 
2.4 Subcontracting by DURECT. 
 
Notwithstanding Section 17.1, DURECT shall have the right to
utilize the services of a Third Party and/or any of its Affiliates to carry out DURECT’s obligations set forth under the Work Plans, subject to the prior written approval of BioPartners, such approval not to be unreasonably withheld or delayed.
Notwithstanding such approval by BioPartners for the use of a Third Party or an Affiliate of DURECT as set forth herein, DURECT shall remain fully responsible for the performance of DURECT’s obligations under this Agreement. In the event that
DURECT is permitted to utilize a Third Party or any of its Affiliates to carry out DURECT’s obligations under the Work Plans, DURECT warrants that the terms and conditions of any agreements with such Third Party or Affiliate relating to the
activities to be performed under the Work Plans shall be in accordance with the terms and conditions set forth in this Agreement. 
 
2.5 BioPartner’s Responsibility. 
 

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BioPartners
shall, at its sole expense, use commercially reasonable efforts to conduct all activities under the Research Program not allocated to DURECT under the Research Program Plan including all [* * *]. 
 
2.6 Termination of Research Program. 
 
BioPartners shall have the right to terminate the Research
Program in a country in the Territory or in the entire Territory at any time upon [* * *] days’ written notice to DURECT in the event that it determines at its sole discretion that it is no longer in its commercial or business interest
to pursue the development of the Drug Product, and BioPartner’s licenses under Article VIII will immediately terminate with regard to such country in the Territory or in the entire Territory as applicable. In the event that BioPartners
terminates the Research Program in any country or the entire Territory for any reason other than due to the [* * *], BioPartners shall reimburse DURECT within [* * *] days of such termination an amount equal to [* * *].

 
2.7 Miscellaneous. 
 
BioPartners shall have the right to arrange for its employees
and outside consultants involved in the development and commercialization of the Drug Product to visit DURECT and its offices and laboratories, and to discuss the Research Program and its results in detail with the technical personnel and
consultants of DURECT; provided that such visits shall be during normal business hours and shall not unreasonably interrupt the operations of DURECT. Such visits shall be at the expense of BioPartners. 
 
ARTICLE III 
 
FUNDING OF RESEARCH PROGRAM 
 
3.1 Funding of Research Program 
 
(a) DURECT and BioPartners shall each be responsible for the
payment of [* * *] of all DURECT Research Expenses reasonably incurred by DURECT in connection with the Research Program; provided that, with respect to any Research Program Phase, BioPartners shall not be obligated to pay for any portion of
the DURECT Research Expenses that exceeds the then current budget set forth in the Work Plan for such Research Program Phase, and DURECT shall not be obligated to perform work which would result in DURECT Research Expenses in excess of the then
current budget set forth in such Work Plan without the prior written agreement of the Parties to amend the budget. Subject to Section 3.1(b), the Parties shall consider and agree in good faith to any increase to the budget in a Work Plan which is
reasonably necessary for performance of such Research Program Phase. DURECT shall invoice BioPartners for [* * *] of such DURECT Research Expenses. Such amounts shall be invoiced by DURECT on a [* * *] basis and shall be paid to DURECT
within [* * *] days of BioPartners’ receipt of such invoice. DURECT shall retain copies of any receipts, bills, invoices, expense account information and any other supporting data for DURECT’s Research Expenses which BioPartners
shall have the right to audit in accordance with Section 8.5. On a quarterly basis, DURECT shall submit to the JDT an itemized listing of the DURECT Research Expenses incurred by DURECT in the prior 

 

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quarter. BioPartners shall be responsible for all of its own expenses relating to the Research Program. 
 
(b) Notwithstanding Section 3.1(a), DURECT shall have the
right, by written notice to BioPartners, [* * *]. 
 
(c) In consideration of the funding of the Research Program by BioPartners set forth under Section 3.1(a), BioPartners shall be granted warrants to purchase shares of common stock of DURECT Corporation pursuant to the form Warrant
Agreements attached hereto as Exhibit I and incorporated herein by reference. 
 
3.2 Research Program Milestone Payments. 
 
In addition to any amounts payable to DURECT under Section 3.1, if DURECT achieves a Research Program Milestone, as set forth under a Work Plan, and provides to BioPartners all Reseach Program
Information and pharmaceutical development reports as set forth in Section 2.2(b), BioPartners shall pay to DURECT a milestone payment equal to [* * *] reasonably incurred by DURECT under such Work Plan (each a “Research Program
Milestone Payment”). Upon the achievement of the Research Program Milestone, DURECT shall invoice BioPartners for the Research Program Milestone Payment. Such Research Program Milestone Payment invoiced by DURECT shall be paid to DURECT within
[* * *] days of BioPartners’ receipt of such invoice. 
 
3.3 Minimum Amount of DURECT Research Expenses. 
 
Regardless of the DURECT Research Expenses actually incurred by DURECT for the conduct of the Research Program, BioPartners’ compensation to DURECT under this Article III for its share of the DURECT Research Expenses
shall be at least US $[* * *] for each calendar year until the completion of DURECT’s activities under the Research Program Plan. The foregoing required minimum yearly spend shall be pro-rated for partial years. 
 
3.4 Suspension of Milestone Payment. 
 
In the event that DURECT does not meet a Research Program
Milestone (as set forth under a Work Plan), BioPartners shall have the right to suspend the corresponding Research Program Milestone Payment as set forth under Section 3.2 and shall be excused from the performance of such payment obligation until
DURECT has met such Research Program Milestone as shall be determined by the JDT. 
 
3.5 Suspension of Work. 
 
DURECT shall not be required to commence any work under a new Work Plan until DURECT has been paid (i) all DURECT Research Expenses that are due and payable to DURECT under all previous Work Plans, and (ii) all previous
Research Program Milestone Payments that are due and payable to DURECT. 
 

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ARTICLE IV

 
CLINICAL PROGRAM 
 
4.1 Clinical Program. 
 
BioPartners shall, at its sole expense, use commercially
reasonable efforts to (i) conduct all activities relating to the Clinical Program for the Drug Product and (ii) make all applications, requests for authorizations and submissions of the Research Program Information or information obtained under the
Clinical Program, for the purposes of obtaining the Drug Product Registration in the Territory (the “Clinical Program”). Subject to the terms and conditions of this Agreement, BioPartners shall at its sole discretion determine the Clinical
Program activities to be performed with respect to the Drug Product and the Drug Product Registrations to be obtained necessary for the commercialization of the Drug Product in the Territory. 
 
4.2 Clinical Program Milestones. 
 
(a) After the date of the completion of the Research Program,
as shall be determined by the JDT, BioPartners shall use commercially reasonable efforts to achieve the milestones relating to the Clinical Program on or before the specified date of completion set forth on Exhibit II, which is attached hereto and
incorporated herein by reference (each a “Clinical Program Milestone”); provided, that DURECT shall have supplied all the SABERTM Ingredients to BioPartners in accordance with Article V and shall have provided all necessary information and regulatory documents in accordance with Section 4.3. Notwithstanding the foregoing, in the event that DURECT does
not supply all the SABERTM Ingredients to BioPartners in accordance with Article V or provide all necessary
information and regulatory documents in accordance with Section 4.3, then each date specified on Exhibit II shall be extended day for day the number of days that DURECT is late in supplying the SABERTM Ingredients or in providing such information and BioPartners shall achieve the milestones relating to the Clinical Program on or before such revised dates.
Additionally, the Parties shall agree in good faith to adjustments of the specified dates of completion for the Clinical Milestones (and shall amend Exhibit II accordingly) to take into account delays which are due to factors which are out of the
reasonable control of BioPartners. 
 
(b) In the
event that BioPartners does not meet a Clinical Program Milestone within the applicable timeframe set forth under Section 4.2(a), DURECT may elect to, at its sole discretion, upon written notice to BioPartners, (i) terminate the restrictions on
DURECT as set forth in Section 8.4 and 8.5(a) in any or all countries in the Territory, or (ii) terminate BioPartners’ license in Section 8.1 in any or all countries in the Territory. 
 
4.3 DURECT’s Cooperation. 
 
(a) DURECT shall use commercially reasonable efforts to cooperate with BioPartners to obtain the Drug Product
Registrations in the Territory by providing any information or other materials relating to the conduct of the Research Program or the SABERTM Delivery System as BioPartners shall reasonably request. 
 

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(b) DURECT
shall, upon request from BioPartners make reasonably available to BioPartners members of the research, development and technical staff of DURECT assigned to the Research Program in order to assist BioPartners in the scale-up of operations and in the
commercialization of the Drug Product in the Territory. 
 
(c) BioPartners shall compensate DURECT [* * *] in connection with DURECT’s activities which are undertaken pursuant to this Section 4.3, as shall have been approved in advance by the JDT. DURECT shall invoice BioPartners
on a [* * *] basis for such costs. BioPartners shall pay DURECT the amounts payable within [* * *] days after receipt of such invoice by BioPartners. 
 
4.4 Termination of Clinical Program. 
 
BioPartners shall have the right to terminate the Clinical Program in a country in the Territory or in the
entire Territory at any time upon [* * *] days’ written notice in the event that it determines at its sole discretion that it is no longer in its commercial or business interest to pursue the development of the Drug Product. In the event
BioPartners so notifies DURECT that the Clinical Program shall be terminated with respect to a country in the Territory or in the entire Territory, the license granted to BioPartners under Article VIII with regard to such country or the entire
Territory, as applicable, will terminate [* * *] days after the date of receipt of such written notice by DURECT. 
 
ARTICLE V 
 
DURECT MANUFACTURE AND SUPPLY 
 
5.1 DURECT Manufacture and Supply During Clinical Phase. 
 
(a) Subject to the terms and conditions set forth herein, DURECT shall manufacture and supply to BioPartners,
and BioPartners shall purchase from DURECT [* * *] (collectively, the “SABERTM Ingredients”) to
be used for the conduct of the Research Program and the Clinical Program. DURECT shall not appoint a Third Party or Affiliate to manufacture the SABERTM Ingredients without the prior written consent of BioPartners, such consent not to be unreasonably withheld or delayed. 
 
(b) The specifications for the SABERTM Ingredients, including any packaging and labeling specifications, shall be agreed upon in writing by the JDT. Any modifications to such
specifications shall be agreed upon in writing by the JDT. The specifications for the SABERTM Ingredients, and
any subsequent amendments, shall be attached hereto as an exhibit and incorporated herein by reference. 
 
(c) The SABERTM Ingredients supplied by DURECT shall be used by BioPartners solely for the purpose of developing the Drug Product pursuant to this Agreement. 
 

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(d) DURECT
shall supply the SABERTM Ingredients in accordance with the Section 5.2(f) to BioPartners at [* * *]. Any
increases to the purchase price of the SABERTM Ingredients that is [* * *] shall be subject to the prior
written consent of BioPartners. 
 
5.2 Terms and
Conditions Applicable to Clinical Supply. 
 
(a)
Within [* * *] prior to the date which BioPartners anticipates commencement of the Clinical Program, BioPartners shall submit an estimate of the quantity of the SABERTM Ingredients that BioPartners expects to purchase from DURECT during the succeeding [* * *] calendar quarters. Thereafter, on or before the
[* * *] day of each following calendar quarter, BioPartners shall submit an updated forecast of its requirements of the SABERTM Ingredients from DURECT for the succeeding [* * *] calendar quarters. These forecasts shall be non-binding and shall be used by DURECT for planning purposes only. The parties may, by mutual agreement, in good faith
adjust the terms relating to forecasting and purchase order lead time as necessary from time to time. 
 
(b) Not later than [* * *] days prior to commencement of each calendar quarter, BioPartners shall submit to DURECT a purchase order
for such quantity of the SABERTM Ingredients as BioPartners commits to purchase from DURECT during such calendar
quarter, with a statement of the dates on which delivery shall be required and shipping instructions therefor (a “Firm Order”). DURECT shall confirm to BioPartners in writing, within [* * *] days after receipt thereof, the receipt
by DURECT of each Firm Order submitted in accordance with this Section, and shall use commercially reasonable efforts to deliver the specified quantity of the SABERTM Ingredients in accordance with the delivery schedule set forth in such Firm Order. DURECT shall exercise commercially reasonable efforts to comply
with changes to a Firm Order that BioPartners may request after acceptance by DURECT of such Firm Order but shall not be liable for its inability to do so. Firm Orders may be amended by mutual agreement of the Parties. 
 
(c) DURECT shall deliver the quantity of the SABERTM Ingredients set forth in each Firm Order, along with appropriate documentation including Certificate of Analysis
and other documentation to be defined by the Parties, to a location designated in writing by BioPartners, FOB (as defined in the Uniform Commercial Code) DURECT’s designated manufacturing facility. Title to the SABERTM Ingredients shall pass to BioPartners at the time of shipment from DURECT’s facility. 
 
(d) DURECT shall promptly invoice BioPartners for all
quantities of the SABERTM Ingredients delivered in accordance herewith. Payment with respect to a shipment shall
be due [* * *] days after receipt by BioPartners of such invoice. The terms and conditions of this Agreement shall exclusively govern the purchase and supply of products hereunder and shall override any conflicting, amending and/or additional
terms contained in any Firm Order or DURECT invoice. 
 
(e) Should DURECT experience manufacturing difficulties that result in a significant delay in delivery, DURECT shall promptly advise BioPartners of such delay and work together with BioPartners in good faith to develop a solution to
address such delay. Except as excused under Section 17.7, in the event that DURECT does not deliver the SABERTM

 

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Ingredients within [* * *] days after the delivery date set forth in the applicable Firm Order, BioPartners shall have the right to
suspend its payment obligations for such SABER Ingredients until DURECT has delivered such SABERTM Ingredients.

 
(f) DURECT warrants that, at the time of
delivery of the SABERTM Ingredients to BioPartners: (i) such SABERTM Ingredients will have been manufactured, stored and shipped in accordance with all applicable laws in the Territory, including applicable
cGMP’s; (ii) such SABERTM Ingredients will have been manufactured in accordance, and be in conformity, with
the specifications for the SABERTM Ingredients agreed to by the JDT under Section 5.1(b); (iii) such SABERTM Ingredients will not be adulterated or misbranded under the Act or any equivalent law in the Territory; (iv) title
to such SABERTM Ingredients will pass to BioPartners as provided herein free and clear of any security interest,
lien or other encumbrance; (v) such SABERTM Ingredients will have been manufactured in facilities that are in
material compliance with all applicable laws at the time of such manufacture (including applicable inspection requirements of FDA and other regulatory authorities in the Territory); and (vi) such SABERTM Ingredients may be introduced into interstate commerce pursuant to the Act. 
 
(g) In the event that, within [* * *] days after delivery thereof by DURECT, any SABERTM Ingredients supplied by DURECT do not conform to the warranties set forth under Section 5.2(f), BioPartners shall
give DURECT notice thereof (including a sample of such SABERTM Ingredients). DURECT shall undertake appropriate
testing of such sample and shall notify BioPartners whether it has confirmed such non-conformity within [* * *] days after receipt of such notice from BioPartners. If DURECT notifies BioPartners that it has not confirmed such non-conformity,
the Parties shall submit the disputed batch to an independent testing laboratory mutually acceptable to the Parties (the “Testing Laboratory”) for testing. The findings of the Testing Laboratory shall be binding on the Parties, absent
manifest error. The expenses of the Testing Laboratory shall be borne by DURECT if the testing confirms the non-conformity and by BioPartners if the testing does not confirm the non-conformity. If the Testing Laboratory or DURECT confirms that a
batch of SABERTM Ingredients does not conform to the warranties set forth under Section 5.2(f), DURECT shall
promptly, at the election of BioPartners, (i) supply BioPartners with a conforming quantity of the SABERTM
Ingredients at DURECT’s expense or (ii) reimburse BioPartners for the costs of paid by BioPartners for such non-conforming SABERTM Ingredients, and shall additionally reimburse BioPartners for any out of pocket costs relating to the disposal or return to DURECT of such SABERTM Ingredients. The rights and remedies provided in this clause shall be the exclusive remedy of BioPartners for non-conforming products. DURECT
EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 
 
(h) DURECT shall maintain, or cause to be maintained (i) all records necessary to comply with all applicable law in the Territory relating
to the manufacture of the SABERTM Ingredients supplied to BioPartners hereunder, including the cGMP’s; (ii)
all manufacturing records, standard operating procedures, equipment log books, batch records, laboratory notebooks and all raw data relating to the manufacture of SABERTM Ingredients; and (iii) such other records as BioPartners may reasonably require in order to ensure compliance by DURECT with the terms and
conditions of this Agreement. All such material shall be retained for such 

 

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period as may be required by cGMP’s or any other applicable law in the Territory, whichever is longest. 
 
(i) DURECT agrees that BioPartners and its agents shall have
the right, upon reasonable prior notice to DURECT, to inspect any location where SABERTM Ingredients are being
manufactured, as applicable, including inspection of (i) the materials used in the manufacture of the SABERTM
Ingredients; (ii) the holding facilities used in the manufacture of the SABERTM Ingredients; (iii) the equipment
used in the manufacture of the SABERTM Ingredients, and (iv) all records relating to such manufacturing in each
such manufacturing facility. Following such audit, BioPartners shall discuss its observations and conclusions with DURECT and corrective actions shall be agreed in writing upon by BioPartners and DURECT within [* * *] days thereafter. DURECT
shall implement such corrective action within [* * *] days after the Parties reach such agreement, unless otherwise agreed in writing by the Parties. 
 
(j) DURECT shall notify BioPartners by telephone within [* * *] business day, and in writing within [* * *] business days,
after learning thereof, of any proposed or unannounced visit or inspection of any facility used in the manufacture of SABERTM Ingredients or any manufacturing Process used in connection with the manufacture of SABERTM
Ingredients, by any Regulatory Authority, and shall permit BioPartners or its agents to be present and participate in such visit or inspection. DURECT shall provide to BioPartners a copy of any report and other written communications received from
such Regulatory Authority in connection with such visit or inspection, and any written communications received from such Regulatory Authority, within [* * *] business days after receipt thereof, and shall consult with BioPartners concerning
the response of DURECT to each such communication. DURECT shall provide BioPartners with a copy of all draft responses for comment as soon as possible and all final responses for review and approval, which shall not be unreasonably withheld or
delayed, within [* * *] business days prior to submission thereof. 
 
5.3 Supply Agreement for the Commercial Phase. 
 
Prior to BioPartners’ receipt of the first Drug Product Registration in the Territory, the Parties shall negotiate in good faith and shall agree in writing, subject to the pricing set forth in Section 5.1(d) and further
subject to the cost savings realized through the mass production of SABERTM Ingredients, to a supply agreement
relating to the supply by DURECT of the SABERTM Ingredients to BioPartners for purposes of the commercialization
of the Drug Product. BioPartners agrees that DURECT shall have the right to supply all GMP-qualified SABER TM
Ingredients for the commercial supply of the Drug Product. 
 
ARTICLE VI 
 
BIOPARTNERS
MANUFACTURE AND SUPPLY 
 
6.1 BioPartners
Manufacture and Supply. 
 
(a) BioPartners shall
supply the Drug Substance to DURECT at no cost to DURECT for the conduct of the Research Program by DURECT in such quantities and on such 

 

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delivery dates agreed to in writing by the Parties pursuant to this Agreement and in compliance with all applicable laws, including the
cGMP’s. The Drug Substance supplied by BioPartners shall be used by DURECT solely for the conduct of the Research Program for BioPartners pursuant to this Agreement. 
 
(b) After delivery by BioPartners to DURECT, DURECT shall maintain and store the Drug Substance in good
condition in accordance with all applicable law in the Territory, including the cGMP’s. Upon termination or expiration of this Agreement, DURECT shall promptly return to BioPartners all unused quantities of the Drug Substance. 
 
ARTICLE VII 
 
THE JOINT DEVELOPMENT TEAM 
 
7.1 The Joint Development Team. 
 
As soon as practicable after the execution of this Agreement,
but no later than thirty (30) days after the Effective Date, the Parties shall establish a joint development team (the “Joint Development Team” or “JDT”). The JDT will be composed of [* * *] members selected
by DURECT, and [* * *] members selected by BioPartners. Each Party, at its sole discretion, may at any time upon written notice to the other Party replace the members selected by it. Each Party shall appoint at least [* * *] member who
shall be an individual within the senior management of such Party. Those representatives of each such Party shall, individually or collectively, have expertise in pharmaceutical drug development and/or marketing. Each Party shall use commercially
reasonable efforts to cause its respective representatives to attend all meetings of the JDT. Each Party shall bear any travel and out-of-pocket expenses incurred by its members in connection with the JDT’s meetings. 
 
7.2 Meetings. 
 
The JDT shall meet [* * *] or as otherwise mutually
agreed upon by the Parties. Meetings of the JDT may be held by the physical presence of its members or by teleconference or videoconference. At each meeting of the JDT, the JDT shall review the progress with respect to the Research Program during
the previous three (3) month period. 
 
7.3
Responsibilities. 
 
The JDT shall be charged with
managing and overseeing the conduct of the Research Program and performing other tasks and duties specified in the Agreement. The responsibilities and authority of the JDT may be adjusted as the Parties shall agree in writing. The JDT shall perform
any additional tasks as shall be agreed to by the Parties in writing. 
 
7.4 Decision Making and Authority. 
 
Except for (i) [* * *], (ii) [* * *] or (iii) [* * *], any disagreement within the JDT not resolved within the JDT within [* * *] days will be promptly presented by the members on the JDT to the executive
at each of DURECT and BioPartners who has the principal responsibility 

 

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for his or her respective company’s work under this Agreement, or who is designated by such Party from time to time for the purpose of
resolving such disagreements. Such executives shall meet to discuss each Party’s view and to explain the basis for disagreement. If such executives are unable to resolve such dispute within [* * *] days of their meeting, the matter shall
be resolved by the BioPartners executive who has the principal responsibility for BioPartners’ work under this Agreement or who is designated by BioPartners. Notwithstanding the foregoing, nothing herein, and no decision made under this Section
7.4 shall be deemed to modify or supersede the express terms and conditions of the Agreement. 
 
7.5 Termination of JDT. 
 
Once all follow-up review of the Research Program has been completed, the activities of the JDT shall terminate on a date as shall be agreed upon by the JDT. 
 
ARTICLE VIII 
 
GRANT OF LICENSE 
 
8.1 License. 
 
Subject to the terms and conditions of this Agreement, DURECT grants to BioPartners, and BioPartners accepts, the non-transferable, sole
and exclusive right and license under the DURECT Patent Rights and DURECT Technology (with the right to grant sublicenses as set forth in Section 8.3) to the extent necessary to develop, manufacture, market, import, use or sell the Drug Product
within the Field throughout the Territory. 
 
8.2
Term of License. 
 
(a) Subject to Section 8.2(b),
the term of the license granted under Section 8.1 shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall terminate as to each country in the Territory upon the expiration of the later of: 
 
(i) the expiration or invalidation of the last to expire or
be invalidated of the DURECT Patent Rights which but for this Agreement would be infringed by the sale of the Drug Product based on such DURECT Patent Rights in such country, including any extension of such DURECT Patent Rights; and 
 
(ii) [* * *] years after the First Commercial Sale in
such country of the Drug Product. 
 
(b) Except as
provided in Section 15.3(b)(i), all licenses granted under this Article VIII shall terminate upon the termination or expiration of the Agreement. 
 
8.3 Sublicense. 
 
Subject to the terms and conditions of this Agreement, BioPartners has the nontransferable, sole and exclusive right to grant sublicenses
under its license pursuant to Section 

 

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8.1 to any Third Party or Affiliate (a “Sublicensee”). BioPartners shall ensure that (i) each Sublicensee shall be subject to and
shall comply with terms and conditions that are no less stringent than those set forth under this Agreement; and (ii) the rights of DURECT under this Agreement shall not be prejudiced, reduced or limited in any way as a result of such sublicense of
rights. In the event that the license granted to BioPartners in Section 8.1 is terminated with respect to any country in the Territory, all sublicenses granted by BioPartners to Sublicensees hereunder in such country shall simultaneously terminate
unless otherwise agreed to by DURECT. 
 
8.4
Exclusivity. 
 
Subject to Section 4.2(b), during
the Term, DURECT shall not, and shall not authorize nor license any Third Party or Affiliate any right under the DURECT Patent Rights or DURECT Technology to develop, manufacture, market, import, use or sell the Drug Product within the Field in any
countries in the Territory with respect to which the license granted to BioPartners under Section 8.1 has not been terminated or expired. 
 
8.5 Non-Competition. 
 
(a) Subject to Section 4.2(b) and Section 15.4, during the Term, DURECT shall not, and shall not authorize nor license any Third Party or
Affiliate to develop, manufacture, market, import, use, sell or otherwise commercialize a product [* * *] in any countries in the Territory with respect to which the license granted to BioPartners under Section 8.1 has not been terminated or
expired. In the event of a change of control of DURECT in which DURECT becomes controlled by a Third Party, the restrictions contained in Section 8.5(a) [* * *]. 
 
(b) During the Term, BioPartners shall not, and shall not authorize nor license any Third Party or Affiliate
to develop, manufacture, market, import, use or sell or otherwise commercialize a [* * *]. In the event of a change of control of BioPartners in which BioPartners becomes controlled by a Third Party, the restrictions contained in Section
8.5(b) [* * *]. 
 
8.6 Commercial Diligence.

 
All activities relating to the commercialization
of the Drug Product in the Territory shall be determined by BioPartners at its sole discretion and expense; provided, that BioPartners shall use commercially reasonable efforts to commercialize the Drug Product in the Territory. 
 
8.7 Option to License the Other Product. 
 
For a period commencing from the Effective Date until [* *
*] months thereafter (the “Option Period”), DURECT hereby grants to BioPartners an irrevocable (unless the option or this Agreement has been terminated or has expired), sole and exclusive right and option to acquire an exclusive
license under the DURECT Patent Rights and DURECT Technology to develop, manufacture, market, import, use or sell the Other Product in the Territory during the Term. This option may be exercised by BioPartners at any time during the Option Period
upon written notice of its exercise of the option to license to DURECT. In the event that (i) 

 

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BioPartners has not given written notice to DURECT within the Option Period stating that it is exercising its option or (ii) BioPartners has
failed to meet a Clinical Program Milestone within the applicable timeframe set forth under Section 4.2, such option shall be terminated and DURECT shall no longer have any obligations to BioPartners under such option. In the event that BioPartners
exercises the option under this Section 8.7, then BioPartners’ right to develop, manufacture, market, import, use and sell the Other Product shall be subject to all of the terms and conditions of this Agreement (except substituting the term
“Other Product” for “Drug Product” and the term “[* * *]” for “Drug Substance”) provided, however, that the term “Territory” as used under this Agreement with respect to the Other Product at
the time of the exercise of the option by BioPartners shall only include those countries in which BioPartners has the right to develop, manufacture, market, import, use and sell [* * *] at the time of the exercise of the option, but the
definition of Territory shall be modified from time to time in accordance with the terms of this Agreement. BioPartners shall provide written notice to DURECT setting forth each country in which it has such rights to [* * *] upon the request
of DURECT. 
 
8.8 Addition of Countries in Excluded
Territory. 
 
(a) In the event that during the
Term, DURECT decides to develop, manufacture, market, import, use or sell the Drug Product, or to appoint a Third Party or Affiliate to do so, in any country in the Excluded Territory, DURECT shall first offer in writing to BioPartners the right to
develop, manufacture, market, import, use or sell the Drug Product itself in such country under the terms of this Agreement with such country incorporated in to the definition of Territory, including the right to appoint Sublicensees under Section
8.3. If within [* * *] days of receipt of such offer, BioPartners (i) has not obtained the right to develop, manufacture, market, import, use and sell the Drug Substance in such country from a Third Party, or (ii) has not accepted such offer
in writing, DURECT shall have the right to develop, manufacture, market, import, use or sell the Drug Product itself in such country in the Excluded Territory or to enter into appropriate agreements and arrangements with a Third Party or an
Affiliate with regard thereto. 
 
(b) From time to
time during the Term, BioPartners shall have the right, upon written notice to DURECT, to incorporate a country in the Excluded Territory into the definition of Territory provided that at the time of such notice by BioPartners: (i) BioPartners has
rights to the Drug Substance in such country, and subject to Section 8.8(a), (ii) DURECT and/or its Affiliates have not commenced development of, and DURECT has not made a commitment to a Third Party (including active two-way discussions directed
towards a possible commercial relationship that can be evidenced by correspondence) with respect to, a product incorporating the Drug Substance in such country. 
 
(c) In the event: (i) BioPartners sublicenses its license under Section 8.1 to a Sublicensee in any country
in the Excluded Territory, and (ii) BioPartners does not receive nor recognize revenue from the Net Sales made by such Sublicensee in such country in the Excluded Territory, then the Net Sales of such Sublicensee in such country shall not be
included in the annual Net Sales of BioPartners for the purposes of determining the royalty rate payable by BioPartners under Exhibit III. 
 

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ARTICLE IX

 
ROYALTIES 
 
9.1 Royalties. 
 
(a) Subject to the terms and conditions of this Agreement and
for the duration of any surviving license granted to BioPartners in Section 8.1, BioPartners will pay DURECT, in each calendar year, a royalty on Net Sales of Drug Product in the each country of the Territory according to the schedule as set forth
on Exhibit III, which is attached hereto and incorporated herein by reference. 
 
(b) Royalties in accordance with Exhibit III shall be paid quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an Accounting Period) within [* * *] days
after the end of each Accounting Period in which such Net Sales occur, commencing with the calendar quarter in which the First Commercial Sale of the Drug Product is made by BioPartners or its Sublicensees or Affiliates. 
 
(c) The obligation to pay royalties to DURECT under Subsection
(a) above shall be imposed only once with respect to any sale of the Drug Product, regardless of the number of DURECT Patent Rights covering or the DURECT Technology licensed by DURECT to BioPartners. There shall be no obligation to pay royalties to
DURECT under Subsection (a) above on sales or transfer of the Drug Product between or among BioPartners, its Affiliates and its Sublicensees (unless such Sublicensee or Affiliate is an end user of the Drug Product). 
 
9.2 Mode of Payment. 
 
BioPartners shall make all payments required under this
Agreement in United States Dollars to DURECT by wire transfer of immediately available funds to a bank account of DURECT designated by DURECT from time to time in accordance with this Agreement. With respect to sales which are not denominated in
United States Dollars, payments shall be calculated based on currency exchange rates for the calendar quarter for which remittance is made for royalties. For each currency, such exchange rate shall equal the arithmetic average of the daily exchange
rates (obtained as described below) during the calendar quarter. Each daily exchange rate shall be obtained from The Wall Street Journal, Eastern United States Edition, or, if not so available, as otherwise agreed to in writing by the Parties.

 
9.3 Tax Withholding. 
 
If any law or regulation requires the withholding by
BioPartners or its Sublicensees of any taxes due on payments to be remitted to DURECT, such taxes shall be deducted from the amounts paid to DURECT. If the taxes are deducted from the amounts paid to DURECT, then BioPartners shall use commercially
reasonable efforts to furnish DURECT proof of payment of all such taxes and shall reasonably cooperate with DURECT in any efforts by DURECT to obtain a credit for such taxes. 
 
9.4 Accounting and Audit. 
 

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(a)
BioPartners agrees to keep clear, accurate and complete records for a period of at least [* * *] years (or such longer period as may correspond to BioPartners’ internal records retention policy) for each reporting period in which sales
occur showing the manufacturing, sales, use and other disposition of the Drug Product in sufficient detail to enable the share of Net Sales payable hereunder to be determined, and further agrees to permit its books and records to be examined by an
independent accounting firm selected by DURECT and reasonably satisfactory to BioPartners, from time-to-time to the extent necessary, but not more frequently than once [* * *]. Such examination by an independent accounting firm under this
Section 9.4(a) is to be made at the expense of DURECT, except that if the results of the audit for any year reveal that BioPartners has underpaid DURECT with respect to any country by an amount exceeding the audit fees in any individual country of
the Territory for such year, then the audit fees shall be paid by BioPartners. The amount of any such underpayment will be promptly paid to DURECT. 
 
(b) DURECT agrees to keep clear, accurate and complete records for a period of at least [* * *] years (or such longer period as may
correspond to DURECT’s internal records retention policy) in sufficient detail to substantiate the determination of the DURECT Research Expenses hereunder, and further agrees to permit its books and records to be examined by an independent
accounting firm selected by BioPartners and reasonably satisfactory to DURECT, from time-to-time to the extent necessary, but not more frequently than once [* * *]. Such examination by an independent accounting firm under this Section 9.4(b)
is to be made at the expense of BioPartners, except that if the results of the audit for any year reveal that DURECT has overcharged BioPartners by an amount exceeding the audit fees, then the audit fees shall be paid by DURECT. Any such overpayment
by BioPartners will be promptly reimbursed by DURECT. 
 
ARTICLE X 
 
REPRESENTATIONS AND
WARRANTIES 
 
10.1 Representations and Warranties
of DURECT. 
 
DURECT represents and warrants to
BioPartners that: 
 
(a) The execution, delivery
and performance of this Agreement by DURECT Corporation and SBS shall not, with or without notice or the passage of time or both, result in any violation of or constitute a default under any material contract, obligation or commitment to which
either DURECT Corporation or SBS is a party or by which either is bound, or any statute, rule or governmental regulation applicable to either DURECT Corporation or SBS. This Agreement constitutes a valid and binding obligation of each of DURECT
Corporation and SBS, enforceable in accordance with its terms. 
 
(b) DURECT Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and SBS is a corporation duly organized, validly existing and in good standing under the laws of
the State of Alabama, and each of DURECT Corporation and SBS has all requisite legal and corporate power and authority to carry on its business, grant the licenses to be granted by DURECT hereunder and to carry out and 

 

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perform its obligations hereunder. All corporate action on the part of DURECT Corporation and SBS and their respective officers and directors
necessary for the entering into of this Agreement, the grants of licenses pursuant hereto and the performance of the obligations of DURECT Corpration and SBS hereunder has been taken. 
 
(c) DURECT shall perform all of its obligations set forth under this Agreement in compliance with all
applicable law in the Territory, including, if applicable, the cGMP’s. 
 
(d) DURECT is the owner of, or has sufficient rights to, all of the DURECT Patent Rights and the DURECT Technology in the Territory to grant to BioPartners the licenses granted hereunder. All DURECT
Patent Rights are in full force and effect and free of all liens, charges, encumbrances and security interests. To the best knowledge of DURECT, the use of the SABERTM Delivery System, the DURECT Patent Rights and the DURECT Technology pursuant to the provisions hereof has not and does not infringe the rights of any Third
Party or Affiliate in the Territory. As of the Effective Date of this Agreement, to the best knowledge of DURECT, there are no adverse actions, suits, or claims pending or threatened against DURECT or its Affiliates in any court or by or before any
governmental body or agency in the Territory with respect to the SABERTM Delivery System, the DURECT Patent Rights
or the DURECT Technology. 
 
10.2 Disclaimer of
Warranties by DURECT. 
 
EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT, THE SABERTM DELIVERY SYSTEM, DURECT TECHNOLOGY AND DURECT PATENT RIGHTS LICENSED BY
DURECT TO BIOPARTNERS UNDER THIS AGREEMENT ARE PROVIDED “AS IS,” AND DURECT EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, NON-INFRINGEMENT,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 
 
10.3 Representations and Warranties of BioPartners. 
 
BioPartners represents and warrants to DURECT that: 
 
(a) The execution, delivery and performance of this Agreement by BioPartners shall not, with or without notice or the passage of time or both, result in any violation of or constitute a default under
any material contract, obligation or commitment to which BioPartners is a party or by which it is bound, or any statute, rule or governmental regulation applicable to BioPartners. This Agreement constitutes a valid and binding obligation of
BioPartners, enforceable in accordance with its terms. 
 
(b) BioPartners is a company duly organized under the laws of Switzerland, and has all requisite legal and corporate power and authority to carry on its business and the performance of its obligations under this Agreement. All
corporate action on the part of BioPartners and its officers and directors necessary for the entering into of this Agreement and the performance of BioPartners’ obligations hereunder has been taken. 
 

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(c)
BioPartners shall perform all of its obligations set forth under this Agreement in compliance with all applicable law in the Territory, including the Good Clinical Practices. 
 
(d) BioPartners has obtained and will maintain at all times during the Term and for so long as any license
granted pursuant to Section 8.1 survives, all rights and licenses with respect to the Drug Substance as necessary to develop and commercialize the Drug Product in the Territory. To the best knowledge of BioPartners, the use of the Drug Substance
pursuant to this Agreement has not and does not infringe the rights of any Third Party or Affiliate in the Territory. During the Term of this Agreement, should the use of the Drug Substance pursuant to this Agreement infringe the rights of any Third
Party or Affiliate in any country of the Territory, then BioPartners shall have [* * *] to resolve such infringement and to obtain the right to use the Drug Substance from the later to occur of (i) the date it becomes aware of such
infringement or (ii) first commercial launch of the Drug Product in a Major Market Country. Should such infringement not be resolved by BioPartners within such [* * *] period, then the Parties agree to discuss options to commercialize the
Drug Product in such country. As of the Effective Date of this Agreement, to the best knowledge of BioPartners, there are no adverse actions, suits, or claims pending or threatened against BioPartners or its Affiliates in any court or by or before
any governmental body or agency in the Territory with respect to the Drug Substance. 
 
10.4 Disclaimer of Warranties by BioPartners. 
 
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE DRUG SUBSTANCE IS PROVIDED “AS IS,” AND BIOPARTNERS EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 
 
ARTICLE XI 
 
INDEMNIFICATION 
 
11.1 Indemnification by BioPartners. 
 
BioPartners shall at all times, during and after the Term of this Agreement, indemnify and hold harmless DURECT and its Affiliates and
their respective directors, officers, employees, scientific advisors and consultants against any and all claims, losses, damages and liabilities, including reasonable attorneys’ fees and costs (“Losses”), arising out of or resulting
from (i) any breach of any representation, warranty or covenant by BioPartners under this Agreement, (ii) the negligence or willful misconduct of BioPartners or any of its respective directors, officers and employees or (iii) the development,
manufacture, market, import, use or sale of the Drug Product or the Drug Substance by BioPartners or its Sublicensees or Affiliates pursuant to this Agreement, including without limitation any and all product liability and intellectual property
infringement claims. The foregoing indemnity obligation shall not apply to the extent that any such claim, loss, damage, liability or Third Party claim or suit is covered by DURECT’s indemnity obligation under Section 11.2 hereof, as to which
Losses each Party shall indemnify the other Party to the extent of their respective liability for the Losses. 
 

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11.2
Indemnification by DURECT. 
 
DURECT Corporation
and SBS shall jointly and severally at all times, during and after the Term of this Agreement, indemnify and hold harmless BioPartners and its Affiliates and their respective directors, officers, employees, scientific advisors and consultants
against any and all Losses arising out of or resulting from (i) any breach of any representation, warranty or covenant by DURECT Corporation or SBS under this Agreement, (ii) the negligence or willful misconduct of DURECT Corporation or SBS or any
of their respective directors, officers and employees; (iii) the infringement of a Third Party’s proprietary rights by reason of use of the SABERTM Delivery System, the DURECT Patent Rights or the DURECT Technology in accordance with the terms hereof, provided that such claim or suit does not arise from the use of the Drug Substance in connection
with a controlled release technology generally; and (iv) the development, manufacture, market, import, use or sale of the SABERTM Ingredients, including without limitation any and all product liability and intellectual property infringement claims. The foregoing indemnity obligation shall not apply to the extent that such claim, loss, damage, liability or
Third Party claim or suit is covered by BioPartners’ indemnity obligation under Section 11.1 hereof, as to which Losses each Party shall indemnify the other Party to the extent of their respective liability for the Losses. 
 
11.3 Obligations of the Party Seeking to Be Indemnified.

 
If DURECT or BioPartners or any of their
respective Affiliates, directors, officers or employees (each an “Indemnified Party”) receives any written claims which it believes is the subject of indemnity hereunder by DURECT or BioPartners, as the case may be (in each case an
“Indemnifying Party”), the Indemnified Party shall, as soon as reasonably practicable after forming such belief, give notice thereof to the Indemnifying Party, including full particulars of such claim to the extent known to the Indemnified
Party; provided that the failure to give timely notice to the Indemnifying Party as contemplated hereby shall not release the Indemnifying Party from any liability to the Indemnified Party except to the extent that the Indemnifying Party is injured
by such delay. The Indemnifying Party shall have the right, by prompt notice to the Indemnified Party, to assume the defense of such claim at the cost of the Indemnifying Party. If the Indemnifying Party does not assume the defense of such claim or,
having done so, does not diligently pursue such defense, the Indemnified Party may assume such defense, with counsel of its choice, but at the cost and for the account of the Indemnifying Party. If the Indemnifying Party so assumes such defense, the
Indemnified Party may participate therein through counsel of its choice, but the cost of such counsel shall be for the account of the Indemnified Party. The Party not assuming the defense of any such claim shall render all reasonable assistance to
the Party assuming such defense, and all out-of-pocket costs of such assistance shall be for the account of the Indemnifying Party. No such claim shall be settled other than by the Party defending the same, and then only with the consent of the
other Party, which shall not be unreasonably withheld; provided that the Indemnified Party shall have no obligation to consent to any settlement of any such claim which imposes on the Indemnified Party any liability or obligation which cannot be
assumed and performed in full by the Indemnifying Party. 
 
ARTICLE XII 
 

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OWNERSHIP OF
INTELLECTUAL PROPERTY, PATENT PROSECUTION, 
ENFORCEMENT AND INFRINGEMENT 
 
12.1 Patent Prosecution and Maintenance. 
 
(a) All rights to the DURECT Patent Rights and the DURECT
Technology which are now or hereafter owned or licensed by DURECT will continue to be owned or licensed by DURECT, and BioPartners will not file any Patents with respect to such the DURECT Patent Rights and the DURECT Technology, except as agreed by
DURECT in writing. Subject to DURECT’s right to abandon or elect not to apply for such Patents, DURECT shall, at its sole expense and discretion, prepare, file, prosecute, defend and maintain all Patents in the Territory with respect to the
DURECT Patent Rights and the DURECT Technology which are owned by DURECT. DURECT will consult with BioPartners and its patent counsel regarding all such matters relating to such Patents which cover the Drug Product in the Territory and will take
into account in good faith BioPartners’ reasonable requests and comments in order to obtain the maximum patent protection reasonably obtainable for the Drug Product. DURECT will have the right, in its sole discretion, in good faith, to abandon
any Patent in any country or to elect not to apply for a Patent in any country; provided, however that with respect to any Patent which covers the Drug Product in the Territory [* * *]. 
 
(b) All rights to the BioPartners Patent Rights and the
BioPartners Technology which are now or hereafter owned or licensed by BioPartners will continue to be owned or licensed by BioPartners and DURECT will not file any Patents with respect to the BioPartners Patent Rights and the BioPartners
Technology, except as agreed by BioPartners in writing. 
 
12.2 Notification of Infringement. 
 
If either Party learns of an infringement or threatened infringement by a Third Party of any DURECT Patent Rights, DURECT Technology, BioPartners Patent Rights or BioPartners Technology in the Territory, such Party shall promptly
notify the other Party and shall provide such other Party with available evidence of such infringement. 
 
12.3 Patent Enforcement. 
 
As between DURECT and BioPartners, DURECT shall have the first right, but not the duty, to institute infringement actions against Third
Parties based on any DURECT Patent Rights or DURECT Technology in the Territory. If DURECT does not institute an infringement proceeding against an offending Third Party based on DURECT’s Patent Rights or DURECT Technology in the Field in the
Territory within [* * *] months after receipt of written notice from BioPartners, BioPartners shall have the right, but not the duty, to institute such an action, provided, however, that notwithstanding the foregoing, if DURECT notifies
BioPartners during such four-month period that it disputes in good faith whether such Third Party is infringing DURECT Patent Rights or DURECT Technology in the Field in the Territory, then the Parties shall refer such matter to a mutually
acceptable independent patent counsel. The patent counsel will be asked to render his or her opinion on the matter within [* * *] days after referral. In the event the patent counsel renders an opinion, based on all facts available to him or
her, that the 

 

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Third Party is infringing the DURECT Technology and DURECT Patents in the Field in the Territory, then BioPartners may, at its election,
initiate an action against such Third Party. If the patent counsel renders an opinion, based on all facts available to him or her, that the Third Party is not infringing the DURECT Technology and DURECT Patents in the Field in the Territory, then
BioPartners may not initiate an action against such Third Party. The Party against whom the opinion is rendered shall bear all costs associated with the use of the patent counsel. The costs and expenses of any infringement action (including fees of
attorneys and other professionals) brought against a Third Party under this Section 12.3 shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action, such costs and expenses
shall be borne by the Parties in such proportions as they may agree in writing. Each Party shall execute all necessary and proper documents and take such actions as shall be appropriate to allow the other Party to institute and prosecute such
infringement actions. Any award paid by Third Parties as a result of such an infringement action (whether by way of settlement or otherwise), shall be paid to [* * *]. 
 
12.4 Infringement of Third Party Rights and Licenses from Third Party. 
 
(a) If either Party identifies or receives notice of an
infringement or potential infringement of a Third Party’s patent(s) as a result of the development or commercialization of the Drug Product under this Agreement, such Party shall promptly notify the other Party and shall provide such other
Party with available evidence of such potential infringement. 
 
(b) Without limiting Article XI, in the event that during the Term any Third Party institutes against DURECT or BioPartners any action that alleges that the use of the SABERTM Delivery System, the DURECT Patent Rights or the DURECT Technology in accordance with the terms hereof infringes the intellectual property rights held by such
Third Party, then, as between DURECT and BioPartners and its Affiliates and Sublicensees, DURECT, at its sole expense, shall have the right to contest, and assume direction and control of the defense of, such action, including the right to settle
such action on terms determined by DURECT; provided that in no event shall DURECT enter into any settlement that adversely affects the interests of BioPartners or its Affiliates, without BioPartners’ prior written consent, which shall not be
unreasonably withheld. BioPartners, at DURECT’s expense, shall use all reasonable efforts to assist and cooperate with DURECT as reasonably requested by DURECT in such action. If, as a result of any such action, a judgment is entered by a court
of competent jurisdiction from which no appeal can be taken or from which no appeal is taken within the time permitted for appeal, or a settlement is entered into by DURECT, such that any of the SABERTM Delivery System, the DURECT Patent Rights, and the DURECT Technology cannot be used in accordance with this Agreement in a country without infringing the
intellectual property rights of such Third Party, then BioPartners shall have the right either to (i) terminate this Agreement effective immediately or (ii) obtain a license from such Third Party or require DURECT to obtain a license from such Third
Party in such country and at BioPartners’ sole discretion, to offset the cost of such license against any royalties owed to DURECT in such country hereunder, provided that the cumulative amount offset by BioPartners pursuant to this Section
12.4(b) shall not exceed [* * *] of the royalty rate then payable by BioPartners in such country hereunder. 
 

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(c) Without
limiting Article XI, in the event that during the Term any Third Party institutes against DURECT or BioPartners any action that alleges that the use of the Drug Substance, BioPartners Patent Rights or the BioPartners Technology in the Territory in
accordance with the terms hereof infringes the intellectual property rights held by such Third Party, then, as between DURECT and BioPartners, BioPartners, at its sole expense, shall have the sole obligation to contest, and assume direction and
control of the defense of, such action, including the right to settle such action on terms determined by BioPartners; provided that in no event shall BioPartners enter into any settlement that adversely affects the interests of DURECT or its
Affiliates, whether under this Agreement or otherwise, without DURECT’s prior written consent, which shall not be unreasonably withheld or delayed. DURECT, at BioPartners’ expense, shall use all reasonable efforts to assist and cooperate
with BioPartners as reasonably requested by BioPartners in such action. If, as a result of any such action, a judgment is entered by a court of competent jurisdiction from which no appeal can be taken or from which no appeal is taken within the time
permitted for appeal, or a settlement is entered into by BioPartners, such that BioPartners cannot develop or commercialize the Drug Product in a country in the Territory, then DURECT shall have the right to terminate the rights granted to
BioPartners under Section 8.1 with respect to such country and such country shall thereafter no longer be included in the Territory. 
 
12.5 Ownership and Inventions. 
 
(a) All rights, title and interest in and to the DURECT Patent Rights and the DURECT Technology shall be exclusively owned by DURECT.
Without regard to inventorship, all Inventions that relate to [* * *] thereof shall be solely owned by DURECT. In addition, without regard to inventorship, all Inventions relating to [* * *] (“Combination Inventions”) shall
be solely owned by DURECT, provided that [* * *]. The Inventions owned by DURECT under this Section 12.5(a) shall be referred to herein as “DURECT Inventions” and shall be deemed DURECT Technology. BioPartners hereby assigns and
conveys to DURECT, all of its rights, title and interest in and to any DURECT Inventions developed by or on behalf of BioPartners. BioPartners shall require that its scientists and research, development and technical personnel involved in the
performance of this Agreement to deliver such assignments, confirmations of assignments or other written instruments as are necessary to vest in DURECT clear and marketable title to such DURECT Inventions. Upon DURECT’s request and at
DURECT’s cost, BioPartners agrees to execute and deliver all papers and perform all acts which are reasonably necessary in order for DURECT to secure, maintain and enforce any patents for said Inventions in any country. 
 
(b) All rights, title and interest in and to the BioPartners
Patent Rights and the BioPartners Technology shall be exclusively owned by BioPartners. Without regard to inventorship, all Inventions that relate to [* * *] shall be solely owned by BioPartners. The Inventions owned by BioPartners under this
Section 12.5(b) shall be referred to herein as “BioPartners Inventions” and shall be deemed BioPartners Technology. DURECT hereby assigns and conveys to BioPartners, all of its rights, title and interest in and to any BioPartner Inventions
developed by or on behalf of DURECT. DURECT shall require that its scientists and research, development and technical personnel involved in the performance of this Agreement to deliver such assignments, confirmations of assignments or other written
instruments as are 

 

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necessary to vest in BioPartners clear and marketable title to such BioPartners Inventions. Upon BioPartners’ request and at
BioPartners’ cost, DURECT agrees to execute and deliver all papers and perform all acts which are reasonably necessary in order for BioPartners to secure, maintain and enforce any patents for said Inventions in any country. 
 
12.6 Ownership of Data and Drug Product Registrations.

 
(a) All rights, title, and interest in and to
any information or data, included in the DURECT Technology shall be owned by DURECT. 
 
(b) All rights, title, and interest in and to any information or data, included in the BioPartners Technology shall be owned by BioPartners. 
 
(c) All rights, title, and interest in and to any information or data which is developed or collected solely
or jointly by the Parties as part of the [* * *]shall be owned jointly by the Parties. 
 
(d) All rights, title, and interest in and to any other information or data which is developed or collected solely or jointly by the Parties under this Agreement other than that defined in 12.6 (a),
(b) and (c) above shall be owned solely by BioPartners. All rights, title, and interest in and to the Drug Product Registrations developed or collected solely or jointly by the Parties during the Term of this Agreement shall be owned exclusively by
BioPartners. In the event that DURECT requests access to such information and data owned by BioPartners, [* * *]. 
 
12.7 Ownership of Information related to Intellectual Property. 
 
Any and all information and material, including any and all intellectual property rights therein and thereto,
assigned to a Party pursuant to the terms of this Agreement shall constitute Confidential Information of such Party which shall be deemed the disclosing Party with respect to such Confidential Information. 
 
ARTICLE XIII 
 
CONFIDENTIALITY 
 
13.1 Confidentiality. 
 
Subject to Section 13.2, during the Term of this Agreement and
for [* * *] years thereafter, each Party shall maintain in confidence all information and materials of a confidential or proprietary nature disclosed by the other Party pursuant to the this Agreement, including, information relating to the
SABERTM Delivery System, the Drug Product, the Drug Substance, the DURECT Patent Rights, the DURECT Technology,
the BioPartners Patent Rights and the BioPartners Technology, whether provided by either Party to the other Party prior to or after the Effective Date (“Confidential Information”), and shall not use such information or materials for any
purpose except as permitted by this Agreement, or disclose the same to anyone other than those of its Sublicensees, employees, consultants, agents or subcontractors as are necessary in connection with such Party’s activities as contemplated in
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obtain a written agreement from any of its Sublicensees, employees, consultants, agents and subcontractors, prior to receipt of such
information or materials, to hold in confidence and not make use of such information or materials for any purpose other than as permitted by this Agreement. 
 
13.2 Disclosure. 
 
The obligation of confidentiality contained in this Agreement shall not apply to the extent that: 
 
(a) the Party receiving confidential information from the
other Party (the “Recipient”) is required to disclose such information by order or regulation of a governmental agency or a court of competent jurisdiction, or under the securities laws of any jurisdiction or the rules of the U.S.
Securities and Exchange Commission or any stock exchange upon which its securities are listed, except that the Recipient will not make any such disclosure (other than as required under the securities laws of any jurisdiction or the rules of the U.S.
Securities and Exchange Commission or any stock exchange upon which its securities are listed) without first notifying the other Party and (i) upon the request of the other Party, preparing and submitting in good faith a request for confidential
treatment pursuant to the United States securities laws or other equivalent law in the Territory covering such information as shall be identified as confidential by the other Party and (ii) allowing the other Party a reasonable opportunity to seek
injunctive relief from (or protective order with respect to) the obligation to make such disclosure; 
 
(b) the Recipient can demonstrate that (i) the disclosed information was at the time of such disclosure to the Recipient already in (or
thereafter enters) the public domain other than as a result of actions of the Recipient or its Affiliates, employees, Sublicensees, consultants, agents or subcontractors in violation hereof; (ii) the disclosed information was rightfully known by the
Recipient (as shown by its written records) prior to the date of disclosure to the Recipient in connection with the negotiation, execution or performance of this Agreement; (iii) the disclosed information was received by the Recipient on an
unrestricted basis from a source unrelated to any Party to this Agreement and who is not under a duty of confidentiality to the other Party; or (iv) the disclosed information was independently developed by the Recipient without use of the disclosing
Party’s information and 
 
(c) disclosure is
made to a government regulatory agency as part of such agency’s drug marketing approval process. 
 
13.3 Publicity. 
 
Except as otherwise provided in this Agreement (including without limitation Section 13.2) or required by law or regulation, no Party will
originate any publication, news release or other public announcement, written or oral, whether in the public press, stockholders’ reports or otherwise, relating to this Agreement or to any sublicense under this Agreement, or to the performance
under this Agreement or under any sublicense under this Agreement, without the prior written approval (including E-mail) of the other Party, which approval shall not be unreasonably withheld or delayed. 
 

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ARTICLE XIV

 
INSURANCE 
 
14.1 Insurance. 
 
(a) BioPartners shall, at its sole cost and expense, procure
and maintain comprehensive general liability insurance and products liability insurance policies from a qualified insurance company which has a superior rating from a recognized rating service, with minimum limits of $[* * *] for combined
bodily injury and property damage. Notwithstanding the foregoing, BioPartners shall have no obligation to purchase product liability insurance until the commencement of the Clinical Program. 
 
(b) DURECT Corporation and SBS shall, in combination and at
their sole cost and expense, procure and maintain comprehensive general liability insurance and products liability insurance policies from a qualified insurance company which has a superior rating from a recognized rating service, with minimum
limits of US $[* * *] for combined bodily injury and property damage. 
 
(c) Each Party shall have its insurance carrier or carriers furnish to the other Party certificates that all insurance required under this Agreement is in force, such certificates to indicate any
deductible and/or self-insured retention and the effective expiration dates of the policies, and such certificates to stipulate that the other Party shall be given thirty (30) days written notice of all cancellation or non-renewal of the policy.

 
ARTICLE XV 
 
TERM AND TERMINATION 
 
15.1 Term. 
 
(a) This Agreement shall commence as of the Effective Date
and, unless sooner terminated as provided hereunder, shall terminate upon the termination of all licenses granted to BioPartners pursuant to Section 8.1 above (“Term”). 
 
15.2 Termination Without Cause. 
 
BioPartners may terminate this Agreement without cause upon [* * *] days prior written notice to
DURECT. 
 
15.3 Termination For Cause.

 
Subject to Section 15.5, either Party (the
“Non-Breaching Party”) may terminate this Agreement if (i) the other Party (the “Breaching Party”) does not comply with any of its material obligations under this Agreement (including the breach of any representation or warranty
set forth in Article X), (ii) the Non-Breaching Party gives notice to the Breaching Party specifying the nature of the default and requiring the Breaching Party to cure the default, and (iii) the default 

 

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is not cured by the Breaching Party within [* * *] days after the receipt of such notice (or if such default cannot reasonably be
cured within such [* * *] period, then one additional [* * *] period if the Breaching Party has commenced and diligently continued actions to cure such default during such initial [* * *] period), in which event the Agreement
shall terminate upon the expiration of such applicable cure period. Breach of a representation or warranty set forth in Article or failure to pay any amounts due under this Agreement within [* * *] after written notice that such amounts are
overdue shall be deemed a material breach of this Agreement. The right to terminate shall be in addition to and not in substitution for any other available remedy at law or in equity 
 
15.4 Termination for Insolvency 
 
Subject to Section 15.5, either Party may terminate this Agreement upon written notice if, at any time, (i)
the other Party shall file in any court or agency pursuant to any statute or regulation of the United States or of any foreign country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a
receiver or trustee of the Party or of its assets, or (ii) the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [* * *] days after the
filing thereof, or (iii) if the other Party shall make an assignment for the benefit of creditors. The Agreement shall terminate [* * *] days after the delivery of such notice by the terminating Party. The right to terminate shall be in
addition to and not in substitution for any other available remedy at law or in equity. 
 
15.5 Effects of Termination. 
 
(a) Upon expiration or termination of this Agreement for any reason other than by DURECT pursuant to Section 15.3, and provided that BioPartners has commenced marketing of the Drug Product hereunder,
BioPartners and its Affiliates and Sublicensees shall have the right to continue to sell all inventory of the Drug Product in such country for a period of [* * *] months from and after the effective date of such termination. Royalties
consistent with the provisions of Section 8.1 shall continue to paid to DURECT with respect to such continuing sales. 
 
(b) In the event that BioPartners terminates the Agreement in accordance with Section 15.3 due to a breach by DURECT of a material
obligation set forth under this Agreement, then: 
 
(i) [* * *], 
 
(ii) [*
* *]; and 
 
(iii) [* * *].

 
(c) In the event of the termination of this
Agreement (or any country within the Territory) by BioPartners, BioPartners shall pay DURECT in accordance with the terms hereof all amounts due and payable under this Agreement through the date of termination and 

 

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for all costs not refundable to DURECT in respect of which DURECT reasonably made commitments in connection with the performance of its
obligations hereunder before the date of delivery of such notice of termination. 
 
(d) Termination or expiration of this Agreement shall not relieve any Party of any obligations or liabilities arising prior to the effective date of termination or expiration. 
 
15.6 Return of Records and Data. 
 
Within thirty (30) days after the termination or expiration of
this Agreement, each Party shall promptly return to the other Party all tangible copies of Confidential Information received from the other Party except that each Party may keep one copy of any Confidential Information received from the other Party
solely for monitoring its confidentiality obligations hereunder. 
 
15.7 Surviving Provisions. 
 
The
Parties’ rights and obligations under Articles XI, XIII, XVI and XVII and Sections 2.6, 5.2(f), 5.2 (g), 5.2(h), 9.3-9.4, 12.5-12.7 and 15.5-15.7 shall survive any termination or expiration of this Agreement. 
 
ARTICLE XVI 
 
DISPUTE RESOLUTION 
 
16.1 Arbitration. 
 
Except for disputes, controversies or claims relating to the
ownership of intellectual property rights or the scope of the licenses granted in Article VIII, and subject to Section 16.2, any dispute, controversy or claim arising under, out of or in connection with this Agreement, including any subsequent
amendments, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce then in force on the date of commencement of the arbitration by three (3) arbitrators appointed in accordance with those Rules. The award
rendered shall be final and binding on the Parties. Judgment upon the award may be entered in any court having jurisdiction. The place of arbitration shall be in New York, New York, U.S.A. The law of the State of New York shall be applied. The
language to be used in the arbitral proceedings shall be English. 
 
16.2 Pre-Arbitration Dispute Resolution. 
 
No dispute under this Agreement shall be referred to arbitration under Section 16.1 until the following procedures have been satisfied. A designated representative of BioPartners and DURECT shall meet as soon as practicable,
as reasonably requested by either Party to review any dispute with respect to the interpretation of any provision of this Agreement or with respect to the performance of either Party under this Agreement. If the dispute is not resolved by the
designated representatives by mutual agreement within thirty (30) calendar days after a meeting to discuss the dispute, either Party may at any time thereafter provide the other Party written 

 

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notice specifying the terms of such dispute in reasonable detail and notifying the other Party of its decision to institute arbitration
proceedings under Section 16.1. 
 
16.3 Provisional
Remedy. 
 
Nothing in this Agreement shall limit
the right of either Party to seek to obtain in any court of competent jurisdiction any interim relief or provisional remedy, including injunctive relief. Seeking or obtaining such interim relief or provisional remedy in a court shall not be deemed a
waiver of this Agreement to arbitrate. 
 
16.4
Disputes Related to Intellectual Property Rights and the License Grants. 
 
Any and all disputes, controversies or claims relating to the ownership of intellectual property rights or the scope of the licenses granted under Article VIII shall be subject to the exclusive venue and jurisdiction of the
state and federal courts of competent jurisdiction located in the State of New York, U.S.A. The Parties hereby consent to the exclusive venue and jurisdiction of such courts for such disputes, controversies or claims. 
 
ARTICLE XVII 
 
MISCELLANEOUS 
 
17.1 Assignment. 
 
Neither this Agreement nor any interest or obligation
hereunder may be assigned or delegated by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed, except that either Party may assign this Agreement, in whole but not in part,
to any successor by merger, acquisition or sale of substantially all of its assets to which this Agreement relates, provided that no such assignment shall release the assigning Party from any liability hereunder incurred prior to the date of such
assignment. Subject to the foregoing, this Agreement shall be binding upon the successors and permitted assigns of the Parties. A Party shall not assign or otherwise transfer any of its patent rights to a Third Party such that such assignment or
transfer restricts, in whole or in part, the rights of the other Party under this Agreement. Any assignment not in accordance with this Section 17.1 shall be void. 
 
17.2 Entire Agreement. 
 
This Agreement (including the Exhibits thereto) constitutes the entire Agreement between the Parties hereto
with respect to the within subject matter and supersedes all previous Agreements, whether written or oral. This Agreement shall not be changed or modified orally, but only by an instrument in writing signed by authorized representatives of both
Parties. 
 
17.3 Severability. 
 
In the event that any provision of this Agreement is
determined to be invalid or unenforceable for any reason, such provision shall be deemed inoperative only to the extent that 

 

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it violates or conflicts with law or public policy, and such provision shall be deemed modified to the extent necessary to conform to such
law or policy. All other provisions of this Agreement shall remain in full force and effect. 
 
17.4 Notices. 
 
Any notice or report required or permitted to be given under this Agreement shall be in writing and shall be sent by facsimile and confirmed by prepaid, registered or certified mail, return receipt requested, or other reputable
international courier service, to the address as follows and shall be effective upon the earlier of receipt, as evidenced by the return receipt or delivery receipt, or three (3) days after such mailing: 
 

	 If to DURECT:
	  	 DURECT Corporation
 10240 Bubb Road
 Cupertino, California 95014
 Attn:General Counsel

Fax: (408) 777-3577

	
	 If to SBS:
	  	 Southern BioSystems, Inc.
 756 Tom Martin Drive
 Birmingham, Alabama 35211
 Attn:President
 Fax: (205) 917-2296

	
	 If to BioPartners:
	  	 BioPartners, GmbH
 Baarermatte
 6340 Baar
 Switzerland
 Attn:Brian O’Callaghan
 Fax:+41 (0) 41 766 20 81

	
	 Copies to:
	  	 Coudert Brothers LLP
 1114 Avenue of the Americas
 New York, New York 10036-7703
 Attn:Edwin S. Matthews, Jr.,
Esq.
 Fax: (212) 626-4120

 
or at such other
address as DURECT Corporation, SBS or BioPartners shall have furnished to the other in writing. 
 
17.5 Choice of Law. 
 
This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, U.S.A., without giving effect to the principles of conflicts of laws thereof. 
 
17.6 Waiver. 
 

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The failure of
either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other
Party. None of the terms, covenants and conditions of this Agreement can be waived except by the written consent of the Party waiving compliance. 
 
17.7 Force Majeure. 
 
No failure or omission by the Parties in the performance of any obligation according to this Agreement shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any cause or causes beyond the reasonable control of the Party, including strikes, riots, war, terrorism, acts of God, invasion, fire, explosion, floods, delay of carrier, shortage or
failure in the supply of materials, energy shortage and acts of government or governmental agencies or instrumentalities. In the event that due to force majeure either Party hereto shall be delayed or hindered in or prevented from the performance of
its duties or doing acts required under the terms of this Agreement and such Party provides written notice to the other Party promptly upon the occurrence of the force majeure event, the performance of such act, shall be excused for the period of
the delay. Notwithstanding the aforementioned, the Party subject to force majeure shall take all reasonable steps to resolve the condition(s) forming the basis of force majeure. In the event that the performance of a Party is excused pursuant to
this Section 17.7 for more than ninety (90) days due to a force majeure event, the other Party shall have the right to terminate this Agreement upon written notice. 
 
17.8 Headings. 
 
The captions used herein are inserted for convenience of reference only and shall not be construed to create obligations, benefits, or
limitations. 
 
17.9 Counterparts. 
 
This Agreement may be executed in counterparts, all of which
taken together shall be regarded as one and the same instrument. Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a Party hereto shall constitute a valid and binding execution and delivery
of this Agreement by such Party. Such facsimile copies shall constitute enforceable original documents. 
 
17.10 Relationship of Parties. 
 
The Parties shall be deemed to be independent contractors. Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, without the prior written consent of the other Party. 
 
17.11 Limitation of Liability. 
 
EXCEPT FOR EACH PARTY’S INDEMNIFICATION OBLIGATIONS UNDER
ARTICLE XI OR FOR BREACH OF ARTICLE XIII, IN NO EVENT SHALL EITHER PARTY 

 

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been filed separately with the SEC. 
-35- 

BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE). 
 
17.12 No Implied Licenses. 
 
Nothing in this Agreement is or shall be construed as granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of DURECT, regardless of whether such patents or other rights are dominant or subordinate to any patent within the DURECT Patent Rights or DURECT Technology. 
 
17.13 No Third Party Beneficiaries. 
 
There are no third party beneficiaries under this Agreement.

 
[remainder of the page intentionally blank]

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-36- 

 
IN WITNESS
WHEREOF, the Parties have duly caused this Agreement to be executed as of the Effective Date. 
 

	 DURECT CORPORATION

	
	 By:
	 	 
	 	

	 	 	 Name:Felix Theeuwes

	 	 	 Title:Chairman & Chief Scientific Officer

	
	 SOUTHERN BIOSYSTEMS, INC.

	
	 By:
	 	 
	 	

	 	 	 Name:Arthur J. Tipton

	 	 	 Title:Vice President

	
	 BIOPARTNERS, GMBH

	
	 By:
	 	 
	 	

	 	 	 Name:Brian O’Callaghan

	 	 	 Title:General Manager

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-37- 

 
Exhibit I

 
Warrant Agreements 
 
[attached] 
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 

 

	 Warrant No. CS-[__]            

	 Number of Shares:                

	 Date of Issuance: [________ __, 200_] 
	 as set forth below                  

 
DURECT CORPORATION

 
Common Stock Purchase Warrant

 
DURECT Corporation (the
“Company”), for value received, hereby certifies that BioPartners, GmbH (the “Registered Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof
but in no event after the Expiration Date (as defined in Section 5 below), a number shares (as adjusted from time to time pursuant to the provisions of this Warrant) of Common Stock of the Company, equal to the quotient obtained by dividing (a)
[* * *] by (b) the Purchase Price, rounded down to the nearest whole share. This Warrant is issued pursuant to the Development and License Agreement dated_________ __, 2002 between the Company and the Registered Holder (the “License
Agreement”) and is subject to the terms and conditions of the License Agreement. Capitalized terms not otherwise defined shall have the meaning assigned to them in the License Agreement. The purchase price shall be $______ per share which
represents the closing sale price of the Company’s Common Stock as quoted on The Nasdaq National Market on___________ __, 200_, the date of grant of this Warrant, which shall be the date of the [* * *]. The shares purchasable upon
exercise of this Warrant and the purchase price per share, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Stock” and the “Purchase
Price,” respectively. 
 
1.
Exercise. 
 
(a) Manner of
Exercise. This Warrant may be exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the purchase/exercise form appended hereto as Exhibit A duly executed by such Registered Holder or by such
Registered Holder’s duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full of the Purchase Price 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-38- 

payable in respect of the number of shares of Warrant Stock purchased upon such exercise. The Purchase Price may be paid by cash, check, wire
transfer or by the surrender of promissory notes or other instruments representing indebtedness of the Company to the Registered Holder. The Registered Holder agrees and acknowledges that the terms of Exhibit A, including Section E thereof, are an
integral part of this Warrant, and that such agreement is partial consideration for the issuance of this Warrant and the Warrant Stock upon exercise thereof. 
 
(b) Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the
close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 1(a) above. 
 
(c) Net Issue Exercise. 
 
(i) In lieu of exercising this Warrant in the manner provided above in Section 1(a), the Registered Holder may elect to receive shares
equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election on the purchase/exercise form appended hereto as Exhibit A
duly executed by such Registered Holder or such Registered Holder’s duly authorized attorney, in which event the Company shall issue to holder a number of shares of Common Stock computed using the following formula: 
 
X = Y (A - B) 
       A 
 

	 Where
	  	 X = The number of shares of Common Stock to be issued to the Registered
Holder.

	 	  	 Y = The number of shares of Common Stock purchasable under this Warrant (at the date
of such calculation).

	 	  	 A = The fair market value of one share of Common Stock (at the date of such
calculation).

	 	  	 B = The Purchase Price (as adjusted to the date of such
calculation).

 
(ii)
For purposes of this Section 1(c), the fair market value of one share of Common Stock on the date of calculation shall be deemed to be the average of the closing prices as quoted on The Nasdaq National Market, over a thirty (30) day period ending
three days before the date of calculation. 
 
(d)
Delivery to Holder. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within ten (10) days thereafter, the Company at its expense will cause to be issued in the name of, and delivered to,
the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: 
 
(i) a certificate or certificates for the number of shares of Warrant Stock to which such Registered Holder shall be entitled, and

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-39- 

 
(ii) in case
such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Warrant Stock equal (without giving effect to any adjustment therein)
to the number of such shares called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in Section 1(a) above. 
 
2. Adjustments. 
 
(a) Stock Splits and Dividends. If outstanding shares of the Company’s Common Stock shall
be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, the Purchase Price in effect immediately prior to such subdivision or at the record date of such dividend shall simultaneously with
the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. If outstanding shares of Common Stock shall be combined into a smaller number of shares, the Purchase Price in effect immediately
prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. When any adjustment is required to be made in the Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect
immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment. 
 
(b) Reclassification, Etc. In case of any reclassification or change of the outstanding securities of the Company or of any
reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case
the holder of this Warrant, upon the exercise hereof at any time after the consummation of such reclassification, change, reorganization, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation if such holder had exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided in Section 2(a); and in each such case, the terms of this Section 2 shall be applicable to the shares of stock or other securities properly receivable upon the exercise of this Warrant after such
consummation. 
 
(c) Adjustment
Certificate. When any adjustment is required to be made in the Warrant Stock or the Purchase Price pursuant to this Section 2, the Company shall promptly mail to the Registered Holder a certificate setting forth (i) a brief statement of the
facts requiring such adjustment, (ii) the Purchase Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant shall be exercisable after such adjustment. 
 
3. Transfers. 
 
(a) Unregistered Security. Each holder of this
Warrant acknowledges that 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-40- 

this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Act as to
this Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the Company, that
such registration and qualification are not required. Each certificate or other instrument for Warrant Stock issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect. 
 
(b) Transferability. Subject to the provisions
of Section 3(a) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of the Warrant with a properly executed assignment (in the form of Exhibit B hereto) at the principal office of the
Company. 
 
(c) Warrant
Register. The Company will maintain a register containing the names and addresses of the Registered Holders of this Warrant. Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of
this Warrant as the absolute owner hereof for all purposes; provided, however, that if this Warrant is properly assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such Registered Holder’s address as shown on the warrant register by written notice to the Company requesting such change. 
 
4. No Impairment. The Company will not, by
amendment of its charter or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will (subject to
Section 13 below) at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment.

 
5. Termination. This Warrant (and
the right to purchase securities upon exercise hereof) shall terminate upon the date (the “Expiration Date”) that is the thirty-six month anniversary of the date of grant of this warrant. 
 
6. Notices of Certain Transactions. In case:

 
(a) the Company shall take a record of the
holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to receive any other right, to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or 
 
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or merger of the Company, any consolidation or 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-41- 

merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity),
or any transfer of all or substantially all of the assets of the Company, or 
 
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this
Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the
effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such
other stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up) are to be determined. Such notice shall be mailed at least ten (10) days prior to
the record date or effective date for the event specified in such notice. 
 
7. Reservation of Stock. The Company will at all times reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock,
securities and property, as from time to time shall be issuable upon the exercise of this Warrant. 
 
8. [Reserved] 
 
9. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 
 
10. Notices. Any notice required or permitted by this Warrant shall be in writing and shall be deemed sufficient upon
receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage
prepaid, addressed (a) if to the Registered Holder, to the address of the Registered Holder most recently furnished in writing to the Company and (b) if to the Company, to the address set forth below or subsequently modified by written notice to the
Registered Holder. 
 
11. No Rights as
Stockholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company. 
 
12. No Fractional Shares. No fractional shares of Common Stock will be issued in connection
with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-42- 

fair market value of one share of Common Stock on the date of exercise, as determined in good faith by the Company’s Board of Directors.

 
13. Amendment or Waiver. Any term
of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the amendment or waiver is sought. 
 
14. Headings. The headings in this Warrant are for purposes of reference only and shall not
limit or otherwise affect the meaning of any provision of this Warrant. 
 
15. Governing Law. This Warrant shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. 
 
 
 

	 DURECT CORPORATION

	
	 By
	 	  

 

	
	 Address:
	 	  

	 	 	  

	 	 	  

	 	 	 
	 Fax Number:
	 	  

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-43- 

 
EXHIBIT
A 
 
PURCHASE/EXERCISE FORM

 

	 To:    DURECT Corporation 
	 Dated:             

 
The undersigned, pursuant to the provisions set forth in the
attached Warrant No. CS-[            ], hereby irrevocably elects to (a) purchase              shares of the Common
Stock covered by such Warrant and herewith makes payment of $             , representing the full purchase price for such shares at the price per share provided for in such Warrant,
or (b) exercise such Warrant for              shares purchasable under the Warrant pursuant to the Net Issue Exercise provisions of Section 1(c) of such Warrant. Capitalized terms
not otherwise defined herein shall have the meanings given in the Warrant. 
 
The undersigned acknowledges that: 
 
A. The Warrant Stock to be acquired by the undersigned will be acquired for investment for the undersigned’s own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this form, the undersigned further represents that the undersigned does
not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Warrant Stock. The undersigned has not been formed for
the specific purpose of acquiring the Warrant Stock. 
 
B. The undersigned understands that the Warrant Stock has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon,
among other things, the bona fide nature of the investment intent and the accuracy of the undersigned’s representations as expressed herein. The undersigned understands that the Warrant Stock is “restricted securities” under
applicable U.S. federal and state securities laws and that, pursuant to these laws, the undersigned must hold the Warrant Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities,
or an exemption from such registration and qualification requirements is available. The undersigned acknowledges that the Company has no obligation to register or qualify the Warrant Stock for resale. The undersigned further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Warrant Stock, and on requirements relating to the
Company which are outside of the undersigned’s control, and which the Company is under no obligation and may not be able to satisfy. 
 
C. The undersigned understands that the Warrant Stock and any securities issued in respect of or exchange for the Warrant Stock, may bear
one or all of the following legends: 
 
(a)
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.” 
 
(b) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate so legended. 
 
D. The undersigned is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 
 
Signature:_____________________ 
 
Name (print):___________________

 
Title (if
applic.)_________________ 
 
Company (if applic.):_____________ 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-ii- 

 
EXHIBIT
B 
 
ASSIGNMENT FORM

 
FOR VALUE RECEIVED,
                                        
                                        
     hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant with respect to the number of shares of Common Stock covered thereby set forth below, unto: 
 

	 Name of Assignee

	  	 Address/Fax Number

	  	 No. of Shares

 

	 Dated:
	 	  

 

	 	 	 	 Signature:
	 	 	 	 
	 	 	 	 	 	 	 	
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
	 	 
	 	 	 	 	 	 	 Witness:
	 	 	 	 
	 	 	 	 	 	 	 	
	 	 
	 	 	 	 	 	 	 	 	 	 	 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 

 

	 Warrant No. CS-[            ] 
	 Number of Shares:             

	 Date of Issuance: [            
            , 200_] 
	 as set forth below              

 
DURECT CORPORATION 
 
Common Stock Purchase Warrant 
 
DURECT Corporation (the “Company”), for value
received, hereby certifies that BioPartners, GmbH (the “Registered Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof but in no event after the Expiration
Date (as defined in Section 5 below), a number shares (as adjusted from time to time pursuant to the provisions of this Warrant) of Common Stock of the Company, equal to the quotient obtained by dividing (a) [* * *] by (b) the Purchase Price,
rounded down to the nearest whole share. This Warrant is issued pursuant to the Development and License Agreement dated             
            , 2002 between the Company and the Registered Holder (the “License Agreement”) and is subject to the terms and conditions of the License Agreement.
Capitalized terms not otherwise defined shall have the meaning assigned to them in the License Agreement. The purchase price shall be $             per share which represents the
closing sale price of the Company’s Common Stock as quoted on The Nasdaq National Market on             
            , 200_, the date of grant of this Warrant, which shall be the date of the [* * *]. The shares purchasable upon exercise of this Warrant and the purchase price per
share, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Stock” and the “Purchase Price,” respectively. 
 
1. Exercise. 
 
(a) Manner of Exercise. This Warrant may be
exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the purchase/exercise form appended hereto as Exhibit A duly executed by such Registered Holder or by such Registered Holder’s duly authorized
attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full of the Purchase Price payable in respect of the number of shares of Warrant Stock purchased upon such
exercise. The Purchase Price may be paid by cash, check, wire transfer or by the surrender of promissory notes or other instruments representing indebtedness of the Company to the Registered Holder. The Registered Holder agrees and acknowledges that
the terms of Exhibit A, including Section E thereof, are an integral part of this Warrant, and that such agreement is partial consideration for the issuance of this Warrant and the Warrant Stock upon exercise thereof. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-2- 

 
(b)
Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in
Section 1(a) above. 
 
(c) Net Issue
Exercise. 
 
(i) In lieu of exercising
this Warrant in the manner provided above in Section 1(a), the Registered Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the
Company together with notice of such election on the purchase/exercise form appended hereto as Exhibit A duly executed by such Registered Holder or such Registered Holder’s duly authorized attorney, in which event the Company shall issue
to holder a number of shares of Common Stock computed using the following formula: 
 
X = Y (A - B) 
        A

 

	 Where
	    	 X = The number of shares of Common Stock to be issued to the Registered
Holder.

	
	 	    	 Y = The number of shares of Common Stock purchasable under this Warrant (at the date
of such calculation).

	
	 	    	 A = The fair market value of one share of Common Stock (at the date of such
calculation).

	
	 	    	 B = The Purchase Price (as adjusted to the date of such
calculation).

 
(ii)
For purposes of this Section 1(c), the fair market value of one share of Common Stock on the date of calculation shall be deemed to be the average of the closing prices as quoted on The Nasdaq National Market, over a thirty (30) day period ending
three days before the date of calculation. 
 
(d)
Delivery to Holder. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within ten (10) days thereafter, the Company at its expense will cause to be issued in the name of, and delivered to,
the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: 
 
(i) a certificate or certificates for the number of shares of Warrant Stock to which such Registered Holder shall be entitled, and

 
(ii) in case such exercise is in part only, a
new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Warrant Stock equal (without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in Section 1(a) above. 
 
***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 

-3- 

 
2.
Adjustments. 
 
(a) Stock
Splits and Dividends. If outstanding shares of the Company’s Common Stock shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend shall simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. If outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Purchase Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. When any adjustment is
required to be made in the Purchase Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment. 
 
(b) Reclassification, Etc. In case of any
reclassification or change of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar
corporate reorganization on or after the date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any time after the consummation of such reclassification, change, reorganization, merger or conveyance, shall be
entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation
if such holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 2(a); and in each such case, the terms of this Section 2 shall be applicable to the shares of stock or other securities
properly receivable upon the exercise of this Warrant after such consummation. 
 
(c) Adjustment Certificate. When any adjustment is required to be made in the Warrant Stock or the Purchase Price pursuant to this Section 2, the Company shall promptly mail to the
Registered Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment, (ii) the Purchase Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant
shall be exercisable after such adjustment. 
 
3.
Transfers. 
 
(a) Unregistered
Security. Each holder of this Warrant acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Act as to this Warrant or such Warrant Stock and registration
or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-4- 

Company, that such registration and qualification are not required. Each certificate or other instrument for Warrant Stock issued upon the
exercise of this Warrant shall bear a legend substantially to the foregoing effect. 
 
(b) Transferability. Subject to the provisions of Section 3(a) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of the Warrant with a
properly executed assignment (in the form of Exhibit B hereto) at the principal office of the Company. 
 
(c) Warrant Register. The Company will maintain a register containing the names and addresses of the Registered Holders of
this Warrant. Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if this Warrant is
properly assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such Registered
Holder’s address as shown on the warrant register by written notice to the Company requesting such change. 
 
4. No Impairment. The Company will not, by amendment of its charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will (subject to Section 13 below) at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 
 
5. Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall
terminate upon the date (the “Expiration Date”) that is the thirty-six month anniversary of the date of grant of this warrant. 
 
6. Notices of Certain Transactions. In case: 
 
(a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the
time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or 
 
(b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company,
any consolidation or merger of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all
of the assets of the Company, or 
 
(c) of the
voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-5- 

Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation
or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up) are to be determined. Such notice shall be mailed at least ten (10) days prior to the record date or effective date for the event specified in such notice. 
 
7. Reservation of Stock. The Company will at all
times reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock, securities and property, as from time to time shall be issuable upon the exercise of this
Warrant. 
 
8. [Reserved]

 
9. Replacement of Warrants. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in
an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 
 
10. Notices. Any notice required or permitted by
this Warrant shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the regular mail as
certified or registered mail (airmail if sent internationally) with postage prepaid, addressed (a) if to the Registered Holder, to the address of the Registered Holder most recently furnished in writing to the Company and (b) if to the Company, to
the address set forth below or subsequently modified by written notice to the Registered Holder. 
 
11. No Rights as Stockholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the
Company. 
 
12. No Fractional Shares.
No fractional shares of Common Stock will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the
fair market value of one share of Common Stock on the date of exercise, as determined in good faith by the Company’s Board of Directors. 
 
13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the
party against which enforcement of the amendment or waiver is sought. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-6- 

 
14.
Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 
 
15. Governing Law. This Warrant shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of conflicts of law. 
 

	 DURECT CORPORATION

	
	 By
	 	  

	
	 Address:
	 	  

	 	 	  

	 	 	  

	 Fax Number:
	 	  

 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-7- 

 
EXHIBIT
A 
 
PURCHASE/EXERCISE FORM

 

	 To: DURECT Corporation 
	 Dated:                         

 
The undersigned, pursuant to the provisions set forth in the attached Warrant No.
CS-[            ], hereby irrevocably elects to (a) purchase              shares of the Common Stock covered by
such Warrant and herewith makes payment of $             , representing the full purchase price for such shares at the price per share provided for in such Warrant, or (b) exercise
such Warrant for              shares purchasable under the Warrant pursuant to the Net Issue Exercise provisions of Section 1(c) of such Warrant. Capitalized terms not otherwise
defined herein shall have the meanings given in the Warrant. 
 
The undersigned acknowledges that: 
 
A. The Warrant Stock to be acquired by the undersigned will be acquired for investment for the undersigned’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that
the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this form, the undersigned further represents that the undersigned does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Warrant Stock. The undersigned has not been formed for the specific purpose of
acquiring the Warrant Stock. 
 
B. The undersigned
understands that the Warrant Stock has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of the undersigned’s representations as expressed herein. The undersigned understands that the Warrant Stock is “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the undersigned must hold the Warrant Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The undersigned acknowledges that the Company has no obligation to register or qualify the Warrant Stock for resale. The undersigned further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Warrant Stock, and on requirements relating to the Company which are
outside of the undersigned’s control, and which the Company is under no obligation and may not be able to satisfy. 
 
C. The undersigned understands that the Warrant Stock and any securities issued in respect of or exchange for the Warrant Stock, may bear
one or all of the following legends: 
 
(a)
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.” 
 
(b) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate so legended. 
 
D. The undersigned is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 
 

	 Signature:
	 	  

 

	 Name (print):
	 	  

 

	 Title (if applic.)
	 	  

 

	 Company (if applic.):
	 	  

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-ii- 

 
EXHIBIT B

 
ASSIGNMENT FORM 
 
FOR VALUE RECEIVED,
                                        
                                 hereby sells, assigns and transfers all of the rights
of the undersigned under the attached Warrant with respect to the number of shares of Common Stock covered thereby set forth below, unto: 
 

	 Name of Assignee

	  	 Address/Fax Number

	  	 No. of Shares

 

	 Dated:
	 	  

	 	 Signature:
	 	  

	 	 	 	 	 	 	  

	 	 	 	 	 Witness:
	 	  

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 

 

	 Warrant No. CS-[        ] 
	 Number of
Shares:                         

	 Date of Issuance:
[                    , 200_] 
	 as set forth
below                           

 
DURECT CORPORATION 
 
Common Stock Purchase Warrant 
 
DURECT Corporation (the “Company”), for value received, hereby certifies that BioPartners,
GmbH (the “Registered Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof but in no event after the Expiration Date (as defined in Section 5 below), a number
shares (as adjusted from time to time pursuant to the provisions of this Warrant) of Common Stock of the Company, equal to the quotient obtained by dividing (a) [* * *] by (b) the Purchase Price, rounded down to the nearest whole share. This
Warrant is issued pursuant to the Development and License Agreement dated                      , 2002 between the Company and
the Registered Holder (the “License Agreement”) and is subject to the terms and conditions of the License Agreement. Capitalized terms not otherwise defined shall have the meaning assigned to them in the License Agreement. The
purchase price shall be $             per share which represents the closing sale price of the Company’s Common Stock as quoted on The Nasdaq National Market on
                      , 200_, the date of grant of this Warrant, which shall be the date of the [* * *]. The shares purchasable
upon exercise of this Warrant and the purchase price per share, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Stock” and the “Purchase
Price,” respectively. 
 
1.
Exercise. 
 
(a) Manner of
Exercise. This Warrant may be exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the purchase/exercise form appended hereto as Exhibit A duly executed by such Registered Holder or by such
Registered Holder’s duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full of the Purchase Price payable in respect of the number of
shares of Warrant Stock purchased upon such exercise. The Purchase Price may be paid by cash, check, wire transfer or by the surrender of promissory notes or other instruments representing indebtedness of the Company to the Registered Holder. The
Registered Holder agrees and acknowledges that the terms of Exhibit A, including Section E thereof, are an integral part of this Warrant, and that such agreement is partial consideration for the issuance of this Warrant and the Warrant Stock upon
exercise thereof. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-2- 

 
(b)
Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in
Section 1(a) above. 
 
(c) Net Issue
Exercise. 
 
(i) In lieu of exercising
this Warrant in the manner provided above in Section 1(a), the Registered Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the
Company together with notice of such election on the purchase/exercise form appended hereto as Exhibit A duly executed by such Registered Holder or such Registered Holder’s duly authorized attorney, in which event the Company shall issue
to holder a number of shares of Common Stock computed using the following formula: 
 
X = Y (A - B) 
        A

 

	 Where
	  	 X = The number of shares of Common Stock to be issued to the Registered
Holder.

	 	  	 Y = The number of shares of Common Stock purchasable under this Warrant (at the date
of such calculation).

	 	  	 A = The fair market value of one share of Common Stock (at the date of such
calculation).

	 	  	 B = The Purchase Price (as adjusted to the date of such
calculation).

 
(ii)
For purposes of this Section 1(c), the fair market value of one share of Common Stock on the date of calculation shall be deemed to be the average of the closing prices as quoted on The Nasdaq National Market, over a thirty (30) day period ending
three days before the date of calculation. 
 
(d)
Delivery to Holder. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within ten (10) days thereafter, the Company at its expense will cause to be issued in the name of, and delivered to,
the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: 
 
(i) a certificate or certificates for the number of shares of Warrant Stock to which such Registered Holder shall be entitled, and

 
(ii) in case such exercise is in part only, a
new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Warrant Stock equal (without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in Section 1(a) above. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-3- 

 
2.
Adjustments. 
 
(a) Stock
Splits and Dividends. If outstanding shares of the Company’s Common Stock shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend shall simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. If outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Purchase Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. When any adjustment is
required to be made in the Purchase Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment. 
 
(b) Reclassification, Etc. In case of any
reclassification or change of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar
corporate reorganization on or after the date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any time after the consummation of such reclassification, change, reorganization, merger or conveyance, shall be
entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation
if such holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 2(a); and in each such case, the terms of this Section 2 shall be applicable to the shares of stock or other securities
properly receivable upon the exercise of this Warrant after such consummation. 
 
(c) Adjustment Certificate. When any adjustment is required to be made in the Warrant Stock or the Purchase Price pursuant to this Section 2, the Company shall promptly mail to the
Registered Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment, (ii) the Purchase Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant
shall be exercisable after such adjustment. 
 
3.
Transfers. 
 
(a) Unregistered
Security. Each holder of this Warrant acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Act as to this Warrant or such Warrant Stock and registration
or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-4- 

Company, that such registration and qualification are not required. Each certificate or other instrument for Warrant Stock issued upon the
exercise of this Warrant shall bear a legend substantially to the foregoing effect. 
 
(b) Transferability. Subject to the provisions of Section 3(a) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of the Warrant with a
properly executed assignment (in the form of Exhibit B hereto) at the principal office of the Company. 
 
(c) Warrant Register. The Company will maintain a register containing the names and addresses of the Registered Holders of
this Warrant. Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if this Warrant is
properly assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such Registered
Holder’s address as shown on the warrant register by written notice to the Company requesting such change. 
 
4. No Impairment. The Company will not, by amendment of its charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will (subject to Section 13 below) at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 
 
5. Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall
terminate upon the date (the “Expiration Date”) that is the thirty-six month anniversary of the date of grant of this warrant. 
 
6. Notices of Certain Transactions. In case: 
 
(a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the
time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or 
 
(b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company,
any consolidation or merger of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all
of the assets of the Company, or 
 
(c) of the
voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-5- 

Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation
or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up) are to be determined. Such notice shall be mailed at least ten (10) days prior to the record date or effective date for the event specified in such notice. 
 
7. Reservation of Stock. The Company will at all
times reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock, securities and property, as from time to time shall be issuable upon the exercise of this
Warrant. 
 
8. [Reserved] 
 
9. Replacement of Warrants. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount
reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 
 
10. Notices. Any notice required or permitted by
this Warrant shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the regular mail as
certified or registered mail (airmail if sent internationally) with postage prepaid, addressed (a) if to the Registered Holder, to the address of the Registered Holder most recently furnished in writing to the Company and (b) if to the Company, to
the address set forth below or subsequently modified by written notice to the Registered Holder. 
 
11. No Rights as Stockholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the
Company. 
 
12. No Fractional Shares.
No fractional shares of Common Stock will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the
fair market value of one share of Common Stock on the date of exercise, as determined in good faith by the Company’s Board of Directors. 
 
13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the
party against which enforcement of the amendment or waiver is sought. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-6- 

 
14.
Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 
 
15. Governing Law. This Warrant shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of conflicts of law. 
 

	 DURECT CORPORATION

	
	 By
	 	  

	
	 Address:
	 	  

	 	 	  

	 	 	  

	 Fax Number:
	 	  

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-7- 

 
EXHIBIT
A 
 
PURCHASE/EXERCISE FORM

 

	 To: DURECT Corporation 
	 Dated:                     

 
The undersigned, pursuant to the provisions set forth in the attached Warrant No.
CS-[            ], hereby irrevocably elects to (a) purchase            shares of the Common Stock covered by such
Warrant and herewith makes payment of $            , representing the full purchase price for such shares at the price per share provided for in such Warrant, or (b) exercise such
Warrant for            shares purchasable under the Warrant pursuant to the Net Issue Exercise provisions of Section 1(c) of such Warrant. Capitalized terms not otherwise defined
herein shall have the meanings given in the Warrant. 
 
The undersigned acknowledges that: 
 
A. The Warrant Stock to be acquired by the undersigned will be acquired for investment for the undersigned’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that
the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this form, the undersigned further represents that the undersigned does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Warrant Stock. The undersigned has not been formed for the specific purpose of
acquiring the Warrant Stock. 
 
B. The undersigned
understands that the Warrant Stock has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of the undersigned’s representations as expressed herein. The undersigned understands that the Warrant Stock is “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the undersigned must hold the Warrant Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The undersigned acknowledges that the Company has no obligation to register or qualify the Warrant Stock for resale. The undersigned further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Warrant Stock, and on requirements relating to the Company which are
outside of the undersigned’s control, and which the Company is under no obligation and may not be able to satisfy. 
 
C. The undersigned understands that the Warrant Stock and any securities issued in respect of or exchange for the Warrant Stock, may bear
one or all of the following legends: 
 
(a)
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.” 
 
(b) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate so legended. 
 
D. The undersigned is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 
 

	 Signature:
	 	  

 

	 Name (print):
	 	  

 

	 Title (if applic.)
	 	  

 

	 Company (if applic.):
	 	  

 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-ii- 

 
EXHIBIT
B 
 
ASSIGNMENT FORM

 
FOR VALUE
RECEIVED,                                      
          hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant with respect to the number of shares of Common Stock covered thereby set forth below,
unto: 
 

	 Name of Assignee

	  	 Address/Fax Number

	  	 No. of Shares

 

	 Dated:
	 	  

	 	 	 	 Signature:
	 	  

	 	 	 	 	 	 	 	 	  

	 	 	 	 	 	 	 Witness:
	 	  

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
Exhibit II

 
Clinical Program Milestones 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-2- 

 
Exhibit III

 
Schedule of Royalty Payments 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-3- 

 
Exhibit IV

 
Research Program Plan 
 
[attached] 
 
Version: SBS Proposal S2006.6 15 October 2002 
 
15 pages 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-4- 

Exhibit V 
 
Countries Not Included Under “Excluded Territory” 
 
The following countries shall not be included in the definition of
“Excluded Territory” as such term is used under this Agreement: 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-5- 

Exhibit VI 
 
Manufacturing Costs 
 
DURECT’s fully allocated manufacturing cost shall mean [* * *]. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-6- 

Exhibit VII 
 
DURECT Patent Rights 
 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-7- 

Exhibit VIII 
 
Drug Product Specifications for Research Program 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-8- 

Exhibit IX 
 
Research Program Milestone 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-9-Development Commercialization & Supply License Agreement

CONFIDENTIAL 
 
Exhibit 10.33 
DEVELOPMENT, COMMERCIALIZATION AND SUPPLY 
 
LICENSE AGREEMENT 
 
BETWEEN 
 
DURECT
CORPORATION 
 
AND 
 
ENDO PHARMACEUTICALS INC. 
 
DATED AS OF 
 
NOVEMBER 8, 2002 
 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

TABLE OF CONTENTS 
 

	 	  	 	  	 	  	 Page

	 1.
	  	 	  	 DEFINITIONS.
	  	 1

	 2.
	  	 	  	 MANAGEMENT.
	  	 12

	 	  	 2.1
	  	 Joint Executive Committee
	  	 12

	 	  	 2.2
	  	 Product Development Committee
	  	 16

	 	  	 2.3
	  	 Joint Commercialization Committee
	  	 18

	 	  	 2.4
	  	 Joint Manufacturing Committee
	  	 22

	 	  	 2.5
	  	 Minutes of Committee Meetings
	  	 24

	 	  	 2.6
	  	 Term
	  	 25

	 	  	 2.7
	  	 Expenses
	  	 25

	 	  	 2.8
	  	 Alliance Managers
	  	 25

	 3.
	  	 	  	 GRANT OF RIGHTS.
	  	 26

	 	  	 3.1
	  	 Rights Granted to Endo
	  	 26

	 	  	 3.2
	  	 Exclusivity
	  	 27

	 	  	 3.3
	  	 Activities Outside the Territory
	  	 27

	 	  	 3.4
	  	 Trademarks; Logos
	  	 28

	 	  	 3.5
	  	 Non-Performance
	  	 30

	 	  	 3.6
	  	 Restrictions on Competing Products
	  	 31

	 	  	 3.7
	  	 Right of Endo Regarding New Products
	  	 33

	 	  	 3.8
	  	 Payment on Sales Outside Territory
	  	 33

	 4.
	  	 	  	 DEVELOPMENT AND REGULATORY MATTERS
	  	 34

	 	  	 4.1
	  	 Exchange of Data and Know-How
	  	 34

	 	  	 4.2
	  	 Product Registrations
	  	 35

	 	  	 4.3
	  	 Scope of Development Plan
	  	 35

	 	  	 4.4
	  	 Post-Registration Development
	  	 37

	 	  	 4.5
	  	 Conduct of Development Plan and Post-Registration Plan
	  	 37

	 	  	 4.6
	  	 Funding of DURECT Activities, Development Plan and Post-Registration Plan.
	  	 39

	 	  	 4.7
	  	 Delay of Initial Regulatory Filing
	  	 41

	 	  	 4.8
	  	 Suspension of Clinical Development Activities
	  	 42

	 	  	 4.9
	  	 DURECT Activities
	  	 42

	 5.
	  	 	  	 DISTRIBUTION AND PROMOTION.
	  	 42

	 	  	 5.1
	  	 Generally
	  	 42

	 	  	 5.2
	  	 Marketing Plan
	  	 43

	 	  	 5.3
	  	 Endo Responsibilities; Rights
	  	 43

	 	  	 5.4
	  	 Promotional Materials and Activities
	  	 43

	 	  	 5.5
	  	 Technical Support Representatives
	  	 44

	 	  	 5.6
	  	 Global Marketing Team
	  	 44

	 	  	 5.7
	  	 Distribution and Marketing Costs
	  	 44

	 	  	 5.8
	  	 DURECT Co-Promotion Right; Supplemental Call Plan
	  	 44

	 	  	 5.9
	  	 Sales Incentive Compensation Programs
	  	 46

	 6.
	  	 	  	 PAYMENTS.
	  	 46

	 	  	 6.1
	  	 R&D Reimbursement and Payments to DURECT
	  	 46

	 	  	 6.2
	  	 Distribution Fee
	  	 47

	 	  	 6.3
	  	 Minimum Payments
	  	 48

	 	  	 6.4
	  	 Allocation of Sales
	  	 48

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

	 	 	 	  	 6.5
	  	 ALZA Payments
	  	 48

	 	 	 	  	 6.6
	  	 Bankruptcy Rejection of ALZA Agreement
	  	 49

	 	 	 	  	 6.7
	  	 Equity Investment in DURECT
	  	 50

	 	 	 7.
	  	 	  	 PAYMENTS AND REPORTS.
	  	 50

	 	 	 	  	 7.1
	  	 Payments
	  	 50

	 	 	 	  	 7.2
	  	 Mode of Payment
	  	 51

	 	 	 	  	 7.3
	  	 Records Retention
	  	 51

	 	 	 	  	 7.4
	  	 Audit Request
	  	 51

	 	 	 	  	 7.5
	  	 Cost of Audit
	  	 52

	 	 	 	  	 7.6
	  	 No Non-Monetary Consideration for Sale
	  	 52

	 	 	 8.
	  	 	  	 MANUFACTURE AND SUPPLY.
	  	 53

	 	 	 	  	 8.1
	  	 Supply Obligations
	  	 53

	 	 	 	  	 8.2
	  	 Supply of Finished Product
	  	 53

	 	 	 	  	 8.3
	  	 Forecasts
	  	 53

	 	 	 	  	 8.4
	  	 Orders for Finished Product
	  	 54

	 	 	 	  	 8.5
	  	 Delivery
	  	 55

	 	 	 	  	 8.6
	  	 Purchase Price
	  	 57

	 	 	 	  	 8.7
	  	 Conformity; Specifications; Quality Control
	  	 58

	 	 	 	  	 8.8
	  	 Acceptance/Rejection; Interim Replacement
	  	 59

	 	 	 	  	 8.9
	  	 Inventory Management
	  	 61

	 	 	 	  	 8.10
	  	 Shortage of Supply
	  	 62

	 	 	 	  	 8.11
	  	 Inability to Supply
	  	 62

	 	 	 	  	 8.12
	  	 Additional Commercial Facilities
	  	 64

	 	 	 	  	 8.13
	  	 Implanters
	  	 65

	 	 	 	  	 8.14
	  	 Finishing
	  	 65

	 	 	 	  	 8.15
	  	 Third Party Manufacturers
	  	 65

	 	 	 	  	 8.16
	  	 Limitation on Use of Third Party Manufacturers
	  	 67

	 	 	 9.
	  	 	  	 OWNERSHIP; PATENTS; TRADEMARKS.
	  	 67

	 	 	 	  	 9.1
	  	 Ownership
	  	 67

	 	 	 	  	 9.2
	  	 Maintenance of the Patents
	  	 68

	 	 	 	  	 9.3
	  	 Infringement
	  	 68

	 	 	 10.
	  	 	  	 PUBLICATION; CONFIDENTIALITY.
	  	 70

	 	 	 	  	 10.1
	  	 Notification
	  	 70

	 	 	 	  	 10.2
	  	 Review
	  	 71

	 	 	 	  	 10.3
	  	 Confidentiality
	  	 71

	 	 	 	  	 10.4
	  	 Exceptions to Obligation
	  	 72

	 	 	 	  	 10.5
	  	 Limitations on Use
	  	 72

	 	 	 	  	 10.6
	  	 Remedies
	  	 73

	 	 	 11.
	  	 	  	 REPRESENTATIONS AND WARRANTIES.
	  	 73

	 	 	 	  	 11.1
	  	 Representations and Warranties of the Parties
	  	 73

	 	 	 	  	 11.2
	  	 Representations and Warranties of DURECT
	  	 74

	 	 	 	  	 11.3
	  	 Disclaimer of Other Warranties
	  	 75

	 	 	 12.
	  	 	  	 RECALL; INDEMNIFICATION; INSURANCE.
	  	 75

	 	 	 	  	 12.1
	  	 Investigation; Recall
	  	 75

	 	 	 	  	 12.2
	  	 Indemnification by DURECT
	  	 76

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-ii- 

	 	  	 12.3
	  	 Indemnification by Endo
	  	 77

	 	  	 12.4
	  	 Shared Liability
	  	 77

	 	  	 12.5
	  	 Indemnification Procedure
	  	 77

	 	  	 12.6
	  	 Cost of Enforcement
	  	 78

	 	  	 12.7
	  	 Limitation on Damages
	  	 78

	 	  	 12.8
	  	 Insurance
	  	 79

	 13.
	  	 	  	 TERM; TERMINATION; ADDITIONAL RIGHTS.
	  	 79

	 	  	 13.1
	  	 Term
	  	 79

	 	  	 13.2
	  	 Termination for Cause
	  	 79

	 	  	 13.3
	  	 Additional Termination Rights by Endo
	  	 80

	 	  	 13.4
	  	 Termination in Connection With Additional Studies
	  	 82

	 	  	 13.5
	  	 Termination in Connection with Bankruptcy
	  	 83

	 	  	 13.6
	  	 Effect of Expiration or Termination
	  	 83

	 	  	 13.7
	  	 Additional Rights
	  	 84

	 	  	 13.8
	  	 Nature of Licenses
	  	 85

	 	  	 13.9
	  	 Accrued Rights; Surviving Obligations
	  	 85

	 14.
	  	 	  	 FORCE MAJEURE.
	  	 85

	 	  	 14.1
	  	 Events of Force Majeure
	  	 85

	 15.
	  	 	  	 ENDO'S RIGHT TO CURE ON BEHALF OF DURECT.
	  	 86

	 	  	 15.1
	  	 Endo's Right to Cure
	  	 86

	 16.
	  	 	  	 MISCELLANEOUS.
	  	 86

	 	  	 16.1
	  	 Relationship of Parties
	  	 86

	 	  	 16.2
	  	 Assignment
	  	 87

	 	  	 16.3
	  	 Books and Records
	  	 87

	 	  	 16.4
	  	 Further Actions
	  	 87

	 	  	 16.5
	  	 Notice
	  	 87

	 	  	 16.6
	  	 Use of Name
	  	 88

	 	  	 16.7
	  	 Public Announcements
	  	 88

	 	  	 16.8
	  	 Waiver
	  	 88

	 	  	 16.9
	  	 Compliance with Law
	  	 89

	 	  	 16.10
	  	 Severability
	  	 89

	 	  	 16.11
	  	 Amendment
	  	 89

	 	  	 16.12
	  	 Governing Law
	  	 89

	 	  	 16.13
	  	 Arbitration
	  	 89

	 	  	 16.14
	  	 Entire Agreement
	  	 91

	 	  	 16.15
	  	 Parties in Interest
	  	 92

	 	  	 16.16
	  	 No Third Party Beneficiaries
	  	 92

	 	  	 16.17
	  	 Descriptive Headings; Certain Terms
	  	 92

	 	  	 16.18
	  	 Fees and Payments
	  	 92

	 	  	 16.19
	  	 Counterparts
	  	 92

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-iii- 

 

	 Exhibit A
	  	 Fully Burdened Manufacturing Costs

	 Exhibit B
	  	 Development Costs

	 Exhibit C
	  	 Examples of Development Expenses

	 Exhibit D
	  	 DURECT Trademarks

	 Exhibit E
	  	 Endo Trademarks

	 Exhibit F
	  	 DURECT New Products and Related Products Development Projects as of Effective Date

	 Exhibit G
	  	 Patents

	 Exhibit H
	  	 Initial Members of JEC

	 Exhibit I
	  	 Initial Members of PDC

	 Exhibit J
	  	 Initial Members of JCC

	 Exhibit K
	  	 Initial Members of JMC

	 Exhibit L
	  	 Initial Alliance Managers

	 Exhibit M
	  	 Examples of Calculation of Distribution Fee

	 Exhibit N
	  	 DURECT Activities

	 Exhibit O
	  	 Common Stock Purchase Agreement

	

 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
-iv- 

DEVELOPMENT, COMMERCIALIZATION AND SUPPLY LICENSE AGREEMENT 
 
THIS DEVELOPMENT, COMMERCIALIZATION AND SUPPLY LICENSE
AGREEMENT (this “Agreement”), effective as of November 8, 2002 (“Effective Date”), is entered into by and between DURECT Corporation, a corporation organized and existing under the laws of the State of Delaware,
having offices located at 10240 Bubb Road, Cupertino, CA 95014 (“DURECT”), and Endo Pharmaceuticals Inc., a corporation organized under the laws of the State of Delaware, having offices located at 100 Painters Drive, Chadds Ford, PA
19317 (“Endo”). 
 
PRELIMINARY
STATEMENTS 
 
A.    DURECT
owns rights in and to the product known as the CHRONOGESIC® (sufentanil) Pain Therapy System currently under
development by DURECT. 
 
B.    Endo desires to obtain a license for commercialization rights to such product in the Territory, and DURECT desires to grant such license for commercialization rights in the Territory to Endo. 
 
C.    DURECT and Endo wish to enter into
this Agreement to specify the rights and obligations of the parties with respect to the license for commercialization of the product granted herein, including the rights and obligations of the parties with respect to the development, manufacture and
commercialization of such product in the Territory. 
 
NOW THEREFORE, in consideration of the mutual covenants and agreements provided herein, the parties hereby agree as follows: 
 

	1.	 	DEFINITIONS. 

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

 
“Accelerated Arbitration
Provisions” shall have the meaning assigned to such term in Section 16.13(b). 
 
“Acquiring Party” shall have the meaning assigned to such term in Section 3.6. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
“Affiliate” shall mean a corporation or any other entity that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the designated party, but only
for so long as the relationship exists. 
 
“Agreement” shall have the meaning assigned to such term in the introductory paragraph. 
 
“Alliance Manager” shall have the meaning assigned to such term in Section 2.8. 
 
“ALZA” shall mean ALZA Corporation and any
successor of ALZA Corporation to, or assignee of ALZA Corporation of, the ALZA Agreement, in whole or in part. 
 
“ALZA Agreement” shall mean that certain Third Amended and Restated Development and Commercialization Agreement entered
into by DURECT and ALZA effective October 1, 2002, as amended and modified from time to time. 
 
“Audited Party” shall have the meaning assigned to such term in Section 7.4. 
 
“Auditing Party” shall have the meaning assigned to such term in Section 7.4. 
 
“Bankruptcy Case” shall mean a bankruptcy
case (whether for liquidation or reorganization) under the Bankruptcy Laws with respect to DURECT (or its successor or assignee) or any of their respective Affiliates. 
 
“Bankruptcy Laws” shall mean Title 11 of the United States Code, 11 U.S.C.  ̈ 101-1330, as it may be amended from time to time, any successor statute or any applicable state or foreign laws relating to bankruptcy,
dissolution, liquidation, winding up or reorganization. 
 
“Bankruptcy Rejection” shall mean the entry of an order in a Bankruptcy Case authorizing the rejection of this Agreement, the ALZA Agreement or a Third Party Manufacturing Agreement, or any material portion of any
such agreement, by DURECT (or its successor or assignee), as debtor-in-possession or by its bankruptcy trustee or any other Person authorized to exercise rejection rights under 11 U.S.C.  ̈ 365 or any other successor statute; provided, however, that nothing in this Agreement shall be deemed an acknowledgment by either party hereto that this Agreement,
the ALZA Agreement or a Third Party Manufacturing Agreement may be rejected under the Bankruptcy Laws. 
 
“Breaching Party” shall have the meaning assigned to such term in Section 13.2. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
2 

 
“Canada” shall have the meaning assigned to such term in Section 3.1(c). 
 
“cGMP” shall mean current Good Manufacturing Practice as defined in Parts 210 and 211 of Title 21 of the U.S. Code of
Federal Regulations, as may be amended from time to time, or any successor thereto. 
 
“Committee” shall mean any of the JEC, the PDC, the JCC, and the JMC and, when used in the plural, shall mean all of them or more than one of them, as the case may be. 
 
“Commercialization” or
“Commercialize” shall mean the ongoing process and activities generally engaged in by a company marketing life-science products to establish and maintain a nationwide presence for a product, including offering for sale, selling,
marketing, promoting, distributing, importing and exporting such product. 
 
“Common Stock Purchase Agreement” shall have the meaning assigned to such term in Section 6.7. 
 
“Complaining Party” shall have the meaning assigned to such term in Section 3.5. 
 
“Confidential Information” shall have the
meaning assigned to such term in Section 10.3. 
 
“Control” shall mean ownership of shares of stock having at least 50% of the voting power entitled to vote for the election of the directors in the case of a corporation, and at least 50% of the interests in profits
in the case of a business entity other than a corporation. 
 
“Co-Owned Trademarks” shall have the meaning assigned to such term in Section 3.4(f). 
 
“Critical Issue” shall mean any matter that is subject to the decision-making authority of any Committee that would have
a material adverse consequence to the timing of development, development, manufacture or Commercialization of the Product, Finished Product or Implanter. 
 
“Current Forecast” shall have the meaning assigned to such term in Section 8.3. 
 
“Damages” shall have the meaning assigned to
such term in Section 12.2. 
 
“Development
Budget” shall have the meaning assigned to such term in Section 4.3(a), as may be amended from time to time. 
 
“Development Costs” shall mean the fully allocated costs of performing the Development Program as calculated in
accordance with Exhibit B, excluding any DURECT Activities Costs. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
3 

 
“Development Plan” shall mean the definitive development plan approved by the PDC pursuant to Section 4.3(a) as amended from time to time pursuant to Section 4.3(a). 
 
“Development Program” shall mean the
activities undertaken under this Agreement for developing and obtaining regulatory approval to Commercialize the Product in the Territory, excluding any DURECT Activities. 
 
“Dispute” shall have the meaning assigned to such term in Section 16.13(a). 
 
“Distribution Fee” shall mean the fees to be
paid by Endo to DURECT pursuant to Section 6.2 in consideration for the rights granted to Endo by DURECT with respect to the Product in the Territory. 
 
“DURECT” shall have the meaning assigned to such term in the introductory paragraph. 
 
“DURECT Activities” shall mean those
development activities to be performed by, and that are the sole responsibility of, DURECT with respect to the Product (excluding line extensions of the Product) that are outside the Development Program and that are described in Exhibit N attached
hereto. 
 
“DURECT Activities
Costs” shall mean DURECT’s fully allocated costs associated with or relating to the performance of the DURECT Activities as calculated in accordance with Exhibit B. 
 
“DURECT Common Stock” shall have the meaning assigned to such term in Section 6.7.

 
“DURECT Trademarks” shall mean
the trademarks set forth on Exhibit D hereto (as such exhibit may be amended or supplemented from time to time). 
 
“Effective Date” shall mean the date set forth in the introductory paragraph. 
 
“Endo” shall have the meaning assigned to
such term in the introductory paragraph. 
 
“Endo Trademarks” shall mean the trademarks set forth on Exhibit E hereto (as such exhibit may be amended or supplemented from time to time). 
 
“Estimated Required Capacity” shall have the meaning assigned to such term in Section 8.12.

 
“Exercising Party” shall have
the meaning assigned to such term is Section 13.7. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
4 

 
“Expedited Rules” shall have the meaning assigned to such term in Section 16.13(b). 
 
“FDA” shall mean the United States Food and Drug Administration (and, as applicable, the Canadian equivalent), or any
successor thereto. 
 
“Field”
shall mean all pharmaceutical applications for human health. 
 
“Final FDA Approval” shall have the meaning assigned to such term in Section 6.1. 
 
“Finished Product” shall mean the Product in ready-for-sale form, including any product labeling or other package inserts
or materials required by the applicable Regulatory Authority and approved by the JCC and the PDC. 
 
“First Commercial Sale” shall mean the first sale of a Product to a Third Party by Endo or its Affiliates, Sublicensees
or designees in the Territory after all Registrations required to permit such sale have been granted, or such sale is otherwise permitted, by the Regulatory Authority in the Territory. 
 
“First Refusal Notice” shall have the meaning assigned to such term in Section 3.7.

 
“First Trial” shall have the
meaning assigned to such term in Section 4.6(c). 
 
“Force Majeure” shall have the meaning assigned to such term in Section 14.1. 
 
“Fully Burdened Manufacturing Cost” shall mean DURECT’s fully allocated cost for manufacturing Product for use in
the Development Program and in connection with this Agreement as calculated in accordance with Exhibit A. 
 
“GAAP” shall mean generally accepted accounting principles in the United States, consistently applied by the Party at
issue. 
 
“Governmental Entity”
shall mean any United States domestic (federal or state) or foreign court, commission or governmental, regulatory or administrative body, board, bureau, agency, instrumentality, authority or tribunal or any subdivision thereof. 
 
“Implanter” shall mean the Product implanter.

 
“Implant Kit” shall mean
separate implant materials for use in administering the Product such as syringes, gloves, gauze pads and other materials that may be either sold separately from the Product or bundled with the Product in the form of a kit, at the discretion of the
JCC should 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
5 

the JCC decide to Commercialize such kit hereunder pursuant to Section 2.3(b)(xviii). The Implant Kit shall not include the Product or
Implanter. 
 
“Inability to
Supply” shall have the meaning assigned to such term in Section 8.11(b). 
 
“IND” shall mean an Investigational New Drug Application filed with the FDA (or as applicable, Canadian equivalent) for authorization to commence clinical trials in a country in the
Territory. 
 
“Indemnified Party”
shall have the meaning assigned to such term in Section 12.5. 
 
“Indemnifying Party” shall have the meaning assigned to such term in Section 12.5. 
 
“Infringement” shall have the meaning assigned to such term in Section 9.3(a). 
 
“Initial Regulatory Filing” shall mean the
completed and submitted initial Registration Application for the Product with the FDA. 
 
“Intellectual Property Rights” shall mean patents, copyrights, trade secrets, proprietary know-how and similar rights of any type (excluding trademarks) under the laws of any
Governmental Entity, including all applications and registrations relating to any of the foregoing. 
 
“Inventions” shall mean any Technical Information relating to the Product, Finished Product or Implanter (including its
components, and all uses and methods or manufacture thereof) developed or acquired by either Party and/or its Affiliates or subcontractors (or jointly by any of the foregoing) thereof arising out of or in connection with the performance of this
Agreement, during the term of this Agreement. 
 
“Joint Commercialization Committee” or “JCC” shall have the meaning assigned to such term in Section 2.3(a). 
 
“Joint Executive Committee” or “JEC” shall have the meaning assigned to such term in Section 2.1(a).

 
“Joint Manufacturing Committee”
or “JMC” shall have the meaning assigned to such term in Section 2.4(a). 
 
“Long-Term Inability to Supply” shall have the meaning assigned to such term in Section 8.11(d). 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
6 

 
“Manufacturing Standards” shall mean, with respect to the Product, Finished Product and Implanter, cGMP and such additional manufacturing specifications or standards as may be established by the JMC from time to
time. 
 
“Marketing Budget” shall
have the meaning assigned to such term in Section 5.2, as may be amended from time to time. 
 
“Marketing Plan” shall mean the definitive marketing plan approved by the JCC pursuant to Section 5.2 as amended from time to time pursuant to Section 5.2. 
 
“Minimum Payments” shall have the meaning set
forth in Section 6.3 hereof. 
 
“Minimum
Payment Year” shall mean the period of four consecutive calendar quarters beginning with the first day of the calendar quarter following the calendar quarter during which all necessary regulatory approvals to market the Product in the
United States of America have been received. 
 
“NDA” shall mean a “New Drug Application,” “Product License Application,” or other application for approval to market a product submitted to the FDA (and, as applicable, the Canadian equivalent),
as amended or supplemented from time to time. 
 
“NDA Filing Date” shall have the meaning assigned to such term in Section 4.1(a). 
 
“Net Sales” shall mean the amounts invoiced on sales of a Product or Finished Product by Endo and its Affiliates,
Sublicensees or designees to Third Parties in bona fide arms-length transactions, less the following deductions actually allowed by Endo, its Affiliates, Sublicensees or designees and taken by such Third Parties and not otherwise recovered by or
reimbursed to Endo, its Affiliates, Sublicensees or designees: (i) trade, cash and quantity discounts and other customary discounts; (ii) taxes or government charges levied on the sale of Product or Finished Product to the extent added to the sales
price and set forth separately as such in the amount invoiced; (iii) amounts repaid or credited by reason of rejections, chargebacks, defects or returns or because of rebates or retroactive price reductions; and (iv) delivery charges (including
transportation and insurance costs) actually included in the sales invoiced, all as determined in accordance with GAAP. Net Sales shall not include (i) the prices charged for separate products other than the Product, such as the Implanter and, if
Commercialized hereunder, the Implant Kit, 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
7 

and (ii) sales or transfer of Product or Finished Product between Endo and its Affiliates, Sublicensees or designees; provided, however, that
Net Sales shall be deemed to include the amount or fair market value of any consideration received by Endo or its Affiliates that can be attributable to a sale of a Product or Finished Product, whether such consideration is in cash or payments in
kind. 
 
“New Product” shall mean
any product under development by DURECT or proposed to be developed by DURECT which comprises [* * *], excluding the following: (i) the Product and any Related Product; and (ii) any product (or component thereof) which manufacture, use or
sale is covered by Intellectual Property Rights owned by a Third Party which but for a license from such Third Party would preclude DURECT from the manufacture, use or sale thereof and for which DURECT does not have a right of sublicense to Endo or
its Affiliates. The New Products in existence as of the Effective Date are listed on Exhibit F hereto. 
 
“Non-Acquiring Party” shall have the meaning assigned to such term in Section 3.6(a) 
 
“Non-Breaching Party” shall have the meaning
assigned to such term in Section 13.2. 
 
“Non-Performing Party” shall have the meaning assigned to such term in Section 3.5. 
 
“Party” shall mean DURECT or Endo, as the case may be, and, when used in the plural, shall mean DURECT and Endo.

 
“Patents” shall mean the
patents and patent applications set forth on Exhibit G, together with any patents that may issue therefrom in the Territory, and any other patents or patent applications in the Territory owned by or licensed by a Third Party to DURECT or its
Affiliates (with rights to sublicense) during the term of this Agreement to the extent relating to, derived from or useful for the manufacture, use, or sale of the Product, Finished Product or Implanter in the Field in the Territory, including any
and all extensions, renewals, continuations, continuations-in-part, divisions, patents-of-additions, reissues, supplementary protection certificates or foreign counterparts of any of the foregoing. 
 
“Person” shall mean an individual or a
corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
8 

 
“Placebo-Controlled Studies” shall mean DURECT’s placebo-controlled studies of the Product currently known as [* * *] and [* * *] in the Summary Development Plan. 
 
“Post-Registration Plan” shall have the
meaning assigned to such term in Section 4.4. 
 
“Product” shall mean the pharmaceutical product in which DURECT owns rights and currently is known as the CHRONOGESIC® (sufentanil) Pain Therapy System which is intended to deliver sufentanil systemically at the current doses of 3.3, 6.7, 10 or 13.3 micrograms per hour for a period of 90 days, including all line
extensions of the Product (including those that provide for different dosage strengths or different duration of delivery of sufentanil). The Product shall not include the Implanter or Implant Kit. 
 
“Product Development Committee” or
“PDC” shall have the meaning assigned to such term in Section 2.2(a). 
 
“Registration” shall mean, with respect to a country in the Territory, final approval of the Registration Application for the Product filed in such country in the Territory.

 
“Registration Application”
shall mean an NDA under the United States Federal Food, Drug and Cosmetic Act (and, as applicable, the Canadian equivalent) and the regulations promulgated thereunder, as all may be amended or supplemented from time to time. 
 
“Regulatory Authority” shall mean the FDA
(and, as applicable, the Canadian equivalent), and any health regulatory authorities in the Territory that hold responsibility for granting regulatory marketing approval for the Product in the Territory, and any successor(s) thereto. 
 
“Regulatory Data” shall mean the medical,
toxicological, pharmacological and clinical data included within Technical Information to the extent necessary to, required for, or included in any Governmental Entity filing to obtain or maintain regulatory approval to market a Product, Finished
Product and Implanter in the Territory. 
 
“Regulatory Documentation” shall mean all submissions to Governmental Entities, including clinical studies, tests, and biostudies, relating to the Product, Finished Product and Implanter, including all INDs and NDAs,
as well as all correspondence with Governmental 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
9 

Entities (registration and licenses, regulatory drug lists, advertising and promotion documents), adverse event files, complaint files,
manufacturing records and inspection reports. 
 
“Rejection Notice” shall have the meaning assigned to such term in Section 6.6(a). 
 
“Related Product” shall mean any product which comprises [* * *], excluding the Product. The Related Products in
existence as of the Effective Date are listed on Exhibit F hereto. 
 
“Responding Party” shall have the meaning assigned to such term in Section 13.7. 
 
“Sales Projections” shall have the meaning assigned to such term in Section 6.3. 
 
“Short-Term Inability to Supply” shall have
the meaning assigned to such term in Section 8.11(c). 
 
“Specifications” shall mean the specifications for the Product, Finished Product, Implanter or, if Commercialized hereunder, the Implant Kit as agreed upon by DURECT and Endo, considering the regulatory requirements
in each country of the Territory, as may be amended from time to time. 
 
“Sublicense” shall have the meaning assigned to such term in Section 3.1(b). 
 
“Sublicensee” shall have the meaning assigned to such term in Section 3.1(b). 
 
“Summary Development Plan” shall have the
meaning assigned to such term in Section 4.3(a). 
 
“System” shall mean a drug delivery system which includes and is contained within an implantable (or externally worn) osmotic pump intended to function by releasing an active agent or agents on a controlled basis.
The term “System” shall include all materials, technology and attributes contained within, or incorporated in, the osmotic pump (other than the active drug itself) and shall include the formulation and stabilization of a therapeutic agent
(such as the active drug) in the System. 
 
“Technical Information” shall mean know-how, trade secrets, formulations, inventions, data (including Regulatory Data and Regulatory Documentation), technology, processes and information necessary or useful to the
Product, Finished Product, Implanter and/or the 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
10 

Development Program, which a Party has the lawful and contractual right to disclose to the other Party, and any and all Intellectual Property
Rights therein and thereto. Technical Information shall include, without limitation, processes and analytical methodology used in development, testing, analysis and manufacture, and medical, clinical, toxicological and other scientific data.
Notwithstanding the foregoing, “Technical Information” shall not include (i) marketing information, know-how, trade secrets or data generated by Endo, in each case to the extent not relating specifically to the Product, Finished Product or
Implanter, or (ii) trademarks. 
 
“Termination Event” shall have the meaning assigned to such term in Section 13.2. 
 
“Territory” shall mean, as the case may be, (i) the United States of America, including its possessions, protectorates
and territories and, (ii) if added to the Territory in accordance with Section 3.1(c), Canada. 
 
“Testing Methods” shall have the meaning assigned to such term in Section 8.7(c). 
 
“Third Party” shall mean any Person who or which is neither a Party nor an Affiliate of a Party. 
 
“Third Party Manufacturer” shall have the
meaning assigned to such term in Section 8.15(a). 
 
“Third Party Manufacturing Agreement” shall have the meaning assigned to such term in Section 8.15(a). 
 
“Third Party Manufacturing Plan” shall have the meaning assigned to such term in Section 8.15(a). 
 
“Transfer Price” shall have the meaning
assigned to such term in Section 8.6(a). 
 
“Trial Commencement Date” shall have the meaning assigned to such term in Section 4.6(c). 
 
“Undertaking” shall have the meaning assigned to such term in Section 6.6(c). 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
11 

 

	2.	 	MANAGEMENT. 

 
2.1 Joint Executive Committee. 
 
(a) Members; Officers. The Parties hereby establish a joint executive committee (the “Joint Executive Committee”
or “JEC”), which shall consist of up to eight members with an equal number of members from each of DURECT and Endo. The initial members of the JEC are set forth on Exhibit H, as may be amended by the designating Party from time to time.
Representatives of the JEC shall be employees of the respective Party. Each of DURECT and Endo may replace any or all of its representatives on the JEC at any time upon written notice to the other in accordance with Section 16.5 of this Agreement.
Any member of the JEC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JEC. DURECT and Endo each may, in its discretion, invite non-member representatives that are
employees (unless otherwise agreed to in writing by the Parties) of such Party to attend meetings of the JEC. The JEC shall be co-chaired by a representative of each of DURECT and Endo, as such representative may be changed by the designating Party
at any time. The co-chairpersons shall appoint a secretary of the JEC, and such secretary shall serve for such term as designated by the co-chairpersons. The initial co-chairpersons and the initial secretary are designated on Exhibit H.

 
(b) Responsibilities. The JEC shall
perform the following functions: 
 
(i) manage and oversee the performance of the Parties pursuant to the terms of this Agreement; 
 
(ii) at least twice annually, review the Development Budget; 
 
(iii) at each meeting of the JEC, review a
comparison of actual expenses to the budgeted expenses for the year-to-date, as current as practicable to a date immediately prior to the date of the meeting, including manufacturing, research and development, and marketing expenses; 
 
(iv) at each meeting, as applicable, review
a comparison of the Product, Finished Product and Implanter development status with the timelines set forth in the 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
12 

Development Plan, or, if appropriate, review a comparison of Product, Finished Product and
Implanter sales in the Territory with the Sales Projections; 
 
(v) review and evaluate the progress of the other Committees; 
 
(vi) review and approve “go/no-go” decisions and other matters referred to the JEC by any other Committee;

 
(vii) in accordance with the
procedures established in Section 2.1(d), resolve disputes, disagreements and deadlocks unresolved by the other Committees; 
 
(viii) determine, in response to the PDC’s findings regarding a material delay of an Initial Regulatory Filing,
whether or not it is in the best interest of the Parties to go forward with the conduct of any additional clinical studies required by the FDA; 
 
(ix) review and adopt procedures, pursuant to Section 8.13 and based on recommendations from the JCC and JMC, regarding
the manufacture and sale of Implanters; 
 
(x) determine, pursuant to Section 12.8, whether insurance amounts for the Parties should be increased, or whether, and to what extent, the Parties may self-insure; 
 
(xi) determine, in accordance with Section 3.1(c) whether Canada shall be included in the
Territory; 
 
(xii) establish, at
the time deemed appropriate by the JEC, the JCC and the JMC; 
 
(xiii) determine when the PDC should meet to discuss and approve the definitive Development Plan for the Product in accordance with Section 4.3(a); 
 
(xiv) determine when Endo should develop,
finalize and review at the JCC a Marketing Plan as contemplated by Section 5.2; and 
 
(xv) have such other responsibilities as may be assigned to the JEC pursuant to this Agreement or as may be mutually
agreed upon by the Parties from time to time. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
13 

 
(c)
Meetings. The JEC shall meet in person, by video teleconference or by telephone at least once every six months during every calendar year, and more frequently as DURECT and Endo deem appropriate or as required to resolve disputes,
disagreements or deadlocks in the other Committees, on such dates, and at such places and times, as the Parties shall agree. Meetings of the JEC that are held in person shall alternate between the offices of DURECT and Endo, or such other place as
the Parties may agree. The members of the JEC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate. 
 
(d) Decision-making. 
 
(i) The JEC may make decisions with respect
to any subject matter that is subject to the JEC’s decision-making authority and functions as set forth in Section 2.1(b). Except as specified in Section 2.1(d)(ii) or (iii), all decisions of the JEC shall be made by unanimous vote or written
consent, with DURECT and Endo each having, collectively, one vote in all decisions. The JEC shall use reasonable best efforts to resolve the matters within its roles and functions or otherwise referred to it. 
 
(ii) With respect to all matters that are
subject to the JEC’s decision-making authority and are not the subject of Section 3.5, 8.11(a), 8.11(e), 8.11(f) or 13.3(a), if the JEC cannot reach consensus within 10 business days after it has met and attempted to reach such consensus, the
matter shall be referred on the eleventh business day: 
 
(A) if the matter is the subject of a deadlock arising in the PDC and is not the subject of Section 4.7 or 4.8, to the co-chairperson of the JEC designated by DURECT for resolution, provided that any decision made by
the DURECT-designated co-chairperson may not, when taken together with all other such decisions, increase or decrease the Development Budget in the aggregate by more than [* * *]; provided, further, that Endo shall have a right,
upon written notice to DURECT, to challenge any JEC decision with respect to Critical Issues pursuant to Section 2.1(d)(iii); 
 

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been filed separately with the SEC. 
14 

 
(B) if the matter is the subject of a deadlock arising in the JCC, to the co-chairperson of the JEC designated by Endo for resolution, provided that any decision made by the Endo-designated co-chairperson may not, when taken
together with all other such decisions, decrease the Marketing Budget for any [* * *] by more than $[* * *] from the previously approved JEC budget for such year; provided, further, that DURECT shall have a right, upon
written notice to Endo, to challenge any JEC decision with respect to Critical Issues pursuant to Section 2.1(d)(iii); 
 
(C) except as provided in Sections 8.11(a), (e) and (f), if the matter is the subject of a deadlock arising in the JMC, to
the co-chairperson of the JEC designated by DURECT for resolution, provided that any decision made by the DURECT-designated co-chairperson may not, when taken together with all other such decisions, increase the Fully Burdened Manufacturing
Costs for any consecutive four-quarter period more than [* * *] of the prior four-quarter period; provided, further, that Endo shall have a right, upon written notice to DURECT, to challenge any JEC decision with respect to Critical
Issues pursuant to Section 2.1(d)(iii). 
 
In the event that the
co-chairperson designated to resolve a dispute under this Section 2.1(d)(ii) is not immediately available, then such matter shall be referred to the senior executive officer of such Party in the area to which the matter relates and who has been
designated by such Party for such resolution. 
 
(iii) In the event the JEC does not resolve, or DURECT or Endo challenge, a Critical Issue pursuant to Section 2.1(d)(ii), then such matters shall be resolved pursuant to the Accelerated Arbitration Provisions of Section 16.13(b). In
the event the JEC does not resolve any other matters pursuant to Section 2.1(d)(ii) and such matters fall into the class of disputes that may be arbitrated by the Parties in accordance with Section 16.13, then such matters shall be resolved pursuant
to Section 16.13(a). 
 
(iv) For
all purposes under this Agreement, any decision made pursuant to Section 2.1(d)(i) and (ii) shall be deemed to be the decision of the JEC. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
15 

 
2.2 Product
Development Committee. 
 
(a) Members;
Officers. The Parties hereby establish a product development committee (the “Product Development Committee” or “PDC”), which shall consist of representatives from each of DURECT and Endo, up to four members from
each Party on such Committee unless otherwise agreed to by the Parties in writing. The initial representatives on the PDC are set forth on Exhibit I, as may be amended by the designating Party from time to time. Each of DURECT and Endo may replace
any or all of its representatives on the PDC at any time upon written notice to the other in accordance with Section 16.5 of this Agreement. Such representatives shall be employees of each such Party, and those representatives of each such Party
shall, individually or collectively, have expertise in pharmaceutical drug development, regulatory matters, marketing, clinical studies, and/or other expertise to the extent relevant. Any member of the PDC may designate a substitute with due
authority to temporarily attend and perform the functions of that member at any meeting of the PDC. DURECT and Endo each may, in its discretion, invite non-member representatives that are employees (unless otherwise agreed to in writing by the
Parties) of such Party to attend meetings of the PDC. The PDC shall be chaired by a representative of DURECT. The secretary of the PDC shall be a representative of DURECT. 
 
(b) Responsibilities. The PDC shall not oversee, review, approve or evaluate any of the DURECT
Activities. The PDC shall perform the following functions: 
 
(i) approve and oversee the implementation of the Development Plan; 
 
(ii) at least once each calendar year by a date not later than [* * *], review and approve any amendments or
modifications of the Development Plan; 
 
(iii) at least twice annually, review the Development Budget; 
 
(iv) at each meeting of the PDC, review a comparison of actual development and regulatory expenses to the budgeted expenses in the Development Budget for the year-to-date, as current as practicable to
a date immediately prior to the date of the meeting; 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
16 

 
(v) review and evaluate progress of the development activities; provided that the PDC shall not have authority to make any determination that any Party is in breach of this Agreement; 
 
(vi) review and approve all compassionate
use of the Product, Finished Product and Implanter; 
 
(vii) review the publication strategy together with the JCC; 
 
(viii) review and recommend to the JEC “go/no-go” decisions; 
 
(ix) in connection with clinical trials,
approve protocols, trial budget and trial design; 
 
(x) review Regulatory Data and Regulatory Documentation to be provided by DURECT regarding all Product and Implanter development activities outside the Territory (to the extent DURECT is permitted by Third Parties, if
applicable, to do so); 
 
(xi)
review and, if appropriate, approve development plans, utilizing an approach similar to the Development Plan, with respect to line extensions of the Product or Related Products; provided that the PDC shall not approve plans to develop at any
one time more than [* * *] such products without the written authorization of DURECT and Endo; 
 
(xii) in good faith consider potential additional line extensions of the Product and Related Products in addition to
those considered pursuant to the foregoing clause (x); 
 
(xiii) coordinate the allocation of responsibilities among the Parties with respect to development of the Product, Finished Product and Implanter based on the Development Plan; 
 
(xiv) consult with the JMC regarding
adoption of a Third Party Manufacturing Plan pursuant to Section 8.15; 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
17 

 
(xv) determine which portions of protocols, regulatory filings, correspondence to or from regulatory authorities etc., should be redacted before being shared with ALZA; and 
 
(xvi) have such other responsibilities as
may be assigned to the PDC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time. 
 
(c) Meetings. The PDC shall meet in person, by video teleconference or by telephone at least once every month, and more or less
frequently as DURECT and Endo deem appropriate or as reasonably requested by either such Party, on such dates, and at such places and times, as such Parties shall agree. Meetings of the PDC that are held in person shall alternate between the offices
of DURECT and Endo, or such other place as such Parties may agree. The members of the PDC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed
necessary or appropriate. 
 
(d)
Decision-making. Endo and DURECT have chartered the PDC with a belief that vigorous interaction and cooperation between the Parties are essential for the success of the Product. Each Party shall use all reasonable efforts to reach consensus
decisions at the Committee level. The PDC may make decisions with respect to any subject matter that is subject to the PDC’s decision-making authority and functions as set forth in Section 2.2(b). All decisions of the PDC shall be made by
unanimous vote or written consent, with DURECT and Endo each having, collectively, one vote in all decisions. If, with respect to any matter that is subject to the PDC’s decision-making authority, after all reasonable efforts to reach consensus
have been exhausted, the PDC cannot reach consensus within 10 business days after it has first met and attempted to reach such consensus, the matter shall be referred on the eleventh business day to the JEC for resolution. For all purposes under
this Agreement, any decision made pursuant to this Section 2.2(d) shall be deemed to be the decision of the PDC. 
 
2.3 Joint Commercialization Committee. 
 
(a) Members; Officers. Pursuant to Section 2.1(b)(xii), the JEC shall establish a joint commercialization committee (the
“Joint Commercialization Committee” or “JCC”), which 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
18 

shall consist of representatives from each of DURECT and Endo, up to six members from Endo and up to two members from DURECT unless otherwise
agreed to by the Parties in writing. The initial members of the JCC are set forth on Exhibit J, as may be amended by the Designating Party from time to time. Each of DURECT and Endo may replace any or all of its representatives on the JCC at any
time upon written notice to the other in accordance with Section 16.5 of this Agreement. Such representatives shall be employees of each such Party, and those representatives of each such Party shall, individually or collectively, have expertise in
marketing and sales of pain products. Any member of the JCC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JCC. DURECT and Endo each may, in its discretion, invite
non-member representatives that are employees (unless otherwise agreed to in writing by the Parties) of such Party to attend meetings of the JCC. The JCC shall be chaired by a representative of Endo. The secretary of the JCC shall be a
representative of Endo. 
 
(b)
Responsibilities. The JCC shall perform the following functions: 
 
(i) review and approve the annual Marketing Plan developed by Endo; 
 
(ii) oversee the implementation of the Marketing Plans and approve modifications to the Marketing Plan throughout the
year; 
 
(iii) discuss the state
of the markets for the Product in the Territory and opportunities and issues concerning the Commercialization of the Product, including consideration of marketing and promotional strategy, marketing research plans, labeling, Product positioning and
Product profile issues; 
 
(iv)
if applicable under Sections 5.5 and 5.8, oversee and coordinate the sales efforts of Endo and DURECT; 
 
(v) review and approve the Post-Registration Plan, taking into consideration the appropriateness of any development
activities including line extensions, clinical trials for purposes of new indications and Phase IV clinical trials in the context of the overall marketing and promotional strategy for the Product; 
 
(vi) review and direct all indigent care use
of the Product; 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
19 

 
(vii) review and approve Sales Projections in accordance with Section 6.3; 
 
(viii) review, in consultation with the JMC, the efficacy of the forecasting procedure set forth in Section 8.3,
including whether any modifications thereto are necessary following the second anniversary of the First Commercial Sale; 
 
(ix) review data and reports arising from and generated in connection with the Commercialization of the Product, Finished
Product and Implanter, including the Marketing Plan, Marketing Budgets, market research studies, and Product, Finished Product and Implanter sales and prescription trends and sales forecasts; 
 
(x) at each meeting of the JCC, review a
comparison of actual sales and marketing expenses to the budgeted expenses in the relevant Marketing Budget for the year-to-date, as current as practicable to a date immediately prior to the date of the meeting; 
 
(xi) at least once each calendar year by a
date no later than [* * *], review and approve the Marketing Plan as updated by Endo; 
 
(xii) review and approve the general guidelines applicable to the Product to be followed by Endo in its development of
promotional materials and promotional activities to be used by Endo in the promotion of the Product, Finished Product and Implanter (such guidelines to be consistent with the then current Marketing Plan applicable to the Product); 
 
(xiii) evaluate and approve use of any
technical support representatives; 
 
(xiv) review and direct the publication strategy, in consultation with the PDC; 
 
(xv) in consultation with the PDC, review and approve the Specifications for the Finished Product, including the
packaging and related materials, prior to Commercial use; 
 
(xvi) develop3 appropriate procedures, pursuant to Section 8.13 and in consultation with the JMC, regarding the manufacture and sale of Implanters; 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
20 

 
(xvii) review and, if appropriate, approve the supplemental call plan, if any, submitted by DURECT pursuant to Section 5.8; 
 
(xviii) evaluate and determine whether to market and sell an Implant Kit; and 
 
(xix) have such other responsibilities as
may be assigned to the JCC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time. 
 
(c) Meetings. The JCC shall meet in person, by video teleconference or by telephone at least once during every calendar quarter,
and more frequently as DURECT and Endo deem appropriate or as reasonably requested by either such Party, on such dates, and at such places and times, as such Parties shall agree. Meetings of the JCC that are held in person shall alternate between
the offices of DURECT and Endo, or such other place as the Parties may agree. The members of the JCC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence,
as deemed necessary or appropriate. 
 
(d)
Decision-making. Endo and DURECT have chartered the JCC with a belief that vigorous interaction and cooperation between the Parties are essential for the success of the project. Each Party shall use all reasonable efforts to reach consensus
decisions at the Committee level. The JCC may make decisions with respect to any subject matter that is subject to the JCC’s decision-making authority and functions as set forth in Section 2.3(b). All decisions of the JCC shall be made by
unanimous vote or written consent, with DURECT and Endo each having, collectively, one vote in all decisions. If, with respect to any matter that is subject to the JCC’s decision-making authority, after all reasonable efforts to reach consensus
have been exhausted, the JCC cannot reach consensus within 10 business days after it has first met and attempted to reach such consensus, the matter shall be referred on the eleventh business day to the JEC for resolution. For all purposes under
this Agreement, any decision made pursuant to this Section 2.3(d) shall be deemed to be the decision of the JCC. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
21 

 
2.4 Joint
Manufacturing Committee. 
 
(a) Members;
Officers. Pursuant to Section 2.1(b)(xii), the JEC shall establish a joint manufacturing committee (the “Joint Manufacturing Committee” or “JMC”), which shall consist of representatives from each of DURECT and
Endo, up to four members from each Party, unless otherwise agreed to by the Parties in writing. The initial members of the JMC are set forth on Exhibit K, as may be amended by the designating Party from time to time. Each of DURECT and Endo may
replace any or all of its representatives on the JMC at any time upon written notice to the other in accordance with Section 16.5 of this Agreement. Such representatives shall be employees of each such Party with expertise in manufacturing. Any
member of the JMC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JMC. DURECT and Endo each may, in its discretion, invite non-member representatives that are
employees (unless otherwise agreed to in writing by the Parties) of such Party to attend meetings of the JMC. Except as provided in Section 8.11(f), the JMC shall be chaired by a representative of DURECT. The secretary of the JMC shall be a
representative of DURECT. 
 
(b)
Responsibilities. The JMC shall perform the following functions: 
 
(i) oversee and coordinate the manufacturing and supply of Product, Finished Product and Implanters; 
 
(ii) oversee the formulation of the manufacturing strategy for the Product, Finished Product and Implanters, including
bulk drug procurement, formulation, filling and finishing of the Product, Finished Product and Implanters and approve facilities to be used for such manufacture and production; 
 
(iii) approve Manufacturing Standards for the Product, Finished Product and Implanter;

 
(iv) review, in consultation
with the JCC, the efficacy of the forecasting procedure set forth in Section 8.3, including whether any modifications thereto are necessary following the second anniversary of the First Commercial Sale; 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
22 

 
(v) evaluate and determine the existence of a Long-Term Inability to Supply referred to the JMC in accordance with Section 8.11(e); 
 
(vi) reconcile the quality systems of Endo and DURECT, as needed; 
 
(vii) develop appropriate procedures,
pursuant to Section 8.13 and in consultation with the JCC, regarding the manufacture and sale of Implanters; 
 
(viii) in consultation with the PDC, adopt and, as appropriate, amend a Third Party Manufacturing Plan with respect to
identifying and qualifying Third Party Manufacturers pursuant to Section 8.15; 
 
(ix) formulate additional strategies for additional supply of Product, Finished Product and Implanters during the term of this Agreement including establishing additional Third Party Manufacturers
pursuant to Section 8.15 and additional production facilities pursuant to Section 8.12; and 
 
(x) have such other responsibilities as may be assigned to the JMC pursuant to this Agreement or as may be mutually
agreed upon by the Parties from time to time. 
 
(c) Meetings. The JMC shall meet in person, by video teleconference or by telephone at least once during every month, and more or less frequently as DURECT and Endo deem appropriate or as reasonably requested by either such
Party, on such dates, and at such places and times, as such Parties shall agree. Meetings of the JMC that are held in person shall alternate between the offices of DURECT and Endo, or such other place as such Parties may agree. The members of the
JMC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate. 
 
(d) Decision-making. Endo and DURECT have chartered the JMC with a belief that vigorous interaction
and cooperation between the Parties are essential for the success of the Product. Each Party shall use all reasonable efforts to reach consensus decisions at the Committee level. The JMC may make decisions with respect to any subject matter that is
subject to the JMC’s decision-making authority and functions as set forth in Section 2.4(b). All 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 
23 

decisions of the JMC shall be made by unanimous vote or written consent, with DURECT and Endo each having, collectively, one vote in all
decisions. If, with respect to any matter that is subject to the JMC’s decision-making authority, after all reasonable efforts to reach consensus have been exhausted, the JMC cannot reach consensus within 10 business days after it has first met
and attempted to reach such consensus, the matter shall be referred on the eleventh business day to the Joint Executive Committee for resolution. For all purposes under this Agreement, any decision made pursuant to this Section 2.4(d) shall be
deemed to be the decision of the JMC. 
 
2.5
Minutes of Committee Meetings. 
 
(a)
Subject to Section 2.5(b), definitive minutes of all Committee meetings shall be finalized no later than 20 days after the meeting to which the minutes pertain, as follows: 
 
(i) Within 5 days after a Committee meeting, the secretary of such Committee shall prepare
and distribute to all members of such Committee and each Alliance Manager draft minutes of the meeting. Such minutes shall provide a list of any actions, decisions or determinations approved by such Committee and a list of any issues yet to be
resolved, either within such Committee or through the relevant escalation process. 
 
(ii) The Alliance Managers shall then have 5 days after receiving such draft minutes to collect comments thereon from the
members of its Party and provide them to the secretary of such Committee. 
 
(iii) Upon the expiration of such second 5-day period, the Alliance Managers and the secretary of such Committee shall have an additional 10 days to discuss each other’s comments and finalize the
minutes. The Alliance Managers, secretary and chairperson(s) of such Committee shall each sign and date the final minutes. The signature of such chairperson(s), secretary and Alliance Managers upon the final minutes shall indicate each Party’s
assent to the minutes. 
 
(b) If at any time during
the preparation and finalization of Committee meeting minutes, the secretary of such Committee and the Alliance Managers do not agree on any issue with respect to the minutes, such issue shall be resolved as provided in Section 2.2(d), 2.3(d) or
2.4(d), as the case may be. The decision resulting from the foregoing process shall be recorded 

 

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24 

by the secretary in amended finalized minutes for said meeting. All other issues in the minutes that are not subject to the foregoing process
shall be finalized within the 20-day period as provided in Section 2.5(a). 
 
2.6 Term. Each Committee shall exist until the termination or expiration of this Agreement, unless otherwise agreed to by the Parties. 
 
2.7 Expenses. Each Party shall be responsible for all
travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate on, a Committee. 
 
2.8 Alliance Managers. Each of DURECT and Endo shall appoint one employee representative who possesses a general understanding of
clinical, regulatory, manufacturing and marketing issues to act as its respective alliance manager for this relationship (each, an “Alliance Manager”). The initial Alliance Managers are set forth on Exhibit L, as amended by the
designating Party from time to time. Each of DURECT and Endo may replace its respective Alliance Manager at any time upon written notice to the other in accordance with Section 16.5 of this Agreement. Any Alliance Manager may designate a substitute
with due authority to temporarily perform the functions of that Alliance Manager. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the Committees. Each Alliance Manager will also
be responsible for: 
 
(a) coordinating the
relevant functional representatives of the Parties, in developing and executing strategies and plans for the Product, Finished Product and Implanter in an effort to ensure consistency and efficiency within the Territory; 
 
(b) providing a single point of communication for seeking
consensus both internally within the respective Party’s organizations and together regarding key strategy and plan issues; 
 
(c) identifying and raising cross-Party and/or cross-functions disputes to the appropriate Committee in a timely manner; and 
 
(d) planning and coordinating: (i) cooperative efforts in the
Territory; and (ii) internal and external communications. 
 

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25 

 
The Alliance
Managers shall be entitled to attend meetings of any of the Committees, but shall not have, or be deemed to have, any rights or responsibilities of a member of any Committee. Each Alliance Manager may bring any matter to the attention of any
Committee where such Alliance Manager reasonably believes that such matter requires such attention. 
 
3. GRANT OF RIGHTS. 
 
3.1 Rights Granted to Endo. 
 
(a) On the terms and subject to the conditions of this Agreement, DURECT hereby grants to Endo the sole and exclusive right and license to Commercialize the Product and Finished Product (and corresponding Implanters for use
therewith) in the Field in the Territory, including the right to record sales for its own account. Subject to the terms and conditions of this Agreement, DURECT hereby grants to Endo and its Affiliates a sole and exclusive license (with rights to
sublicense subject to Section 3.1(b) below) under: (i) the Patents and (ii) the Technical Information and Inventions including any and all Intellectual Property Rights therein owned by or licensed to DURECT (including any and all of the foregoing
licensed to DURECT pursuant to the ALZA Agreement subject to the terms and conditions therein), whether any of the foregoing are in existence as of the Effective Date or comes into existence during the term of this Agreement solely for use in
connection with Endo’s Commercialization of the Product and Finished Product (and corresponding Implanters for use therewith) in the Field in the Territory and to otherwise exercise Endo’s rights and perform its obligations under this
Agreement. 
 
(b) Endo shall have the right to
appoint any Third Party designee(s) to Commercialize the Product in the Territory alone or in combination with Endo or its Affiliates and sublicense the rights granted to it under Section 3.1(a); provided that in the event that Endo
sublicenses Commercialization rights to the Product to any Third Party in the Territory such that the Third Party has the right to record sales for its own account (such grant of rights shall be deemed a “Sublicense” and such Third
Party grantee shall be deemed a “Sublicensee”), then (i) such Sublicense shall be subject to the prior written approval of DURECT, which approval shall not be unreasonably withheld or delayed, (ii) such sublicense shall be subject
to the terms and conditions of this Agreement, and (iii) the rights of DURECT under this Agreement shall not be prejudiced, reduced or limited in any way as a result of such Sublicense. 
 

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26 

 
(c) No later
than [* * *] after the Effective Date, the PDC shall approve a development plan, utilizing an approach similar to the Development Plan (taking into account the different nature of the Canadian market), to support Registration of the Product
in Canada, its possessions, protectorates and territories (“Canada”) in accordance with Section 4.3. If within [* * *] of the projected filing date of the Registration Application for Canada contained in such Development Plan
for Canada, Endo demonstrates to the reasonable satisfaction of the JEC that it has the capability in place at such time to Commercialize the Product in Canada on a nationwide basis consistent with the level that an established pharmaceutical
company would normally devote to its own product of comparable potential in Canada, then Canada shall, upon approval by the JEC, be included in the Territory. In the event the JEC makes the determination that Endo does not have such required
capability in Canada, then upon such determination, Endo shall have no further rights with respect to the Commercialization of the Product in Canada, and DURECT shall thereafter be free to Commercialize the Product in Canada itself or grant rights
to a Third Party to Commercialize the Product in Canada. 
 
(d) On the terms and subject to the conditions of this Agreement, the rights granted under Section 3.1(a) shall continue until the later of: (A) the fifteenth anniversary of the First Commercial Sale by Endo of the Product or (B)
200th day following the completion of the useful lives of all the Patents (i.e., all such Patents have
expired or been invalidated, for which DURECT shall provide Endo written notice within five days of such occurrence). 
 
(e) On the terms and subject to the conditions of this Agreement, Endo shall have an option, in its sole discretion, to extend [* *
*] the period of the rights granted under Section 3.1(a) by written notice to DURECT given at least [* * *] prior to the expiration of Endo’s rights under Section 3.1(d) on the same terms as contained in this Agreement. 
 
3.2 Exclusivity. During the term of this Agreement,
DURECT and its Affiliates shall not Commercialize, and shall not grant any rights or licenses to any Third Party to develop or Commercialize the Product in the Territory in the Field. 
 
3.3 Activities Outside the Territory. Endo acknowledges that DURECT retains all rights in and to the
Product outside the Territory. Endo and its Affiliates shall not intentionally or knowingly, directly or indirectly, cause Product to be imported or transferred to countries outside 

 

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the Territory for Commercialization outside the Territory. To the extent that Endo becomes aware that any Product is being exported or
transferred from the Territory for Commercialization outside the Territory, Endo shall use reasonable commercial efforts to promptly abate such activity. 
 
3.4 Trademarks; Logos. 
 
(a) DURECT hereby grants Endo with respect to the DURECT Trademarks, and Endo hereby grants DURECT with respect to the Endo Trademarks,
the exclusive license to use such trademarks in the Territory, subject to the provisions of this Agreement and for the term hereof, solely in connection with the manufacture and development (with respect to DURECT) and the marketing, distribution
and sale (with respect to Endo) of Product, Finished Product, Implanters and, if Commercialized hereunder, Implant Kits in the Territory. DURECT shall manufacture and Endo shall market and sell the Finished Product, Implanter and, if Commercialized
hereunder, Implant Kit throughout the Territory under the applicable DURECT Trademarks and Endo Trademarks in the Territory. The use of the DURECT Trademarks by Endo, and the Endo Trademarks by DURECT, shall be subject to the prior review and
approval of the JCC as set forth in this Section 3.4. 
 
(b) At least [* * *] prior to a Party’s first use of the other Party’s trademarks in connection with the Product, Implanter or Implant Kit, such Party shall provide the JCC with samples of such trademark use for
review of the depiction of such trademark (i.e., font, positioning and presentation of such trademark) by the JCC. If no objection is received from the JCC within five business days of receipt by the JCC of such samples, such Party may use such
trademarks in the manner used in the samples submitted to the JCC for review. In the event a Party subsequently decides to make a use of the other Party’s trademarks that materially alters the depiction of any such trademarks previously
provided to and approved by the JCC, such Party shall provide to the JCC new samples of such use for review and approval in accordance with the foregoing approval process. When using the trademarks of the other Party under this Agreement, each Party
undertakes to comply with all laws pertaining to trademark notice requirements in force at any time in the Territory. Each Party agrees that it shall use the other Party’s trademarks in connection with the Product, Implanter or, if
Commercialized hereunder, Implant Kit, as applicable, strictly in accordance with the guidelines, instructions and quality standards issued by 

 

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the JCC from time to time. In formulating such guidelines, instructions and quality standards, the JCC shall give reasonable consideration to
the applicable trademark usage guidelines and similar requirements of each Party in respect of such Party’s trademarks. 
 
(c) Endo acknowledges that DURECT is the owner of the DURECT Trademarks, and DURECT acknowledges that Endo is the owner of the Endo
Trademarks. Endo agrees that all use of the DURECT Trademarks by Endo shall inure to the benefit of and be on behalf of DURECT, and DURECT agrees that all use of the Endo Trademarks shall inure to the benefit of and be on behalf of Endo. Endo and
DURECT each acknowledge that nothing in this Agreement shall give either Party any right, title or interest in the other Party’s trademarks other than the right to use such trademarks in accordance with this Agreement. Endo agrees with respect
to the DURECT Trademarks, and DURECT agrees with respect to the Endo Trademarks, that it will not challenge the title or ownership of the other Party in, or attack or contest the validity of, such trademarks. 
 
(d) DURECT shall use all commercially reasonable efforts to
register and maintain, or cause to be registered and maintained, the DURECT Trademarks (and the trademark CHRONOGESIC® should it become a Co-Owned Trademark pursuant to Section 3.4(f)) in the Territory during the term of this Agreement at DURECT’s sole expense. Endo shall use all commercially reasonable efforts to register and maintain, or
cause to be registered and maintained, the Endo Trademarks and all Co-Owned Trademarks (other than the trademark CHRONOGESIC® should it become a Co-Owned Trademark pursuant to Section 3.4(f)) in the Territory during the term of this Agreement at Endo’s sole expense. 
 
(e) To the extent permitted by law, all labeling, packaging, literature, promotional material and advertising
for any Product, Finished Product, Implanter or Implant Kit to be marketed, distributed or sold in any country in the Territory shall contain DURECT’s name and logo with comparable prominence as Endo’s name and logo. To the extent
practicable, or as required by applicable law to protect the DURECT Trademarks and Endo Trademarks, DURECT and Endo shall include on any material bearing any such trademarks an acknowledgement that the DURECT Trademarks are the property of DURECT
and the Endo Trademarks are the property of Endo. Additionally, at the request of ALZA, the Parties shall cause each Product and Finished Product and its packaging to display prominently, in a manner 

 

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reasonably acceptable to ALZA, an ALZA name and logo, and to identify ALZA as a developer of the technology in such Product. All uses of the
ALZA name and marks on the Product and Finished Product and its packaging shall be subject to ALZA having [* * *] to review and approve such uses. Except as approved by the JCC hereunder, neither Party shall modify, alter, remove, cover or
add to, in any manner whatsoever, any trademark or trademark notice of the other Party that may be affixed or attached to any Product, Finished Product, Implanter or, if Commercialized hereunder, Implant Kit, or used in any labeling, packaging,
literature, promotional material or advertising therefor. 
 
(f) All trademarks selected by the JCC for use in the Territory solely in connection with the Product, Finished Product, Implanter and, if Commercialized hereunder, Implant Kit including the Product name CHRONOGESIC® (if so selected), Product logo, and special promotional or advertising taglines for the Product and Implanter shall
be jointly owned by both DURECT and Endo in the Territory, and shall be deemed for all purposes hereunder “Co-Owned Trademarks”. To the extent that one Party may be deemed to solely own a Co-Owned Trademark prior to such adoption by
the JCC, such Party hereby assigns to the other Party an undivided half-interest in such trademark (including all goodwill associated therewith) effective upon its adoption by the JCC as a Co-Owned Trademark. Co-Owned Trademarks shall be used by the
Parties solely in connection with the Product, Finished Product, Implanter and Implant Kit, and their use by the Parties shall inure to the benefit of and be on behalf of both Parties as joint owners. The Co-Owned Trademarks shall be owned, as
between the Parties, by DURECT outside the Territory. 
 
3.5 Non-Performance. In the event that a Party (“Complaining Party”) believes that the other Party (“Non-Performing Party”) is not adequately performing the obligations and responsibilities
assigned to the other Party under or in connection with this Agreement, including under the Development Plan, Post-Registration Plan and/or Marketing Plan (other than any non-performance by Endo in connection with sales details, which shall be
governed solely by Section 5.8) as relevant, then the Complaining Party shall provide the Non-Performing Party with written notice of such claim including specification of the respects in which the Complaining Party believes the Non-Performing Party
is not meeting such obligations and responsibilities with reasonable particularity. The PDC, JCC, or JMC, as the case may be, shall promptly meet to 

 

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discuss such claims. If the PDC, JCC, or JMC, as the case may be, does not reach a consensus decision within [* * *] of such referral,
then the matter shall be referred to the JEC for resolution, provided that Sections 2.1(d)(ii) and (iii) shall not apply to such matters. If the JEC does not reach consensus decision with respect to any such matter within [* * *] of
such referral, then DURECT and/or Endo may submit the matter to arbitration pursuant to the Accelerated Arbitration Provisions set forth in Section 16.13(b). If a determination is made pursuant to this Section 3.5, by the PDC, JCC, JMC, JEC or the
arbitrators, as the case may be, that the Non-Performing Party has failed to adequately perform such obligations and responsibilities, then the Complaining Party may perform such obligations and responsibilities in lieu of the Non-Performing Party
to the extent it reasonably deems appropriate. The Complaining Party’s performance of such obligations and responsibilities pursuant to this Section 3.5 shall be reasonably consistent with the scope of performance of such obligations and
responsibilities contemplated to be performed by the Non-Performing Party in the Development Plan, Post-Registration Plan and/or Marketing Plan as relevant; provided, however, nothing herein shall be deemed to alter the allocation of
costs between the Parties provided in Sections 4.6 and 5.7, provided further that, at the option of the Complaining Party, the Non-Performing Party shall reimburse the Complaining Party, or have deducted from payments otherwise due the
Non-Performing Party hereunder, [* * *] of all (i) costs that would otherwise be paid by or reimbursed to the Non-Performing Party under this Agreement had the Complaining Party not performed such obligations and responsibilities on behalf of
the Non-Performing Party, and (ii) costs, in addition to those costs set forth in the foregoing clause (i), associated with the development, manufacture and/or Commercialization incurred by the Complaining Party to perform such obligations and
responsibilities on behalf of the Non-Performing Party. The Non-Performing Party shall fully cooperate with the Complaining Party in connection with the Complaining Party’s exercise of its rights hereunder. Any rights provided to the
Complaining Party pursuant to this Section 3.5 shall be in addition to any other rights or remedies available to the Complaining Party under this Agreement (except for Section 5.8, the provisions of which shall be DURECT’s sole remedy
thereunder), at law or in equity. 
 
3.6
Restrictions on Competing Products. 
 
 

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(a) Except as permitted by this Section 3.6 or in conjunction with the other Party under
this Agreement pursuant to Sections 2.2(b)(xi) and (xii), during the term of this Agreement, each Party agrees not to, and to cause its Affiliates not to, directly or indirectly, develop, attempt to develop, actively investigate or Commercialize for
its own account or grant to a Third Party any right to develop or Commercialize a Related Product in the Field in the Territory. In the event that a Party or one of its Affiliates (an “Acquiring Party”) obtains Control of a Third
Party which has developed or Commercialized (and is continuing to produce or sell), or is developing or Commercializing, a Related Product (directly or indirectly), in any such case within the Field within the Territory, the Acquiring Party shall,
at its option, either: 
 
(i)
cease, or cause its applicable Affiliate to cease such development or Commercialization within [* * *] after obtaining such Control and during the term of this Agreement; 
 
(ii) divest, or cause its applicable Affiliate to divest, the Related Product within [* *
*] after obtaining such Control; or 
 
(iii) promptly offer in writing to DURECT (in the case of Endo) or Endo (in the case of DURECT) (the “Non-Acquiring Party”), the right to either, at the Acquiring Party’s option: (x) participate in [* *
*] of the Acquiring Party’s rights and obligations in connection with the development and Commercialization of the Related Product or (y) acquire [* * *] of the Acquiring Party’s interest in the Related Product at a valuation
which is equal to the price paid by the Acquiring Party for the Related Product. In either such event, the Parties shall conduct good faith discussions regarding the terms of any such arrangement, and the Acquiring Party shall not develop or
Commercialize such Related Product until the Parties reach an agreement regarding the terms of such arrangement; provided that the Acquiring Party shall be free to divest or cease development of such Related Product. In the event that
the Non-Acquiring Party declines to participate or acquire such an interest in the Related Product, then the Acquiring Party shall divest or cease development, or shall cause its applicable Affiliate to divest or cease development of, such Related
Product. 
 

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(b) In the
event of a change of Control of a Party in which such Party becomes Controlled by a Third Party, the restrictions contained in Section 3.6(a) shall [* * *]. 
 
3.7 Right of Endo Regarding New Products. In the event that DURECT or one of its Affiliates creates or
adopts a development plan in connection with the development or Commercialization of a New Product during the term of this Agreement, it shall promptly provide written notice of such event (“First Refusal Notice”) to Endo and
provide information reasonably requested by Endo in connection therewith. Upon receipt of a First Refusal Notice, Endo shall have [* * *] to (i) notify DURECT in writing if it desires to participate with DURECT in the development or
Commercialization of the New Product or (ii) decline to bid. If Endo does not respond in writing to the First Refusal Notice within such [* * *] period, then it shall no longer have any rights with respect to the New Product. If Endo provides
DURECT with timely notice of its interest in participating in the development and Commercialization of the New Product, then the Parties shall attempt in good faith to negotiate the terms of an agreement for Endo to participate with DURECT in the
development or Commercialization of the New Product for a period not to exceed [* * *] (“Negotiation Period”); provided that the terms of such agreement shall require that Endo provide to DURECT development funding for the
New Product. If, despite such good faith negotiations, DURECT and Endo are unable to enter into a definitive agreement during such Negotiation Period, then Endo shall no longer have any rights with respect to the New Product and DURECT will
thereafter be free to enter into agreement(s) with Third Parties for the Commercialization of such New Product. 
 
3.8 Payment on Sales Outside Territory. In the event that DURECT or any of its Affiliates sells or licenses for sale Product in any
of Canada (if not included within the Territory pursuant to Section 3.1(c)), [* * *], DURECT shall make a cash payment to Endo in the amount of [* * *] for each such country within [* * *] of the first commercial sale of Product
in each such country; provided that if in connection with a termination of this Agreement (other than a termination under Section 13.4), Endo fails to spend the full amount that it is projected to spend under the Summary Development
Plan or Development Plan, as applicable, DURECT may reduce such cash payment by the percentage of such shortfall. 
 
 

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4. DEVELOPMENT AND REGULATORY
MATTERS. 
 
4.1 Exchange of Data and
Know-How. 
 
(a) The Parties acknowledge that
DURECT is in the process of conducting clinical studies and other development activities on the Product necessary to make the Initial Regulatory Filing. Therefore, until the Initial Regulatory Filing is made (the “NDA Filing Date”),
DURECT shall be primarily responsible for conducting the clinical studies and all other regulatory matters, manufacturing matters and/or pre-clinical studies necessary to support, prepare and file the Initial Regulatory Filing, and DURECT shall use
all commercially reasonable efforts necessary to make the Initial Regulatory Filing. During such period, DURECT shall (i) keep Endo informed as to the status of such efforts, (ii) permit Endo to review and comment on the Initial Regulatory Filing
and all subsequent Regulatory Applications during their preparation, (iii) consult with Endo regarding the preparation of the Initial Regulatory Filing and all subsequent Regulatory Applications, (iv) inform Endo of all communications to and from
any Regulatory Authority (including providing Endo with copies of all such written communications) and any documents related thereto requested by Endo, (v) provide Endo with no less than [* * *] to review and comment on any such communication
(and related documents) prior to its submission to a Regulatory Authority and (vi) provide reasonable advance notice to Endo with respect to, and permit an Endo representative to participate in all meetings with the FDA in connection with the
Product. 
 
(b) During the term of this Agreement,
to the extent that it is able to do so under applicable confidentiality agreements binding on such Party, each Party shall promptly provide to the other Party copies of all (i) Technical Information that is in existence as of the Effective Date and
other such Technical Information that is developed or acquired by such Party from time to time during the term, including all Regulatory Data and Regulatory Documentation, (ii) to the extent material to the Product in the Field in the Territory,
written materials or correspondence relating to any comments, requests and inquiries of the health care profession or any other Third Parties (other than ALZA, which shall be subject to Section 4.1(c)) and all information relating to the Product and
(iii) all safety information concerning the Product of which it becomes aware. 
 

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(c) During the
term of this Agreement, DURECT shall promptly notify Endo of and enable Endo to attend meetings or conferences with ALZA, and provide to Endo copies of all written materials or correspondence to and from ALZA, which, in any event,: (i) affect or
reasonably may affect Endo’s rights under this Agreement, or (ii) to the extent not precluded by confidentiality obligations to ALZA contained in the ALZA Agreement, relate to the Product. 
 
(d) Each Party agrees to notify the other Party, within one
business day of the date such Party first learns of any “serious” adverse experience, side effect, injury, toxicity or sensitivity reaction or any unexpected incidents, and the severity thereof, associated with the clinical uses, studies,
investigations, tests and marketing of any of the Products, whether or not determined to be attributable to such Product(s). “Serious”, as used in this Section, refers to an adverse experience from the Product which is fatal or
life-threatening, results in permanent or substantial disability, in-patient hospitalization or prolongation of hospitalization, or is a congenital anomaly, a cancer, or a result of an overdose. Except as otherwise set forth herein to the contrary,
with respect to all other adverse experiences (i.e., non-serious), each Party shall notify the other Party and furnish such other Party with any copies of such non-serious adverse experiences reported in connection with any of the Products
within [* * *] of receipt. 
 
(e) All such
data and information exchanged or required to be exchanged by the Parties pursuant to this Section 4.1 shall be owned by DURECT (or ALZA to the extent it relates to the System in accordance with the terms of the ALZA Agreement), whether in
DURECT’s possession or control as of the Effective Date or developed by any Party during the term of this Agreement. DURECT hereby grants Endo the right and license to use all such data and information for all purposes necessary to allow Endo
to exercise its rights and perform its obligations under this Agreement. 
 
4.2 Product Registrations. Except as otherwise mutually agreed by DURECT and Endo, DURECT shall own all Registrations for the Product in the Territory. 
 
4.3 Scope of Development Plan. 
 
(a) The Parties acknowledge that a Summary Development Plan (including a summary development budget) dated as
of the Effective Date for calendar years 2002 through NDA Approval has been approved by both Parties (“Summary Development Plan”). Pursuant to 
 

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the JEC’s direction under Section 2.1(b)(xiii), the PDC shall meet to approve the definitive Development Plan for the Product based on
the Summary Development Plan, which shall be approved no later than the earlier of [* * *] or the [* * *] anniversary of the Trial Commencement Date. Such Development Plan shall include, on a calendar year-by-calendar year basis: (i)
the research and development activities including clinical studies, non-clinical studies, manufacturing process validation, CMC, ICH registration batches, pre-approval inspection preparation, pharmaceutical development including quality control and
stability, manufacturing qualification and regulatory tasks under this Agreement for the development of the Product through Final FDA Approval (or similar Registration elsewhere in the Territory) (in any event, excluding any and all DURECT
Activities); (ii) the estimated budget for each development activity, and estimated over-all budget for performance of all development activities under the Development Plan (“Development Budget”); (iii) “go/no go” decision
criteria for each stage of development of the Product; (iv) target Product profiles, which shall be created by the PDC and JCC, jointly; (v) the allocation of the respective responsibilities of DURECT and Endo regarding development activities; and
(vi) timelines for scientific, medical, regulatory and other activities to be undertaken by the Parties for the purpose of obtaining Registration for the Product in the Territory. The Development Plan shall exclude any and all DURECT Activities.
Once approved, the Development Plan shall be updated by and reviewed by the PDC at least once each calendar year by a date no later than [* * *] of each year so as to cover any other amendments in accordance with the decision-making authority
provided in Section 2.2(d). 
 
(b) Prior to
Registration in the Territory, the Parties intend that DURECT will be primarily responsible for implementing the regulatory strategy developed by the PDC for the Product in the Territory. The Parties intend that DURECT will be primarily responsible
for regulatory activities in the Territory after Registration, comprising regulatory compliance, worldwide safety surveillance, adverse event reporting and all other necessary support services. Following Registration in the Territory, Endo shall
cooperate with DURECT and provide prompt reasonable assistance including collecting and supplying all required information to DURECT so that DURECT can maintain regulatory compliance in the Territory with respect to the Product. Endo shall permit
duly authorized representatives of DURECT to inspect, on the premises of Endo, its Affiliates, Sublicensees and other designees, as applicable, upon [* * *] advance 

 

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written notice, during normal business hours, supplies of the Product, Finished Product and Implanter, Endo’s quality control records
and facilities used in the distribution and sale of the Product, Finished Product and Implanter to ensure compliance with the quality control standards set forth in the NDA for the Product; provided that such inspections shall take
place no more often than [* * *] per any calendar year. 
 
(c)As of the Effective Date, each of the Parties believes that the summary development budget in the Summary Development Plan provides for sufficient funds to complete the execution of the Development Plan contemplated by the Parties
in accordance with this Section 4.3. Each Party shall provide sufficient funds to complete the execution of the Development Plan provided that the Product is developed in accordance with this Section 4.3. 
 
4.4 Post-Registration Development. After Registration
of the Product in the Territory, and consistent with the Marketing Plan adopted by the JCC, Endo shall develop a plan (to be reviewed and approved by the JCC) for post-Registration development activities, if applicable, to be performed for the
purpose of providing marketing support for the Product (“Post-Registration Plan”) which shall include the allocation (and transition to the extent applicable) of development responsibility (including the responsibility for conduct
of Phase IV clinical trials) for the Product as between the Parties. Thereafter, Endo shall be responsible for performing such development activities allocated to it in the Post-Registration Plan through completion, and DURECT shall be responsible
for performing such development activities allocated to it in the Post-Registration Plan through completion, provided that development activities involving labeling revisions shall be DURECT’s responsibility. The Parties shall work
together in order to assure an orderly transfer of responsibilities in accordance with the Post-Registration Plan. 
 
4.5 Conduct of Development Plan and Post-Registration Plan. Under the auspices of, and subject to review and approval by, the PDC
in the case of the Development Plan and the JCC in the case of the Post-Registration Plan, the Parties shall have the following responsibilities relating to the conduct of the Development Plan and the Post-Registration Plan: 
 
(a) Each of Endo and DURECT shall be responsible for the
preparation of all protocols and the conduct of Product development activities for which such Party is designated as the Party responsible for such activity in the Development Plan and Post-Registration Plan. 
 

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(b) DURECT
shall be responsible for preparing all Regulatory Applications necessary or desirable to register the Product in the Territory. DURECT shall be responsible for filing all Regulatory Applications and, thereafter, to conduct all communications with
the Regulatory Authorities during the registration process. DURECT shall submit all proposed filings to the PDC for its approval. DURECT shall keep the PDC informed as to the status of such efforts, permit the PDC to review any revisions to any
filings or communications with Regulatory Authorities during their preparation, and shall confer with the PDC regarding the preparation of such filings and communications and the registration process. During such process, the Parties shall
collaborate and cooperate in the preparation and filing of all documents necessary therefor and all regulatory interactions and compliance with Regulatory Authorities in the Territory. 
 
(c)DURECT shall supply all Product and Implanters as necessary and/or desirable for all studies to be
conducted pursuant to the Development Plan and Post-Registration Plan. Such Product and Implanters shall be supplied in accordance with, in all material respects, the Specifications, in accordance with cGMP, and in accordance with supply forecasts
therefor provided by the PDC or JCC respectively at least [* * *] (with respect to the Development Plan) and [* * *] (with respect to the Post-Registration Plan) prior to the anticipated delivery date for each shipment thereof. Such
Product shall be supplied at DURECT’s Fully Burdened Manufacturing Cost which shall be included in Development Costs under Section 4.6, and such Implanters shall be supplied pursuant to Section 8.13. DURECT’s obligation to supply Product
and Implanters for any Post-Registration development shall be subject, first, to fulfilling all requirements for the supply of Product, Finished Product and Implanters for commercial sales pursuant to Section 8. DURECT shall use all commercially
reasonable efforts to reduce the Fully Burdened Manufacturing Cost of manufacturing Product and Finished Product. If, in order to achieve the reduction in cost, DURECT reasonably determines that it must change the manufacturing process for the
Product or Finished Product, the PDC shall approve and include such work in the Development Plan as an amendment; provided that in such event Endo shall not be responsible for any costs incurred in connection with implementing such reduction
in costs. 
 
(d) In connection with performing its
obligations pursuant to the Development Plan and Post-Registration Plan, each of Endo and DURECT shall use all commercially 

 

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reasonable efforts to perform such responsibilities diligently using the same efforts that an established pharmaceutical company normally
devotes to its own comparable products, taking into account the maximum sales and profitability potential of the Product while promoting the therapeutic profile and benefits of the Product in the most commercially, reasonable beneficial and
responsible manner. Without limiting the generality of the foregoing, each such Party shall: 
 
(i) cooperate with the other Party to implement the Development Plan and Post-Registration Plan, and such other
activities that, from time to time, the PDC or JCC decides are necessary for the commercial success of the Product; 
 
(ii) use all commercially reasonable efforts to perform the work set out for such Party to perform in the Development
Plan and Post-Registration Plan; 
 
(iii) conduct all work pursuant to the Development Plan and Post-Registration Plan in good scientific manner, and in compliance with all requirements of applicable laws, rules and regulations, and all other requirements of any
applicable cGMP, good laboratory practice and current good clinical practice to attempt to achieve the objectives of such plans efficiently and expeditiously; and 
 
(iv) completely and accurately reflect all work done and results achieved in connection with
the Development Plan and Post-Registration Plan in the form required under all applicable laws and regulations. The other Party shall have the right, during normal business hours and upon reasonable prior written notice, to inspect and copy all such
records at its own expense in a manner that is not unreasonably disruptive. The inspecting Party shall maintain such records and information contained therein in confidence in accordance with Section 10 and shall not use such records or information
except to the extent otherwise permitted by this Agreement. 
 
4.6 Funding of DURECT Activities, Development Plan and Post-Registration Plan. 
 
(a) From and after the Effective Date, each of DURECT and Endo shall be responsible for the Development Costs and DURECT Activities Costs
listed below its name in the following table: 
 

	 DURECT
	  	 Endo

 

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	100% of the DURECT Activities Costs, if any, prior to June 30, 2004	 	0% of the DURECT Activities Costs, if any, prior to June 30, 2004
	 50% of the DURECT Activities Costs, if any, after June 30, 2004
	 	 50% of the DURECT Activities Costs, if any, after June 30, 2004

	 50% of the Development Costs under the Development Plan for the Product (and any development plan for any
line extensions of the Product and Related Products pursuant to Section 2.2(b)(xi) and (xii))
	 	 50% of the Development Costs under the Development Plan for the Product (and any development plan for
any line extensions of the Product and Related Products pursuant to Section 2.2(b)(xi) and (xii))

	 [* * *] % of the Development Costs under the Post-Registration Plan for the Product that are NOT intended
for supplemental NDA submissions, as determined by the JCC
	 	 [* * *] % of the Development Costs under the Post-Registration Plan for the Product that are NOT
intended for supplemental NDA submissions, as determined by the JCC

	 .[* * *] % of the Development Costs for the development activities that ARE intended for supplemental NDA
submissions, as determined by the PDC
	 	 [* * *] % of the Development Costs for the development activities that ARE intended for supplemental
NDA submissions, as determined by the PDC

 
(b)
With respect to those Development Costs and DURECT Activities Costs to be shared on a 50/50 basis between DURECT and Endo pursuant to the above table, within[* * *] after the end of each calendar quarter, DURECT and/or Endo, as the
case may be, shall provide to the other Party an invoice in an amount equal to 50% of such Development Costs or DURECT Activities Costs incurred by such Party in such quarter. Payment terms shall be [* * *] days from the date of each
Party’s receipt of any correct invoice. Payments shall be sent to the “Remit to” address set forth on the invoice. Each Party shall pay the other a late charge of [* * *] per month (or the maximum interest allowable by
applicable law, whichever is less) for each invoice past due for more than 30 days from the date of such Party’s receipt of any correct invoice. Should a Party dispute any portion of an invoice, it shall not be required to pay any portion of
such invoice until such time as the dispute is resolved and such disputing Party receives a fully corrected invoice; provided that, in such an event, the other Party shall have the option of issuing a new, correct invoice for the
portion of the original invoice not in dispute, and the disputing Party shall pay such new invoice within the time limits set forth in this Section 4.6(b). 
 
(c) Notwithstanding anything to the contrary in Sections 4.6(a) and (b) and except as set forth in this Section 4.6(c), Endo shall have no
obligations under Sections 4.6(a) and (b) to 

 

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make any payments to DURECT for any Developments Costs incurred up to and including the date on which the first patient is dosed with the
Product in the first clinical trial of at least that number of patients necessary to satisfy the FDA which occurs after the Effective Date (such date, the “Trial Commencement Date” and such trial, the “First
Trial”). Notwithstanding the foregoing: (i) in the event the Trial Commencement Date has not occurred by December 31, 2003, then during the period commencing on January 1, 2004 until the earlier of the Trial Commencement Date or June 30,
2004, Endo shall be responsible for 25% of the Development Costs incurred in each such calendar month, up to an aggregate payment by Endo to DURECT of $3 million of Development Costs for such period; and (ii) in the event the Trial Commencement Date
has not occurred on or before June 30, 2004, then Endo shall be responsible for such portion of the Development Costs incurred after June 30, 2004 in accordance with Section 4.6(a). 
 
4.7 Delay of Initial Regulatory Filing. In the event that Registration of the Initial Regulatory
Filing is denied or is materially delayed by the FDA, or if the FDA imposes additional material requirements at any time, then the PDC shall (a) immediately meet to discuss in good faith a reassessment of the relevant Development Plan to address the
FDA’s objections and questions, (b) immediately give the JEC notice of such developments, (c) from time to time as additional such developments arise, promptly give the JEC notice of such additional developments, and (d) keep the JEC reasonably
informed of the PDC’s deliberations regarding all such developments. As used in this Section 4.7, a material delay is a delay arising from a requirement set forth by the FDA that DURECT conduct additional studies (clinical and non-clinical) not
conducted in connection with the submission of the Initial Regulatory Filing. In the event of a material delay, the PDC shall apply its sound scientific, commercial and regulatory judgment with all deliberate speed to determine whether or not it is
in the best interest of both of Endo and DURECT to go forward with the conduct of any additional studies required by the FDA. Upon reaching such determination, the PDC shall make a formal recommendation of its conclusions to the JEC and shall await
direction from the JEC regarding what, if any, further action is to be taken with respect to such matters. Upon receiving the approval of the JEC to undertake the additional studies required by the FDA, the PDC shall be authorized, and is hereby
directed, to amend the existing overall Development Budget as necessary to undertake such studies and to cause such studies to be undertaken. 
 

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4.8
Suspension of Clinical Development Activities. Any Party shall have the right to immediately suspend the relevant clinical development activities with respect to the Product for a particular indication or dosage strength in the event that such
Party, reasonably and in good faith, determines that there exists significant and urgent concerns relating to patient safety with respect to such clinical studies, after first conferring with the other Party with respect thereto. The Party making
the determination to suspend such clinical activities shall notify the other Party in writing immediately of any such suspension and the reasons therefor. The PDC shall then promptly determine what actions should be taken with respect to such
clinical activities. Once a determination is made by the PDC with respect to the appropriate actions to be taken, if such action requires amendment of the relevant Development Plan or (in consultation with the JCC) Marketing Plan and the Development
Budget or (in consultation with the JCC) Marketing Budget, the PDC shall make a formal recommendation of its conclusions to the JEC, including the results of its conclusions. Upon receiving approval of the JEC to make any recommended changes, the
PDC shall be authorized, and is hereby directed, to implement such actions. 
 
4.9 DURECT Activities. From and after the Effective Date until and including June 30, 2004, DURECT shall be responsible for 100% of the DURECT Activities Costs. After June 30, 2004, the Parties
shall share in the DURECT Activities Costs on a 50/50 basis in accordance with Sections 4.6(a) and 4.6(b). 
 
5 DISTRIBUTION AND PROMOTION. 
 
5.1 Generally. As promptly as it is reasonably able after obtaining Registration of the Product in each country of the Territory (and in any event within [* * *] months after
Registration), Endo (or its Affiliates or designees) shall use all reasonable commercial efforts to launch the Product in each country of the Territory and shall thereafter continue diligently to Commercialize the Product in each country of the
Territory in accordance with the Marketing Plan using the same efforts that an established pharmaceutical company normally devotes to its own comparable products, taking into account the maximum sales and profitability potential of the Product while
promoting the therapeutic profile and benefits of the Product in the most commercially, reasonably beneficial and responsible manner and with at least the level of diligence and resources as are applied to Endo’s other comparable products.

 

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5.2
Marketing Plan. Pursuant to the JEC’s direction under Section 2.1(b)(xiv), Endo shall develop, finalize and review at the JCC a Marketing Plan for the Product, Finished Product and Implanters on a calendar year-by-calendar year basis,
covering the [* * *] calendar years commencing with [* * *]. The Marketing Plan shall include, at such time as appropriate, (i) preliminary plans related to the prelaunch, launch, promotion, reimbursement and sales of the Product,
Finished Product and Implanters and which shall, at such time as appropriate, include pricing strategy, public relations and promotional communications, forecasts for the number of sales representatives, sales detailing plans, sales incentive
compensation programs related to the Product, Finished Product and Implanters and a summary of Phase IV clinical studies and a reasonably descriptive overview of the marketing and advertising campaigns proposed to be conducted; and (ii) an estimated
budget for the performance of the activities under the Marketing Plan (“Marketing Budget”). The Marketing Plan shall be commensurate with the commitment normally devoted by an established pharmaceutical company to launch its own
products of comparable potential for each such calendar year. The Marketing Plan shall be updated by Endo and reviewed by the JCC at least once each calendar year by a date no later than [* * *] of each year so as to cover the next [* *
*] full calendar years and to include any other amendments in accordance with the decision-making authority provided in Section 2.3(d). 
 
5.3 Endo Responsibilities; Rights. In connection with its responsibilities for distribution, marketing and sales of the Product,
Finished Product and Implanters in the Territory, Endo shall provide for all sales force personnel (including sales administration and training), order entry, customer service, reimbursement management, medical affairs, medical information,
marketing (including all advertising and promotional expenditures), warehousing, physical distribution, invoicing, credit and collections, production forecasting and other related facilities and services necessary or desirable for such distribution,
marketing and sales. Endo agrees that it will retain a sufficient number of detailing representatives necessary to adequately cover the designated physician call points for the Product, Finished Product and Implanters in order to perform its
obligations hereunder. 
 
5.4 Promotional
Materials and Activities. DURECT shall be entitled to participate (through the JCC meetings) in the review of future promotional materials and promotional activities with respect to the Product, Finished Product and Implanters in the Territory.
All 

 

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promotional materials and promotional activities shall be developed by Endo, with input from DURECT through the JCC process, following the
general guidelines established by the JCC and consistent with the then current Marketing Plan. 
 
5.5 Technical Support Representatives. The Product, Finished Product and Implanters will be further supported by a technical field force to support the pharmaceutical detailing representatives
of a size and scope to be determined by Endo and approved by the JCC, the goal of which shall be to provide detailed training to the physician’s office on the implant procedure, patient management, reimbursement process and to attend first
implants, where feasible. Should Endo choose to contract this technical force from a Third Party rather than use its own personnel, then Endo shall provide written notice thereof to DURECT. Within [* * *] of receipt of such notice from Endo,
DURECT shall have the right to elect to provide such technical force by providing written notice to Endo of such election; provided that if DURECT elects to provide the technical support field force, DURECT shall be responsible for
[* * *] of such costs pursuant to a procedure to be adopted by the JCC, and DURECT shall cooperate, and coordinate such technical support efforts, with Endo. 
 
5.6 Global Marketing Team. To the extent reasonably feasible, DURECT shall permit Endo to participate
in any global marketing strategy team formed by DURECT that includes members from Third Parties licensed to market the Product or Finished Product outside the Territory. 
 
5.7 Distribution and Marketing Costs. From and after the Effective Date, Endo shall be responsible for
costs relating to the marketing, sale and distribution of the Product and Finished Product in the Territory. 
 
5.8 DURECT Co-Promotion Right; Supplemental Call Plan. Following the first full calendar year after the First Commercial Sale of
the Finished Product, in the event that (i) Endo’s sales details for the Finished Product are below the target for such details as set forth in the applicable Marketing Plan by more than (a) [* * *] with respect to any calendar year or
(b) [* * *] with respect to any [* * *] consecutive calendar years, and (ii) the foregoing deficiency is not due to Regulatory Authority action, shortage of supply pursuant to Section 8.10 or an Inability to Supply, then DURECT shall
have the right to present to the JCC a supplemental call plan for 

 

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DURECT to provide for the shortfall in sales details. If such supplemental call plan is approved by the JCC, which approval shall not be
unreasonably withheld or delayed, DURECT shall be entitled to conduct sales details in the amount of such shortfall, and DURECT and Endo shall share [* * *] of the actual costs thereof for a minimum of [* * *] until such time as Endo
reasonably demonstrates its ability and readiness to conduct sales calls in order to meet the forecasted sales detail target. If the JCC does not so approve such supplemental call plan, then DURECT at its option shall be entitled to conduct sales
details in the amount of such shortfall for a minimum of [* * *], and the costs thereof shall be borne by DURECT alone; provided that under any condition DURECT shall cooperate, and coordinate such efforts, with Endo.
Notwithstanding the foregoing, in the event that Endo’s sales force has not reasonably demonstrated its ability and readiness to conduct sales calls in order to meet the applicable sales details target set forth in the Marketing Plan submitted
by Endo to the JCC for the year following DURECT’s commencement of sales details hereunder, then DURECT shall, following the [* * *] anniversary of DURECT’s commencement of sales details hereunder, be entitled to continue its
supplemental sales detail activities under this Section 5.8 in the amount of such shortfall, and Endo shall reimburse DURECT its expenses therefor after such [* * *] at the rate established for a Complaining Party under Section 3.5 until such
time as the Endo sales force reasonably demonstrates its ability and readiness to conduct sales calls in order to meet the forecasted sales detail target in the then-current Marketing Plan; provided that if the Parties at any time do
not agree to such ability and readiness of Endo to meet the applicable forecasted sales detail target, then either Party may resolve such disagreement pursuant to the Accelerated Arbitration Provisions set forth in Section 16.13(b). At DURECT’s
reasonable request, Endo shall provide to DURECT documents and other information necessary for DURECT to determine whether Endo has conducted the number of sales details provided for in this Section 5.8. In addition, so long as DURECT is conducting
such supplemental sales details in accordance with this Section 5.8, DURECT will be included in, and be allowed to participate in, all promotional activities being conducted by Endo pursuant to the then current Marketing Plan, including
participation in symposia, key opinion leader events, and the like, and Endo shall provide DURECT’s supplemental detailing force with all promotional materials and support services to the same extent available to Endo’s sales force;
provided that any additional costs incurred by Endo in 
 

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connection therewith shall be borne by the Parties in accordance with the cost allocations set forth in this Section 5.8. 
 
5.9 Sales Incentive Compensation Programs. During the
first [* * *] following the First Commercial Launch, Endo shall provide to its sales representatives that are promoting the Product, Finished Product and Implanter sales incentive compensation programs for the Product, Finished Product and
Implanter that are no less favorable than those which Endo provides to such sales representatives with respect to their sale of any pharmaceutical products other than the Product, Finished Product or Implanter. 
 
6. PAYMENTS. 
 
6.1 R&D Reimbursement and Payments to DURECT. Endo shall pay to DURECT non-refundable and
non-creditable payments to reimburse DURECT for Development Costs borne by DURECT to develop the Product consistent with the timing set forth below: 
 

	 Timing
	 	 Reimbursement

	
	 Within [* * *] days after the date DURECT provides Endo a copy of the FDA’s notification that it has
accepted the first of the protocols relating to any one of the Placebo-Controlled Studies; provided that Endo has not exercised its termination right set forth in Section 13.3(c)
	 	 Reimbursement of Development Costs borne by DURECT prior to the Effective Date in connection with the Product, up to a
total of [* * *]

	
	 Within [* * *] days after the date the FDA notifies DURECT of Acceptance of the Product’s NDA for
Filing
	 	 Reimbursement of Development Costs borne by DURECT prior to the Effective Date in connection with the Product, up to a
total of [* * *]

	
	 Within [* * *] days after the date that Canada becomes part of the Territory in accordance with Section
3.1(c)
	 	 Reimbursement of Development Costs borne by DURECT prior to the Effective Date in connection with the Product up to a
total of [* * *]

	
	 Within [* * *] days after the date DURECT provides to Endo a copy of the FDA’s final approval of the
Product’s NDA which approval will allow for the immediate marketing and sale of Product in the United States (“Final FDA Approval”)
	 	 Reimbursement of Development Costs borne by DURECT after the Effective Date up to a total of
[* * *]

	
	 Within [* * *] days after the date
	 	 Reimbursement of Development Costs

 

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	 DURECT provides to Endo a copy of the Product Registration in Canada which approval will allow for the immediate
marketing and sale of Product in Canada in the event that Canada has become part of the Territory in accordance with Section 3.1(c)
	 	 borne by DURECT after the Effective Date in connection with the Product, up to a total of [* * *]

	 On the date that is [* * *] days after the First Commercial Sale of the Product
	 	 Reimbursement of Development Costs borne by DURECT after the Effective Date until the date of notification of the
Final FDA Approval in connection with the Product over and above those amounts addressed immediately above, up to a total of [* * *]

 
The Party who receives
the written acceptance, or the Registration, as the case may be, from the FDA shall be responsible for promptly informing the other Party in writing when such event has occurred. 
 
6.2 Distribution Fee. Endo shall pay to DURECT a Distribution Fee based on Net Sales of Finished
Product in the Territory as calculated in accordance with this Section 6.2. The applicable percentage of Net Sales used for the purpose of calculating the Distribution Fee payable to DURECT in a calendar year shall be the applicable percentage based
on the prior year’s total Net Sales of Finished Product in the Territory, as set forth below: 
 

	 Prior Annual Sales
	 	 Distribution Fee to DURECT

	 When calendar year net commercial units recorded by Endo as commercial sales of Product are up to and
including [* * *] units
	 	 DURECT receives [* * *] of Net Sales for such year minus the aggregate Transfer Price paid by Endo for all units of
Product

	 When calendar year net commercial units recorded by Endo as commercial sales of Product are greater than
[* * *] units but less than or equal to [* * *] units
	 	 DURECT receives [* * *] of Net Sales for such year minus the aggregate Transfer Price paid by Endo for all units of
Product

	 When calendar year net commercial units recorded by Endo as commercial sales of Product are greater than
[* * *] units but less than or equal to [* * *] units
	 	 DURECT receives [* * *] of Net Sales for such year minus the aggregate Transfer Price paid by Endo for all units of
Product

	 When calendar year net commercial units recorded by Endo as commercial sales of Product are greater than
[* * *] units but
	 	 DURECT receives [* * *] of Net Sales for such year minus the aggregate Transfer Price paid by Endo for all units of
Product

 

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	 less than or equal to [* * *] units
	 	 
	 When calendar year net commercial units recorded by Endo as commercial sales of Product are greater than [* * *]
units
	 	 DURECT receives [* * *] of Net Sales for such year minus the aggregate Transfer Price paid by Endo for all units of
Product

 
An example of the
calculation of Distribution Fee payments is set forth on Exhibit M. 
 
6.3 Minimum Payments. Within [* * *] after the Effective Date, Endo shall prepare and deliver to DURECT a good faith projection of the Net Sales for the first [* * *] of marketing the Finished Product in
the Territory (“Sales Projection”). At least [* * *] in each calendar year, until Final FDA Approval, Endo shall update such Sales Projection, with one update to be delivered no later than [* * *] after NDA filing and
a final update to be delivered within [* * *] after Final FDA Approval. The Sales Projection and each subsequent update shall be reviewed and approved by the JCC and shall be consistent with the Marketing Plans and the Current Forecast for
supply of Finished Product provided under Section 8.3, provided that the quantities of Finished Product in such Sales Projection shall not be binding on Endo. In the Minimum Payment Year, Endo shall pay to DURECT on a quarterly basis minimum
payments equal to [* * *] of the projected quarterly Net Sales of Finished Product ([* * *] of projected Net Sales of Product on an annual basis) based on the Sales Projection update delivered [* * *] after
Final FDA Approval for the [* * *] of marketing of the Product in the Territory (“Minimum Payments”). Minimum Payments paid to DURECT by Endo shall be fully creditable against Distribution Fees under Section 6.2 for the
Minimum Payment Year for which the Minimum Payments are made. 
 
6.4 Allocation of Sales. Endo shall allocate or reallocate sales of Product to Net Sales received in a specific calendar month or calendar year in accordance with Endo’s usual and customary sales allocation practices that
Endo applies to its other products. 
 
6.5 ALZA
Payments. 
 
(a) DURECT shall be solely
responsible and obligated, and Endo shall have no responsibility or obligation at any time, for any and all payments due to ALZA under or in connection with the ALZA Agreement, including any increased costs under or in connection with Sections
2.3(b) or 5.6(a) of the ALZA Agreement. 
 

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(b)
Notwithstanding Section 6.5(a), during the term of this Agreement, DURECT (i) shall not breach, or default under, the ALZA Agreement which breach or default could give rise, whether immediately or with the passage of time, to termination of such
agreement or restriction of DURECT’s rights thereunder in a manner that would adversely affect the rights granted by DURECT to Endo under this Agreement (and, pursuant to Sections 4.1(c) and 15.1, shall provide Endo with prompt written notice
of any such alleged breach or default), (ii) shall maintain its exclusive rights to the Product pursuant to the ALZA Agreement, including Sections 5.1(b) and 5.3(a)(A) of the ALZA Agreement, and (iii) shall not amend the ALZA Agreement in any manner
that will alter DURECT’s rights thereunder in a manner that would adversely affect the rights granted by DURECT to Endo under this Agreement. 
 
6.6 Bankruptcy Rejection of ALZA Agreement. (a) Prior to filing any motion, pleading or otherwise seeking a Bankruptcy Rejection of
the ALZA Agreement under 11 U.S.C. 365 or other comparable provision of any Bankruptcy Laws (including by way of response to any motion or other pleading filed by ALZA seeking Bankruptcy Rejection or assumption, affirmance or other similar relief
with respect to the ALZA Agreement), DURECT or any other Person acting on behalf of DURECT or its estate pursuant to any Bankruptcy Laws, shall give [* * *] notice to Endo of the intent to seek such Bankruptcy Rejection (“Rejection
Notice”). 
 
(b) The Rejection Notice must
include the following: (i) the factors considered by the moving party underlying the business judgment justifying the Bankruptcy Rejection of the ALZA Agreement, (ii) any monetary defaults by DURECT under the ALZA Agreement through the date of the
notice, (iii) any monetary obligations under the ALZA Agreement for the [* * *] subsequent to the date of the notice that DURECT has no intention of meeting, (iv) any non-monetary defaults by DURECT under the ALZA Agreement to the date of the
notice and (v) any anticipatory non-monetary defaults by DURECT under the ALZA Agreement. 
 
(c) No later than [* * *] after actual receipt of the Rejection Notice, Endo may, at its option, in its sole discretion and without prejudice to any other rights or remedies available to Endo
under this Agreement, notify DURECT of its undertaking to do any of the following: (i) provide DURECT with the funds necessary to cure all pre-existing monetary defaults under the ALZA Agreement, (ii) provide DURECT, on an ongoing basis, with funds
necessary to meet all of DURECT’s monetary obligations under the ALZA Agreement, if and as they arise in the 

 

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ordinary course of business between ALZA and DURECT, (iii) provide DURECT with all services and support necessary and appropriate to cure all
non-monetary defaults and to prevent any anticipatory non-monetary defaults by DURECT under the ALZA Agreement and (iv) acknowledge that should this Agreement be rejected and Endo choose to retain its rights under 11 U.S.C.  ̈365(n)(1)(B) or other similar provision of any Bankruptcy Laws, all of Endo’s claims under such undertaking shall be subject to 11
U.S.C.  ̈365(n)(2)(C) (“Undertaking”). 
 
(d) Should DURECT or any other Person acting on behalf of DURECT or its estate pursuant to any Bankruptcy
Laws, decide to seek Bankruptcy Rejection of the ALZA Agreement notwithstanding the Undertaking, any motion or pleading seeking Bankruptcy Rejection of the ALZA Agreement shall attach copies of the Rejection Notice and the Undertaking and shall be
served on Endo as a party in interest to such proceeding in accordance with the Bankruptcy Laws, the Federal Rules of Bankruptcy Procedures and Local Rules of the bankruptcy court administering the Bankruptcy Case. 
 
6.7 Equity Investment in DURECT 
 
On Tuesday, November 12, 2002, Endo shall purchase from
DURECT, and DURECT shall issue to Endo, 1,533,742 shares of validly issued, fully paid, nonassessable shares of DURECT common stock, par value $.0001 per share (“DURECT Common Stock”), for an aggregate purchase price of
$4,999,998.92 pursuant to the Common Stock Purchase Agreement attached as Exhibit O hereto (the “Common Stock Purchase Agreement”). 
 
7. PAYMENTS AND REPORTS. 
 
7.1 Payments. Beginning [* * *] after the end of the calendar quarter in which the First Commercial Sale is made in the
Territory and for each calendar quarter thereafter (no later than [* * *] after the end of such calendar quarter), Endo shall submit a statement to DURECT, which shall set forth the amount of Net Sales in the Territory, during such quarter,
and the calculation of Distribution Fees due on such Net Sales for such quarter. Additionally, beginning [* * *] after the calendar quarter in which Minimum Payments first become payable and for the three calendar quarters thereafter (no
later than [* * *] after the end of such calendar quarter), Endo shall submit a statement to DURECT, which shall set forth the amount due to DURECT as 

 

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Minimum Payments during such quarter, and the calculation of such payment. Each such statement shall be accompanied by the payment, if any,
due to DURECT. 
 
7.2 Mode of Payment. Endo
shall make all payments required under this Agreement by wire transfer (at DURECT’s expense for such wire transfer fees) to any account specified by DURECT or as otherwise directed by DURECT from time to time in U.S. Dollars, provided
that, with respect to Canada, such payments shall be payable in U.S. Dollars, calculated using the rate of exchange which is the average commercial rate of exchange for the [* * *] preceding the date of payment for the conversion of local
currency to U.S. Dollars as published by The Wall Street Journal (or if such journal shall cease to publish currency exchange rates, then another leading U.S. financial publication or bank as mutually agreed to in writing by the Parties).

 
7.3 Records Retention. Endo, its
Sublicensees, DURECT, its Third Party Manufacturers, and each such Party’s respective Affiliates shall keep complete and accurate records pertaining to the development, sale and manufacture of Product, Finished Product and Implanters and the
calculation of Net Sales in the Territory to permit the determination of Fully Burdened Manufacturing Cost of Product and Finished Product (and actual, direct costs of Implanters), Development Costs, Distribution Fees and distribution, sales and
marketing costs relating to the Product, Finished Product and Implanters for a period of [* * *] after the year in which such sales or costs occurred, and in sufficient detail to permit the Parties to confirm the accuracy of each of the
foregoing. 
 
7.4 Audit Request. During the
term of this Agreement and for a period of two years thereafter, at the request and expense of any Party (the “Auditing Party”), DURECT and its Affiliates and Third Party Manufacturers (in the case of a request by Endo) or Endo and
its Affiliates and Sublicensees (in the case of a request by DURECT) (the “Audited Party”) shall permit an independent, certified public accountant appointed by the Auditing Party and reasonably acceptable to the Audited Party, at
reasonable times and upon reasonable notice but not more often than two times each calendar year, to examine such records as may be necessary to determine the correctness of any report or payment made under this Agreement, to determine the
consistency of actual expenditures versus the budgeted expenditures set forth in the Development Budget and/or Marketing Budget, as the case may be, or obtain information as to the determination of Fully Burdened Manufacturing Cost of Product and
Finished Product (and 

 

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actual, direct costs of Implanters) (including the records of when during production batches failed, the cost and nature of such failures),
and the aggregate Net Sales and Distribution Fees payable for any calendar quarter. Results of any such examination shall be made available to all Parties except that said independent, certified public accountant shall verify to the Auditing Party
such amounts and shall disclose no other information revealed in such audit. 
 
7.5 Cost of Audit. The Auditing Party shall bear the full cost of the performance of any audit requested by the Auditing Party except as hereinafter set forth. If, as a result of any inspection
of the books and records of the Audited Party, it is shown that payments made by Endo to DURECT under this Agreement were less than the amount which should have been paid, then Endo shall make all payments required to be made to eliminate any
discrepancy revealed by said inspection within [* * *] after DURECT’s demand therefor. Furthermore, if the payments made were less than [* * *] of the amount that should have been paid during any calendar year, Endo shall also
reimburse DURECT for the reasonable costs of such audit. In the event that the audit shows that an overpayment has been made by Endo, such amounts shall be deducted from Distribution Fees owed to DURECT. If such overpayment amounts have not been
settled by such deductions from Distribution Fees within one year from the date originally overpaid, then DURECT shall make all payments required to be made to Endo to eliminate any such overpayment. Furthermore, if (i) the overpayment made was more
than [* * *] of the amount that should have been paid in any calendar year or (ii) the costs invoiced by DURECT were more than [* * *] of the audited costs in any calendar year, then DURECT shall also reimburse Endo for the reasonable
costs of such audit. 
 
7.6 No Non-Monetary
Consideration for Sale. Without the prior written consent of DURECT, Endo and its Sublicensees and Affiliates shall not accept or solicit any non-monetary consideration of the sale of the Finished Product, Finished Product and the Implanter.
Subject to the applicable oversight and approval responsibilities of the PDC and the JCC set forth in Sections 2.2(b) and 2.3(b), the use by Endo and its Affiliates of a commercially reasonable amount of the Product and Implanters for promotional
sampling, compassionate use and indigent care shall not violate this Section 7.6, provided that DURECT shall be paid in accordance with Section 4.5(c), 8.6(a) or 8.13 for Product, Finished Product and Implanters for such uses as applicable.

 
 

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8. MANUFACTURE AND SUPPLY.

 
8.1 Supply Obligations. Under the
auspices of, and subject to review and approval by, the JMC, and except as mutually agreed by Endo and DURECT, commencing on the Effective Date, and thereafter during the term of this Agreement, DURECT (or its Affiliates) shall be responsible for
the manufacture or supply of all requirements of Product, Finished Product and Implanters for clinical and commercial use in the Territory pursuant to this Agreement. 
 
8.2 Supply of Finished Product 
 
(a) Commencing on the commercial launch of the Finished Product and thereafter during the term of this
Agreement, subject to the terms and conditions of this Section 8, DURECT shall supply Endo with all of Endo’s and Endo’s Affiliates, Sublicensees’ and designees’ requirements for Finished Product and Implanters in the Territory
pursuant to this Agreement, and Endo, its Affiliates, Sublicensee and designees shall purchase from DURECT all of such requirements for Finished Product and Implanters. Endo shall place orders for the requirements of its Affiliates, Sublicensees and
designees, and DURECT shall ship directly to such Affiliates, Sublicensees or designees or to Endo for its reshipment to such Affiliates, Sublicensees or designees, as requested by Endo. 
 
(b) DURECT shall ensure that all services, facilities and goods used in connection with such manufacture
comply with the applicable Manufacturing Standards in effect from time to time. 
 
(c) Endo and DURECT, in consultation with the JMC, shall cooperate in good faith and shall establish the Specifications for Product, Finished Product and Implanter for this Agreement. 
 
(d) DURECT may, after consultation with the JMC, subcontract
with a qualified Third Party Manufacturer in order to fulfill DURECT’s supply obligations to Endo hereunder; provided that in no event shall any such subcontract release DURECT from any of its obligations to supply Product, Finished Product or
Implanters under this Agreement. 
 
8.3
Forecasts. Commencing [* * *] prior to the anticipated commercial launch of the Finished Product in the Territory, no later than [* * *] prior to the first business day of each 

 

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calendar quarter (“Q1”), Endo shall provide DURECT with a non-binding (except with respect to Q1), good faith rolling
forecast of estimated quantities of Finished Product and anticipated delivery schedules for Finished Product for the following [* * *] period (i.e., Q1 and the next [* * *] (“[* * *],” respectively)), by
quarters (“Current Forecast”). The quantity indicated for Q1 in the Current Forecast shall be binding on Endo, and Endo shall be required to place firm orders for Q1 pursuant to Section 8.4 based on the quantity of Finished Product
for Q1 contained in the Current Forecast. The quantity indicated for [* * *] through [* * *] in the Current Forecast shall not be binding on Endo, provided that Endo shall be required to place a firm order for [* * *] for
a quantity which is (i) no more than [* * *]; and (ii) no less than [* * *] of the quantity indicated for [* * *] in the Current Forecast. The Current Forecast shall be revised and updated quarterly to include forecasted
quantities for the next succeeding [* * *]. [* * *] prior to the [* * *] anniversary of the First Commercial Sale, the Parties, through the JCC and JMC, shall review the efficacy of the forecasting procedure set forth in this
Section 8.3 to determine (i) if the procedure for firm orders for [* * *] should be extended to apply to [* * *] and, in a modified format (i.e. a wider range of permissible discrepancy), [* * *], or (ii) if the procedure
for firm orders should not be extended to apply to [* * *] or [* * *] and should be modified (i.e. implementing a wider range of permissible discrepancy) for [* * *]. 
 
8.4 Orders for Finished Product. 
 
(a) No later than [* * *] before the calendar quarter
in which delivery is sought, Endo shall place its firm order with DURECT, setting forth the number of units of Finished Product by dosage, delivery dates and shipping instructions with respect to each shipment of Finished Product. DURECT shall
accept such orders from Endo, subject to the other terms and conditions of this Agreement, to the extent such quantity of Finished Product specified in the firm order is consistent with the requirement regarding firm orders in Section 8.3.
Endo’s orders shall be made pursuant to purchase orders which are in a form mutually acceptable to Endo and DURECT, to the extent that such form is not inconsistent with the terms of this Agreement. 
 
(b) DURECT shall not be obligated to accept orders to the
extent the quantity of Finished Product ordered exceeds the limitation set forth in Section 8.3, but shall use good faith efforts to fill such orders for such excess quantities from available supplies. In the event that DURECT, despite the use of
good faith efforts, is unable to supply such excess quantities to 

 

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Endo, such inability to supply shall not constitute a breach of DURECT’s obligations under this Section 8 or a Short-Term Inability to
Supply or Long-Term Inability to Supply. DURECT shall use all reasonable efforts to notify Endo within [* * *] after receipt of an order of DURECT’s ability to fill any amounts of such orders in excess of the quantities that DURECT is
obligated to supply. Endo shall notify DURECT as soon as possible of an increase in Endo’s requirements for Finished Product materially in excess of the limits set forth in Section 8.3. 
 
(c) In the event that Endo submits orders for Finished Product
with respect to any Q1 for less than the minimum quantity of Finished Product that Endo is required to purchase under this Section 8, DURECT nevertheless shall supply and ship to Endo (in accordance with the shipping instructions most recently
supplied by Endo), and Endo shall have the obligation to purchase and accept from DURECT, such minimum quantity of Finished Product. Endo shall notify DURECT as soon as possible of a decrease in Endo’s requirements for Finished Product
materially below the limits set forth in Section 8.3. In the event of such a decrease, DURECT shall use all commercially reasonable efforts, but shall not be required if contractually prohibited from doing so, to reduce accordingly the orders for
Finished Product and parts that DURECT has placed with its Third Party Manufacturers and suppliers that DURECT would have purchased but for such decrease in purchase of the Finished Product by Endo. 
 
8.5 Delivery. With respect to exact shipping dates,
DURECT shall use all reasonable commercial efforts to ship or cause to be shipped quantities of Finished Product and Implanters that DURECT is obligated to supply pursuant to Section 8.3 on the dates specified in Endo’s purchase orders
submitted and accepted in accordance with Section 8.4. Notwithstanding any term that may be specified on Endo’s Product purchase order, all Product, Finished Product and Implanters to be delivered pursuant to this Agreement shall be delivered
in accordance with this Section 8.5, FOB (as such term is defined in the UCC) DURECT’s facility, suitably packed in bulk containers for shipment, and marked for shipment to the final destination point indicated in Endo’s purchase order.
The shipping packaging used in connection with such deliveries shall be in accordance with cGMP with respect to protection of the Product, Finished Product and Implanters during transportation, taking into consideration the mode(s) of transport Endo
has elected to use for each such shipment, the final destination point of each such shipment and reasonable expectations regarding shipment time duration and possible delays associated 

 

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therewith. Transportation of Product, Finished Product and Implanters may be made by rail, road, air, sea, and inland waterway or by a
combination of such modes of transport. DURECT will deliver or cause to be delivered all Product, Finished Product and Implanters to the carrier nominated by Endo at a point selected by DURECT. If such delivery occurs at DURECT’s or a Third
Party’s premises, DURECT or such Third Party shall be responsible for loading. If delivery occurs at any other place, DURECT or such Third Party shall not be responsible for unloading. If Endo nominates a Person other than a carrier to receive
the Product, DURECT shall be deemed to have fulfilled its obligation to deliver the Product when the Product is delivered to that Person. Title and risk of loss shall transfer to Endo, and Endo shall be responsible for all shipping, storage,
handling and insurance costs upon delivery to the carrier or Person designated by Endo. 
 

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8.6 Purchase Price. 
. 
(a) The purchase price for all Finished Product supplied by DURECT to Endo
pursuant to this Section 8 for commercial use in the Territory (“Transfer Price”) shall be as set forth in the chart below. The applicable Transfer Price for Finished Product supplied by DURECT in a calendar year shall be the
applicable Transfer Price based on the net commercial sale of Finished Product in the prior calendar year as follows: 
 

	 Prior Year Net
 Commercial Sale
	 	 3.3 ug/hr

	 	 6.7 ug/hr

	 	 10 ug/hr

	 	 13.3 ug/hr

	 0 – [* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

	 [* * *] – [* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

	 [* * *] – [* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

	 [* * *] – [* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

	 [* * *] –[* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

	 [* * *] units
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]
	 	 [* * *]

 
In [* * *], and
each year thereafter, the above Transfer Prices shall be readjusted up or down effective as of each January 1 by the percentage change in the United States Consumer Price Index (Urban Wage Earners and Clerical Workers, U.S. City Average, All Items,
1982-1984 = 100) from the prior January 1. Endo shall have no obligation to pay the Transfer Price to DURECT for Product that has been paid for under the Development Budget, including Product from validation batches that are shipped to Endo for
commercial sale. The Parties shall agree in good faith on applicable Transfer Prices for Product line extensions and Related Products, if any, Commercialized under this Agreement. 
 
(b) DURECT shall submit invoices to Endo for Product and Finished Product promptly after shipment. Payment
terms shall be [* * *] days from the date of Endo’s receipt of any correct invoice. Payments shall be sent to the “Remit to” address set forth on the invoice. Endo shall pay DURECT a late charge of [* * *] per month (or
the maximum interest allowable by applicable law, whichever is less) for each invoice past due for more than 30 days from the date of Endo’s receipt of any correct invoice. Should Endo dispute any portion of an invoice, it shall not be required
to pay any portion of such invoice until such time as the dispute is resolved 

 

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and Endo receives a fully corrected invoice; provided that, in such an event, DURECT shall have the option of issuing a new,
correct invoice for the portion of the original invoice not in dispute, and the disputing Party shall pay such new invoice within the time limits set forth in this Section 8.6(b). Notwithstanding the foregoing, Endo has no obligation to pay for any
shipment of Product and Finished Product that (i) Endo and DURECT agree does not meet the Specifications and/or Manufacturing Standards, (ii) in accordance with Section 8.8(b), Endo has found does not meet the Specifications and/or Manufacturing
Standards and such findings have not been disproved by independent laboratory testing or (iii) is under quarantine (provided that in such event, Endo shall pay for such Product [* * *] days from the date of release of such quarantine). Upon
DURECT’s receipt of a notice from Endo claiming that a shipment of Product does not meet the Specifications and/or applicable Manufacturing Standards, the time period for payment of such shipment or such batch shall toll until such time as such
non-conformity questions regarding such shipment or such batch are resolved in accordance with Section 8.8. All relevant terms of Section 7 with respect to payments of Distribution Fees shall apply to the payment of invoices for the supply of
Product or Finished Product. 
 
8.7 Conformity;
Specifications; Quality Control 
. 
(a) All Product, Finished Product and Implanters supplied by DURECT pursuant to this Agreement shall comply in all material respects with the Specifications and applicable Manufacturing Standards and shall adhere to all
applicable laws and regulations relating to the manufacture, sale and shipment of each shipment of Product, Finished Product and Implanters at the time it is shipped by DURECT hereunder. 
 
(b) Changes to the Specifications shall be made only by the JMC, subject to the Parties’ right to
challenge such changes pursuant to this Agreement. DURECT shall ensure that all such changes shall be reflected in all Regulatory Authority filings. 
 
(c) DURECT shall conduct, or cause to be conducted, quality control testing of Product, Finished Product and Implanters prior to shipment,
in accordance with the Specifications and applicable Manufacturing Standards as are in effect from time to time and such other quality control testing procedures adopted by the JMC from time to time (collectively, the “Testing
Methods”). Initially and until decided otherwise by the JMC, the Testing Methods 

 

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shall include all FDA required release testing and DURECT shall undertake all such tests. DURECT shall retain records pertaining to such
testing. Each shipment of Product, Finished Product and Implanters hereunder shall be accompanied by a certified quality control protocol and certificate of analysis for each lot of Product, Finished Product and Implanters therein as well as such
customs and other documentation as is necessary or appropriate. 
 
(d) Endo shall have the right, at reasonable times and upon reasonable notice, to inspect and audit all DURECT facilities at which Product, Finished Product or Implanters are manufactured pursuant to this Section 8 for purposes of
determining compliance with the terms of this Agreement, including cGMP. DURECT shall use all reasonable commercial efforts to gain access to the facilities of Third Party Manufacturers at which Product, Finished Product or Implanters are
manufactured for Endo to so audit such facilities for purposes of determining compliance with the terms of this Agreement, including cGMP. 
 
(e) DURECT shall ensure that each Product, Finished Product and Implanters, when delivered to Endo, meets the Specifications and
Manufacturing Standards, and the standards of Product and Finished Product identity, strength, quality and purity set forth in the NDA. In addition, DURECT shall ensure that all Product, Finished Product, Implanters and, if Commercialized hereunder,
Implant Kits supplied to Endo or its Affiliates, Sublicensees or designees shall (i) meet all applicable requirements of any relevant Regulatory Authority in the Territory and any other applicable laws or regulations, (ii) be manufactured, packaged,
tested, stored and shipped in accordance with applicable cGMPs, and applicable law or regulation, and (iii) be produced, packaged, tested and stored in facilities that have been approved by the applicable Regulatory Authority, to the extent required
by applicable law or regulation. 
 
8.8
Acceptance/Rejection; Interim Replacement 
. 
(a) Endo and its designees shall have the right to reject any shipment of Product, Finished Product or Implanters made to it under this Agreement that does not meet the Specifications or applicable
Manufacturing Standards in any material respects when inspected by Endo to verify its conformity to the Specifications, applicable Manufacturing Standards and applicable purchase order; provided that such claims by Endo of
non-conforming Product, 
 

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Finished Product or Implanters shall be deemed waived unless made by Endo in writing and received by DURECT within a [* * *] period of
Endo discovering same. 
 
(b) Any notice delivered
pursuant to Section 8.8(a) shall specify the reasons for the rejection. After notice of rejection is received by DURECT, Endo shall cooperate with DURECT in determining whether rejection is justified. DURECT shall notify Endo as soon as reasonably
possible, but not later than [* * *] after receipt of the notice from Endo, whether it accepts Endo’s basis for rejection. If DURECT accepts Endo’s determination that the Products, Finished Product or Implanters are non-conforming,
then DURECT shall replace such shipment or batch with conforming Product, Finished Product or Implanters and pay for all reasonable out-of-pocket expenses incurred by Endo and DURECT in connection with shipping and/or storing such replacement
Product, Finished Product or Implanters and storing the non-conforming Product, Finished Product or Implanters. If DURECT does not accept Endo’s determination that the Products, Finished Products or Implanters are non-conforming, and Endo does
not accept DURECT’s conclusion, then DURECT and Endo shall jointly select an independent Third Party expert to test the Product, Finished Product and/or Implanter and determine whether they conform to the Specifications, applicable
Manufacturing Standards and applicable purchase order. The Parties agree that such Third Party’s determination shall be final and binding. The Party against whom the Third Party expert rules shall bear the costs of the Third Party testing. If
the Third Party expert rules that the Product, Finished Product or Implanter conform to the Specifications, the applicable Manufacturing Standard and applicable purchase order, then Endo shall purchase the Product, Finished Product or Implanter at
the agreed upon price. If the Third Party rules that the Product, Finished Product or Implanters do not conform to the Specifications, the applicable Manufacturing Standard or applicable purchase order, then DURECT agrees to replace such shipment or
batch with conforming Product, Finished Product or Implanters (unless it has already done so pursuant to Section 8.8(c)) and pay for all reasonable out-of-pocket expenses incurred by Endo and DURECT in connection with shipping and/or storing such
replacement Product, Finished Product or Implanters and storing the non-conforming Product, Finished Product or Implanters. Such replacement shipment of Product, Finished Product or Implanters shall be treated as a new, additional shipment of
Product, Finished Product or Implanters (that will be separately invoiced by DURECT if the Product, Finished Product or 

 

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Implanters being replaced has not been paid for by Endo) for all purposes, including measuring its conformity to the Specifications,
applicable Manufacturing Standards and applicable purchase order, and Endo’s payment for such additional shipment. Endo shall return any such rejected shipment to DURECT if so instructed by DURECT, at DURECT’s expense. In the event that
any Product, Finished Product or Implanters shipment or batch thereof is ultimately agreed or found to meet the Specifications, applicable Manufacturing Standards and applicable purchase order, Endo shall accept and pay for such shipment or batch in
accordance with Section 8.6(b). 
 
(c) Upon
DURECT’s receipt of a claim that a shipment or batch thereof of Product, Finished Product or Implanters does not meet the Specifications and/or applicable Manufacturing Standards, DURECT shall replace such shipment or batch thereof with an
additional shipment of Product that does conform to such standards, as soon as reasonably practicable; provided that such replacement shall not constitute an acceptance by DURECT that such Product, Finished Product or Implanter are non-conforming.

 
(d) DURECT shall maintain in inventory as safety
stock Product, Finished Product and Implanters, and all components thereof, and Endo shall maintain in inventory as safety stock Product, Finished Product and Implanters, as is reasonable and customary in the pharmaceutical industry for product
manufacturers and marketers, respectively. 
 
8.9
Inventory Management. Endo shall maintain inventory of Product, Finished Product and Implanters in accordance with Endo’s usual and customary inventory management practices that Endo applies to its other products. 
 

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8.10
Shortage of Supply. DURECT shall notify Endo as promptly as possible upon becoming aware that DURECT is unable to supply the quantity of Product, Finished Product or Implanters to Endo that DURECT is required to supply hereunder, but in no
event more than [* * *] after DURECT’s receipt of a firm order from Endo as provided in Section 8.4 if DURECT is unable to supply such quantities of Product, Finished Product or Implanters. In such event, DURECT shall implement all
commercially reasonable efforts to remedy such shortage, including through the use of Third Party Manufacturers for all or a portion of such quantities of Product, Finished Product or Implanters as determined are necessary by the JMC. 
 
8.11 Inability to Supply. 
. 
(a) In the event of any
Short-Term Inability to Supply or Long-Term Inability to Supply, Endo shall be entitled in proportion to the supply shortfall to (i) delay the incurrence of the Development Costs and/or the Distribution Fee, sales costs and/or marketing costs for
the relevant period, until such Short-Term Inability to Supply or Long-Term Inability to Supply ends, and (ii) reduce its Product and Finished Product (and corresponding Implanter) forecasts pursuant to Section 8.3, in which case the Development
Budget and/or the relevant Marketing Budget shall be adjusted accordingly. Any issues relating to the application of this provision shall be subject to review by the relevant Committee, and any resolution of such matters shall require a consensus
decision by such Committee (or be resolved pursuant to the Accelerated Arbitration Provisions set forth in Section 16.13(b)), provided that Sections 2.1(d)(ii) and (iii) shall not apply with respect to such matter. 
 
(b) An “Inability to Supply” shall mean: (i)
with respect to the supply of Product and Implanters for development activities, DURECT’s failure for any reason, including Force Majeure, to supply Endo with quantities of Product (or corresponding Implanters) meeting the Specifications and
Manufacturing Standards equal to at least [* * *] of the quantity of Product (or corresponding Implanters) reasonably required to perform the development activities under the Development Plan and Post-Registration Plan over any calendar
quarter; and (ii) with respect to the supply of Finished Product and Implanters for commercial sales, DURECT’s failure for any reason, including Force Majeure, to supply Endo with quantities of Finished Product (or corresponding Implanters)
meeting the Specifications and Manufacturing Standards equal to at least [* * *] of the quantity of Finished Product (or corresponding Implanters) set 

 

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forth in the Current Forecast and binding on Endo pursuant to Section 8.3; provided that (i) an Inability to Supply that occurs
(A) during the [* * *] immediately following the First Commercial Sale or (B) due to a Force Majeure after the [* * *] year immediately following the First Commercial Sale shall not be deemed a breach (including a Termination Event) by
DURECT of this Agreement if (a) DURECT has used all reasonable commercial efforts to supply such quantities of Product and Finished Product (and corresponding Implanters) that are binding on Endo pursuant to Section 8.3, and (b) such Inability to
Supply has not resulted from the willful wrongdoing, recklessness or gross negligence of DURECT, and (ii) in the event that the foregoing clause (i) applies, quantities of Finished Product (and corresponding Implanters) that are binding on Endo
pursuant to Section 8.3 shall, at Endo’s option in its sole discretion, be reduced in proportion to any such Inability to Supply. 
 
(c) A “Short-Term Inability to Supply” is any Inability to Supply that is reasonably expected to continue for no more
than a [* * *] period of time. 
 
(d) A
“Long-Term Inability to Supply” shall mean any Inability to Supply that is reasonably expected to exceed or actually exceeds a [* * *] period of time. 
 
(e) In the event that either Party believes or has reason to believe that any Long-Term Inability to Supply
exists, such Party shall provide the other Party with prompt written notice of such claim and the JMC shall promptly meet to discuss such claim and to determine whether the alleged Long-Term Inability to Supply exists. If the JMC does not reach a
consensus decision in its deliberations regarding such claims, then the matter shall be referred to the JEC for resolution, provided that Sections 2.1(d)(ii) and (iii) shall not apply with respect to such matter. If the JEC does not reach
consensus decision on the matter, then Endo may submit the matter to arbitration pursuant to the Accelerated Arbitration Provisions set forth in Section 16.13(b). The Parties shall reasonably and promptly cooperate with the JMC, JEC, and
arbitrators, as the case may be, during their proceedings regarding such claims. 
 
(f) If a determination is made pursuant to Section 8.11(e), by the JMC, the JEC, or the arbitrators, as the case may be, that a Long-Term Inability to Supply exists, the JEC shall re-evaluate the
Development Plan, Marketing Plans, Development Budget and/or the Marketing Budgets in view of such Long-Term Inability to Supply. If a determination is made pursuant to 

 

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Section 8.11(e), by the JMC, the JEC, or the arbitrators, as the case may be, that a Long-Term Inability to Supply exists, then: (i) for so
long as such Long-Term Inability to Supply continues, the JMC shall be co-chaired by representatives of Endo and DURECT and matters that are the subject of a deadlock arising in the JMC shall be resolved in accordance with the Accelerated
Arbitration Provisions of Section 16.13(b); (ii) DURECT shall cooperate with Endo in using an alternative supply, including in connection with the use of qualified Third Party Manufacturers and sourcing of materials; and (iii) Endo shall (with the
understanding that the goal of the Parties shall be to transition the manufacture and supply of Product and Finished Product back to DURECT as soon as practicable, to the extent that such Long-Term Inability to Supply ceases to exist) have the right
to, or direct that DURECT, take one or more of the following actions in connection with the Product, Finished Product or Implanter supply shortfall: 
 
(i) use a Third Party Manufacturer to fill the Product, Finished Product or Implanter supply shortfall; 
 
(ii) take such other actions as may be
necessary for purposes of filling the Product, Finished Product and Implanter supply shortfall. 
 
(g) In the event that a Third Party Manufacturer is to supply Product, Finished Product or Implanters in accordance with Section 8.11(f), 8.13 or 8.15, DURECT shall fully cooperate with such Third
Party Manufacturer, and take all actions necessary to qualify them as a manufacturer of Product, Finished Product or Implanters, including: (i) providing them with copies of all documentation within DURECT’s possession and control that is
reasonably necessary for them to manufacture Product, Finished Product or Implanters; (ii) providing such technical assistance as is reasonably necessary to enable them to manufacture Product, Finished Product or Implanters in accordance with the
Specifications and the applicable Manufacturing Standards; and (iii) to the extent that a Third Party Manufacturer supplies Product, Finished Product or Implanters pursuant to Section 8.11(f), 8.13 or 8.15, Endo shall be relieved of its obligation
to purchase from DURECT such quantities of Product, Finished Product or Implanters. 
 
8.12 Additional Commercial Facilities. No later than [* * *] prior to the date when Endo reasonably believes that the quantity of Finished Product required by Endo for commercial 

 

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sale will exceed the maximum capacity of DURECT’s then existing manufacturing facility(ies), Endo will provide written notice to DURECT
setting forth the maximum quantity of Finished Product that it reasonably believes will be required per year to support commercial sales for the subsequent [* * *] calendar years (“Estimated Required Capacity”). Upon receipt
of such notice, the JMC and JCC shall discuss and decide what course of action to pursue in order to accommodate such anticipated increased demand, including the use of Third Party Manufacturers. In the event the JEC in consultation with the JMC and
JCC decides that a new commercial manufacturing facility should be built in order to provide the Estimated Required Capacity, then DURECT and Endo shall agree in good faith to a plan to equitably share the costs of building and maintaining a new
commercial manufacturing facility with capacity to supply Finished Product up to the Estimated Required Capacity in a manner intended to ensure continuous supply of Product and Finished Product hereunder; it being understood that the Parties will
agree to the ownership of such facility(ies) at such time. 
 
8.13 Implanters. DURECT, in coordination with the JMC and JCC, shall be responsible for identifying appropriate Third Party Manufacturers of, and delivering to Endo, its Affiliates or designees for distribution to Third
Parties, all Implanters and, if Commercialized hereunder, Implant Kits pursuant to the forecast, order, invoicing and delivery procedures set forth in Sections 8.2 through 8.6. DURECT’s actual, direct cost of Implanters shall be paid for, and
the net sales derived from the sale of such Implanters, shall be shared by DURECT and Endo equally (i.e., 50% for each Party) pursuant to appropriate procedures to be submitted by the JMC in consultation with the JCC and subject to approval
of the JEC. 
 
8.14 Finishing. Unless
requested by Endo in writing to the contrary, DURECT shall supply to Endo for commercial distribution all (i) Product as Finished Product, and (ii) Implanters and, if Commercialized hereunder, Implant Kits in ready-for-sale form, including any
labeling and other packaging materials approved by the JCC. 
 
8.15 Third Party Manufacturers. 
 
(a) No later than [* * *] following the JCC’s first adoption of the Marketing Plan, the JMC, in consultation with the PDC, shall adopt a plan (a “Third Party Manufacturing Plan”) identifying potential
Third Parties to be engaged by DURECT, and that are approved in writing 

 

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by Endo (such approval not to be unreasonably withheld or delayed), to perform services or supply facilities or goods in connection with the
manufacture, testing and/or packaging of the Product or Implanter (including all components, sub-assembly, assembly, finish and fill and packaging thereof) by or on behalf of DURECT to ensure continuous supply of Product, Finished Product and
Implanters hereunder (“Third Party Manufacturers”). Such Third Party Manufacturing Plan shall be subject to written approval by Endo (such approval not to be unreasonably withheld or delayed), following which DURECT shall use all
commercially reasonable efforts to enter into definitive manufacturing license agreements with such Third Party Manufacturers (each, a “Third Party Manufacturing Agreement”) and use all commercially reasonable efforts to obtain any
necessary or appropriate Regulatory Approval for such Third Party Manufacturer to perform in connection with this Agreement. The Third Party Manufacturers shall be required to provide any and all services, facilities and goods necessary for the
manufacture of Product, Finished Product and Implanters in the event that DURECT ceases to fulfill its obligations to do so under this Agreement, including as a result of an Inability to Supply, a Bankruptcy Case or Bankruptcy Rejection, Force
Majeure, or being a Non-Performing Party or other breach of DURECT’s obligations hereunder. 
 
(b) DURECT shall use all commercially reasonable efforts to enter into definitive Third Party Manufacturing Agreements within [* * *] following the adoption by the JMC of the Third Party
Manufacturing Plan. If (i) a Third Party Manufacturing Agreement is not entered into within such [* * *] period, (ii) there are, at any time following such [* * *] period, any types of services, facilities, components or goods that are
required to be provided by DURECT under this Agreement that are not then covered by any Third Party Manufacturing Agreement, or (iii) a Third Party Manufacturing Agreement shall terminate, then the JMC shall promptly amend the Third Party
Manufacturing Plan to identify additional or alternative potential Third Party Manufacturers to perform such function, and, following Endo’s approval (not to be unreasonably withheld or delayed) of such amended plan, DURECT shall promptly enter
into negotiations with such Third Parties to obtain appropriate Third Party Manufacturing Agreements. 
 
(c) The Third Party Manufacturing Agreements shall contain the obligations set forth in Section 8.15(a), and shall provide that Endo shall
be an intended third party beneficiary of such Third Party Manufacturer’s obligations to DURECT thereunder, including with rights of 

 

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direct enforcement by Endo. In addition, each Third Party Manufacturing Agreement shall provide that, in the event that DURECT, or any other
Person acting on behalf of DURECT or its estate pursuant to any Bankruptcy Laws, shall seek or obtain a Bankruptcy Rejection of such Third Party Manufacturing Agreement, then the Third Party Manufacturer shall (i) timely exercise its rights to
continue any and all licenses thereunder, pursuant to 11 U.S.C. 365(n) of the Bankruptcy Laws, and (ii) to the extent that Bankruptcy Rejection effectively terminated the Third Party Manufacturing Agreement, immediately enter into an agreement with
Endo, on substantially the same terms and conditions. The Third Party Manufacturing Agreements may contain such additional terms and conditions as DURECT and the Third Party Manufacturer shall agree to, subject to the approval of the JMC prior to
the execution of such Third Party Manufacturing Agreement and provided that such additional terms and conditions do not prejudice, reduce or limit Endo’s rights under this Agreement (including this Section 8.15). 
 
(d) With respect to Third Party Manufacturers identified and
approved hereunder, all activities relating thereto shall be included in the Development Plan and the costs shared by the Parties in accordance with Section 4.6. 
 
(e) The provisions of Sections 6.5 and 6.6 of this Agreement regarding the ALZA Agreement shall apply
mutatis mutandis to the Third Party Manufacturing Agreements. 
 
8.16 Limitation on Use of Third Party Manufacturers. Notwithstanding anything to the contrary in this Section 8 or in this Agreement, DURECT’s use of Third Party Manufacturers shall be at
all times subject to the limitations and conditions set forth in the ALZA Agreement, and DURECT shall not be required to contract any manufacturing activity relating to the Product which would be a violation of its obligations under the ALZA
Agreement; provided that DURECT shall use all reasonable commercial efforts to obtain any necessary consents from ALZA regarding such Third Party Manufacturers. 
 
9. OWNERSHIP; PATENTS; TRADEMARKS. 
 
9.1 Ownership. As between the Parties, all Inventions shall be owned by DURECT (or its nominee); provided the Parties hereby
acknowledge that ALZA shall own specified Inventions related to Systems in accordance with the terms of the ALZA Agreement. To the extent necessary to effectuate the foregoing, Endo shall take any action reasonably necessary to 

 

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effectuate DURECT or its nominee’s ownership pursuant to the foregoing (subject to DURECT reimbursing all reasonable out-of-pocket
expenses incurred by Endo in connection therewith). DURECT shall at all times have all right, title and interest in and to the Patents, Technical Information and Intellectual Property Rights relating to the Product, Finished Product and Implanter
(subject to the rights of ALZA), whether in existence on the Effective Date or developed during the term of this Agreement, subject to the rights granted to Endo pursuant to this Agreement. 
 

	9.2	 	Maintenance of the Patents. 

 
(a) Subject to Section 9.2(b), DURECT shall have full responsibility for, and shall control the preparation and prosecution of, and shall
pay all application and maintenance fees for, all Patents owned or filed by DURECT. DURECT shall use all commercially reasonable efforts to prosecute and maintain all Patents owned by DURECT. In connection therewith, DURECT shall generally consult
with Endo on all future filings to be made by DURECT with respect to the Patents and the prosecution and maintenance of such Patents, including where appropriate or reasonably requested by Endo, providing copies to Endo of any such filings made to,
and written communications received from, any patent office relating, in whole or in part, to the Patents, and notifying Endo promptly of (and, where possible, prior to), and consulting with and considering in good faith suggestions by Endo to
avoid, any abandonment or invalidation of any such Patent. 
 
(b) Upon Endo’s written request, DURECT shall consider in good faith applying for patents, in all jurisdictions in the Territory, at DURECT’s sole expense, on any potentially patentable Invention which is not already the
subject of a Patent. 
 
(c) Each Party shall
cooperate with the other Party (or its designee) to execute all lawful papers and instruments, to make all rightful oaths and declarations and to provide consultation and assistance as may be necessary in the preparation, prosecution, maintenance
and enforcement of all such Patents pursuant to this Agreement. 
 
9.3 Infringement. 
 
(a) If
any Party learns of any actual or alleged unauthorized use, infringement or threatened infringement or other violation by a Third Party within the Territory (any of the 

 

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foregoing, an “Infringement”) by a Third Party with respect to any Patent, Technical Information, or any DURECT Trademark,
Endo Trademark or Co-Owned Trademark, such Party shall promptly notify the other Party and shall provide such other Parties with available evidence of such infringement. 
 
(b) DURECT shall have the first right, but not the duty, to institute Infringement actions against Third
Parties based on any Patent, Technical Information, Invention or other Intellectual Property Rights owned by DURECT in the Territory. If DURECT does not institute an Infringement proceeding against such an offending Third Party within [* * *]
of learning of such Infringement or, in the event that a Third Party files a paragraph IV certification relating to any Patent pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii)(IV) of the Hatch/Waxman Act (or any successor statute), if DURECT does not
institute an Infringement proceeding against such Third Party within [* * *] of receipt of notice of such paragraph IV certification, or DURECT at any time ceases to actively prosecute any such ongoing Infringement, Endo shall have the right,
but not the duty, to institute such an action with respect to any such Infringement; provided that Endo may not enter into any settlement, consent judgment or other voluntary final disposition of such action which adversely affects the
validity, enforceability, scope or ownership of any Patent, Trademark, Technical Information, Invention or other Intellectual Property Rights owned by DURECT without the prior written consent of DURECT, which will not be unreasonably withheld or
delayed. The costs and expenses of any such action (including reasonable fees of attorneys and other professionals) shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action,
such costs and expenses shall be borne by the Parties in such proportions as they may agree in writing. Each Party shall execute all necessary and proper documents, take such actions as shall be appropriate to allow the other Party to institute and
prosecute such infringement actions and shall otherwise cooperate in the institution and prosecution of such actions (including consenting to being named as a nominal party thereto). Each Party prosecuting any such Infringement action shall keep the
other Party reasonably informed as to the status of such action. Any award paid by Third Parties as a result of such an Infringement action (whether by way of settlement or otherwise) shall be applied first to reimburse the Parties for all costs and
expenses incurred by the Parties with respect to such action on a pro rata basis and, if after such reimbursement any funds shall remain 

 

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from such award, they shall be allocated as follows: (i) if DURECT has instituted and maintained such action alone, DURECT shall be entitled
to retain such remaining funds; (ii) if Endo has instituted and maintained such action alone, Endo shall be entitled to retain such remaining funds; or (iii) if the Parties have cooperated in instituting and maintaining such action, the Parties
shall allocate such remaining funds between themselves in the same proportion as they have agreed to bear the expenses of instituting and maintaining such action. Notwithstanding anything herein to the contrary, the Parties hereby acknowledge that
ALZA shall have the right to enforce any patents covering the System as set forth in Section 9.2 of the ALZA Agreement. 
 
(c) The provisions set forth in Section 9.3(b) shall apply with equal force mutatis mutandis to the DURECT Trademarks and,
if selected by the JCC, the Co-Owned Trademark CHRONOGESIC® (wherein DURECT shall have the first right to
institute Infringement proceedings) and the Endo Trademarks and other Co-Owned Trademarks (wherein Endo shall have the first right to institute Infringement proceedings). Notwithstanding the foregoing, the commencement and maintenance of proceedings
with respect to the trademark ENDO and Endo’s logo (and variations on the foregoing) shall be in the sole discretion of Endo, with no right granted to DURECT to commence, prosecute or settle any action with respect thereto, and the commencement
and maintenance of Infringement proceedings with respect to the trademark DURECT and DURECT’s logo (and variations on the foregoing) shall be in the sole discretion of DURECT, with no rights granted to Endo to commence, prosecute or settle any
action with respect thereto. 
 
10. PUBLICATION; CONFIDENTIALITY.

 
10.1 Notification. The Parties recognize
that each may wish to publish the results of their work relating to the subject matter of this Agreement. However, the Parties also recognize the importance of acquiring patent protection and other considerations. Consequently, subject to any
applicable laws or regulations obligating any Party to do otherwise, any proposed publication by any Party concerning the subject matter of this Agreement shall comply with this Section 10. All such publications, whether written or oral, shall be
prepared in accordance with the publication strategy established and approved by the JCC and PDC. At least [* * *] before a manuscript is to be submitted to a publisher, the publishing Party will provide the JCC with a copy of the manuscript.
If the publishing Party wishes to make an oral presentation, it will 

 

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provide the JCC with a summary of such presentation at least [* * *] before such oral presentation and, if an abstract is to be
published, [* * *] before such abstract is to be submitted. Any oral presentation, including any question period, shall not include any Confidential Information belonging to a Party unless such Party agrees in writing to such inclusion in
advance of such oral presentation. 
 
10.2
Review. The JCC will review the manuscript, abstract, text or any other material provided to it under Section 10.1 to determine the advisability of such publication from the marketing perspective, to determine whether patentable subject
matter is disclosed and to assess the accuracy of the technical content therein. The JCC will notify the publishing Party within [* * *] of receipt of the proposed publication if the JCC, in good faith, determines that patentable subject
matter is or may be disclosed, or if the JCC, in good faith, believes Confidential Information is or may be disclosed. If it is determined by the JCC that patent applications should be filed, the publishing Party shall delay its publication or
presentation for a period not to exceed [* * *] from the JCC’s receipt of the proposed publication or presentation to allow time for the filing of patent applications covering patentable subject matter. In the event that the delay needed
to complete the filing of any necessary patent application will exceed the [* * *] period, the JCC will discuss the need for obtaining an extension of the publication delay beyond the [* * *] period. If it is determined in good faith
by a Party that Confidential Information or proprietary information of such Party is being disclosed, the Parties shall consult in good faith to arrive at an agreement on mutually acceptable modifications to the proposed publication or presentation
to avoid such disclosure. 
 
10.3
Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the term of this Agreement and for 10 years thereafter, the receiving Party, its Affiliates and its
designees shall, and shall ensure that their respective employees, officers, directors and other representatives shall, keep completely confidential and not publish or otherwise disclose and not use for any purpose any information furnished to it or
them by the disclosing Party, its Affiliates or its designees, except to the extent that it can be established by the receiving Party by competent proof that such information: (i) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the disclosing Party; (ii) was generally available to the public or otherwise 

 

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part of the public domain at the time of its disclosure to the receiving Party; (iii) became generally available to the public or was
otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement; or (iv) was disclosed to the receiving Party, other than under an obligation of confidentiality,
by a Third Party who had, to the receiving Party’s knowledge, no obligation to the disclosing Party not to disclose such information to others (all such information to which none of the foregoing exceptions applies, and the terms of this
Agreement (subject to DURECT’s obligation, if any, to share this Agreement and other required information with ALZA, but only to the extent required pursuant to the ALZA Agreement and under appropriate confidentiality conditions), shall be
deemed “Confidential Information”). Any and all information and materials, including any and all Intellectual Property Rights therein and thereto, owned by a Party shall constitute Confidential Information of such Party which shall
be deemed the disclosing Party with respect to such Confidential Information. 
 
10.4 Exceptions to Obligation. The restrictions contained in Sections 10.3 or 16.7 shall not apply to Confidential Information that: (i) is submitted by the recipient to Governmental Entities to
facilitate the issuance of Registrations for the Product, provided that reasonable measures shall be taken to assure confidential treatment of such information; (ii) is provided by the recipient to Third Parties under confidentiality
provisions at least as stringent as those in this Agreement, in connection with consulting, development, manufacturing, external testing, or marketing trials under this Agreement; or (iii) is otherwise required to be disclosed in compliance with
applicable laws or regulations or order by a court or other regulatory body having competent jurisdiction; provided that if a Party is required to make any such disclosure of disclosing Party’s Confidential Information such Party will,
except where impracticable for necessary disclosures (for example, to physicians conducting studies or to health authorities), give reasonable advance notice to the disclosing Party of such disclosure requirement, and will use all reasonable efforts
to secure confidential treatment of such Confidential Information required to be disclosed. 
 
10.5 Limitations on Use. Each Party shall use, and cause each of its Affiliates and its licensees to use, any Confidential Information obtained by such Party from the disclosing Party, 

 

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its Affiliates or its licensees, pursuant to this Agreement or otherwise, solely in connection with the activities or transactions
contemplated hereby. 
 
10.6 Remedies. Each
Party shall be entitled, in addition to any other right or remedy it may have, at law or in equity, to an injunction, without the posting of any bond or other security, enjoining or restraining the disclosing Party, its Affiliates and/or its
licensees from any violation or threatened violation of this Section 10. 
 
11. REPRESENTATIONS AND WARRANTIES. 
 
11.1 Representations and Warranties of the Parties. Each Party represents and warrants to the other Party that: 
 
(a) Such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has
full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; 
 
(b) Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement and has full power and authority to enter into this Agreement and perform its obligations under this Agreement; 
 
(c) This Agreement has been duly executed by such Party and constitutes a valid and legally binding obligation of such Party, enforceable
in accordance with its terms, subject to and limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws generally applicable to creditors’ rights; and (ii) judicial discretion in the availability of equitable
relief; 
 
(d) With the exception of approval by
Regulatory Authorities, such Party has obtained, or is not required to obtain, the consent, approval, order, or authorization of any Third Party, or has completed, or is not required to complete, any registration, qualification, designation,
declaration or filing with, any Governmental Entity, in connection with the execution and delivery of this Agreement and the performance by such Party of its obligations under this Agreement, including any grant of rights to the other Party pursuant
to this Agreement; and 
 

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(e) The
execution and delivery of this Agreement, and the performance by such Party of its obligations under this Agreement, including the grant of rights to the other Party pursuant to this Agreement, does not and will not: (i) conflict with, nor result in
any violation of or default under any instrument, judgment, order, writ, decree, contract or provision to which such Party is otherwise bound; (ii) give rise to any lien, charge or encumbrance upon any assets of such Party or the suspension,
revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization or approval that applies to such Party, its business or operations or any of its assets or properties; or (iii) conflict with any rights granted by such
Party to any Third Party or breach any obligation that such Party has to any Third Party. 
 
11.2 Representations and Warranties of DURECT. DURECT represents and warrants to Endo that: 
 
(a) DURECT is the owner of, or has sufficient rights to, all of the Patents, Technical Information and DURECT Trademarks in existence on
the Effective Date to manufacture the Product and Finished Product and to grant to Endo the rights granted under this Agreement (including the right to Commercialize the Product, Finished Product and Implanter). To the knowledge of DURECT, as of the
Effective Date all of the Patents and DURECT Trademarks are valid, in full force and effect and have been maintained to date, and, except as indicated on Exhibit D with respect to DURECT Trademarks, are not the subject of any interference or
opposition proceedings; 
 
(b) To the knowledge of
DURECT, the Parties’ manufacture, use or Commercialization of the Product, Finished Product or Implanter or use of the DURECT Trademarks as contemplated by this Agreement will not infringe or otherwise violate any Intellectual Property Right or
trademark of any Third Party, and, as of the Effective Date, DURECT is not aware of any asserted or unasserted claims, interferences, oppositions or demands of any Third Party against the Patents or Technical Information or (except as set forth on
Exhibit D) the DURECT Trademarks in existence as of the Effective Date; 
 
(c) The manufacturing facility(ies) owned by DURECT (i) shall be capable of supplying up to [* * *] units of Product and Finished Product during the calendar year in which the First Commercial Sale occurs, including
supply for all requirements for Product under this 

 

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Agreement for clinical trials, (ii) shall be capable of supplying up to [* * *] units of Product and Finished Product during the [*
* *] year following the First Commercial Sale and (iii) the Transfer Fee set forth in this Agreement is DURECT’s current best estimate of the commercial terms on which DURECT can sell Finished Product to Endo; 
 
(d) As of the Effective Date, DURECT has provided Endo, or
given Endo access to, true, complete and unredacted copies of all (i) Regulatory Documentation, (ii) agreements (including any letter agreements) between DURECT and ALZA, including all effective amendments to any such agreements (excluding the
Product Acquisition Agreement, dated April 14, 2000, concerning ALZET® an osmotic, implantable pump for research
use in laboratory animals) and (iii) correspondence between ALZA and DURECT which have been retained in DURECT’s records as part of its normal course of business, which, in any event: (A) affects or may affect Endo’s rights under this
Agreement, or (B) to the extent not precluded by confidentiality obligations to ALZA, relates to the Product; 
 
(e) ALZA has declined any rights it may have to Commercialize the Product under the ALZA Agreement and accordingly has no such rights; and

 
(f) As of the Effective Date, DURECT is not
developing any New Product or Related Product other than those set forth on Exhibit F. 
 
11.3 Disclaimer of Other Warranties. EXCEPT AS SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. 
 
12. RECALL; INDEMNIFICATION; INSURANCE. 
 
12.1 Investigation; Recall. In the event that the Regulatory Authority in the Territory shall allege or prove that a Product, Finished Product, Implanter or, if Commercialized hereunder, Implant
Kit does not comply with applicable rules and regulations in the Territory, Endo shall notify DURECT immediately. The JEC upon the recommendation of the JMC, in consultation with the JCC, shall conduct any appropriate investigation and shall make a
determination as to the disposition of any such matter. If Endo is required or if the JEC upon the 

 

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recommendation of the JMC should deem it appropriate to conduct any recall DURECT and Endo shall bear the costs and expenses associated with
such recall, in the proportion of [* * *] for DURECT and [* * *] for Endo, unless: (i) the predominant cause of such recall results from DURECT’s failure to provide Product, Finished Product, Implanters or, if Commercialized
hereunder, Implant Kits in accordance with this Agreement, or unless the predominant cause of such recall results from DURECT’s breach of this Agreement or willful wrongdoing, recklessness or gross negligence, in each such case DURECT shall
bear all costs and expenses associated with such recall; or (ii) the predominant cause of such recall results from Endo’s breach of this Agreement or willful wrongdoing, recklessness or gross negligence, in which case Endo shall bear all costs
and expenses associated with such recall. 
 
12.2
Indemnification by DURECT. DURECT shall indemnify, defend and hold Endo and its Affiliates, and their respective directors, officers, employees and agents (each an “Endo Related Party”) harmless from and against any and all
damages, losses, judgments, penalties, fines, settlements, and costs and expenses (including reasonable fees of attorneys and other professionals) (“Damages”) arising out of Third Party claims relating to the Product, Finished
Product or Implanter that result from (i) any failure or alleged failure of any Product, Finished Product or Implanter to satisfy any of the provisions in Section 8.7, (ii) the malfunction or defect in the design or manufacture of the Product,
Finished Product or Implanter, (iii) the infringement or other violation of any Third Party Intellectual Property Rights arising out of the manufacture, use or Commercialization of the Product, Finished Product or Implanter under the terms of this
Agreement, (iv) the infringement or other violation of any Third Party trademarks with respect to the use by the Parties of the DURECT Trademarks in connection with the Product, Finished Product or Implanter under the terms of this Agreement, (v)
any payments due to ALZA under or in connection with the ALZA Agreement or any breach or alleged breach thereof, (vi) any action (or inaction) by DURECT prior to the earlier of the Trial Commencement Date and June 30, 2004, (vii) subject to any
surviving obligations of Endo under Section 12.3, any action (or inaction) by DURECT after the date of termination or expiration of this Agreement, or (viii) any other breach by DURECT of this Agreement including breach by DURECT of its
representations and warranties hereunder. 
 

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12.3
Indemnification by Endo. Endo shall indemnify, defend and hold DURECT and its Affiliates and their respective directors, officers, employees and agents (each a “DURECT Related Party”) harmless from and against any and all
Damages arising out of Third Party claims relating to the Product, Finished Product or Implanter that result from: (i) the infringement or other violation of any Third Party trademarks with respect to the use by the Parties of the Endo Trademarks in
connection with the Product, Finished Product or Implanter under the terms of this Agreement, (ii) any breach by Endo of this Agreement, including breach by Endo of its representations and warranties hereunder; or (iii) the wrongful promotion or
marketing of the Finished Product or Implanter by Endo, its Sublicensees, Affiliates and designees (other than as covered by the indemnity from DURECT to Endo for infringement or violation of Third Party Intellectual Property Rights pursuant to
Sections 12.2(iii) and (iv)). 
 
12.4 Shared
Liability. In the event Damages arise out of Third Party claims which are subject to indemnification by Endo under Section 12.3 and also subject to indemnification by DURECT under Section 12.2, then the Parties shall indemnify each other to the
extent of their respective liability for the Damages. Any Damages which arise out of Third Party claims which are not subject to indemnification by Endo under Section 12.3 or by DURECT under Section 12.2 shall be shared [* * *] by the
Parties, and the Parties shall jointly and by mutual agreement defend or settle such claims. In the event that the Parties cannot agree to their respective indemnity obligations hereunder, a Party shall be free at any time to resolve the respective
indemnity obligations of the Parties under this Section 12 pursuant to the arbitration provisions set forth in Section 16.13. 
 
12.5 Indemnification Procedure. Upon receipt by the Party or Related Party seeking indemnification hereunder (an
“Indemnified Party”) of notice of any action, suit, proceeding, claim, demand or assessment against such Indemnified Party which might give rise to Damages, the Indemnified Party shall give prompt written notice thereof to the Party
from which indemnification is sought (the “Indemnifying Party”) indicating the nature of claim and the basis therefor, provided that the failure to give such prompt notice shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent the Indemnifying Party or the defense of any such claim is materially prejudiced thereby. The Indemnifying Party shall have the right, at its option, to assume the defense of, at its own expense and by
its own counsel, any such claim 

 

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involving the asserted liability of the Indemnified Party. If any Indemnifying Party shall undertake to compromise or defend any such
asserted liability, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall agree to cooperate fully with the Indemnifying Party and its counsel in the compromise of, or defense against, any such
asserted liability; provided, however, that the Indemnifying Party shall not, as part of any settlement or other compromise, admit to liability or agree to an injunction without the written consent of the Indemnified Party.
Notwithstanding an election by the Indemnifying Party to assume the defense of any claim as set forth above, such Indemnified Party shall have the right (at its own expense if the Indemnifying Party has elected to assume such defense) to employ
separate counsel and to participate in the defense of any claim. 
 
12.6 Cost of Enforcement. All costs and expenses incurred by an Indemnified Party in connection with enforcement of its rights under Sections 12.2 and 12.3, as applicable, shall also be reimbursed by the Indemnifying Party
promptly after final determination that such Indemnified Party is entitled to such indemnification by the Indemnifying Party. 
 
12.7 Limitation on Damages. EXCEPT WITH RESPECT TO THE WILLFUL WRONGDOING, RECKLESSNESS OR GROSS NEGLIGENCE OF A PARTY, A
PARTY SHALL NOT BE LIABLE TO THE OTHER, WHETHER PURSUANT TO THE FOREGOING INDEMNIFICATION OBLIGATIONS OR OTHERWISE, FOR SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, OR PUNITIVE DAMAGES;
PROVIDED, HOWEVER, THIS EXCLUSION IS NOT INTENDED TO, NOR SHALL, EXCLUDE ACTUAL OR COMPENSATORY DAMAGES OF THE AFFECTED PARTY, INCLUDING SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OWED TO THIRD PARTIES AS A RESULT OF A THIRD PARTY
CLAIM. 
 

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12.8 Insurance. Each Party shall carry and maintain in full force and effect while
this Agreement is in effect the following insurance in amounts no less than that specified for each type (as may be increased at any time as specified by the JEC, or as the Parties may be permitted by the JEC to self-insure based on presentations to
the JEC of the capability to so self-insure): 
 
(a) Comprehensive general liability insurance with combined limits of not less than [* * *] per occurrence and [* * *] per accident for bodily injury, including death, and property damage; 
 
(b) Workers’ compensation insurance in the amounts
required by the law of the state(s) in which such Party’s workers are located; 
 
(c) Products liability insurance with a policy limit of at least [* * *] per occurrence and in the aggregate until First Commercial Sale of the Product, and thereafter with a policy limit of at
least [* * *] per occurrence and in the aggregate. 
 
Each Party hereto shall name the other Party hereto as an “additional insured” on all policies relating to the insurance described in this Section 12.8. Each Party upon request shall provide the other with evidence of such
insurance. Each Party shall provide to the other [* * *] prior written notice of any proposed cancellation, termination, reduction or change in its coverage. 
 
13. TERM; TERMINATION; ADDITIONAL RIGHTS. 
 
13.1 Term. This Agreement shall become effective as of the Effective Date and, unless earlier
terminated pursuant to the other provisions of this Section 13, shall remain in effect for so long as Endo is exercising its rights pursuant to Section 3.1(d) or (e). 
 
13.2 Termination for Cause. Either Party (“Non-Breaching Party”) may, without
prejudice to any other remedies available to it at law or in equity, terminate this Agreement, effective upon written notice of termination, in the event that the other Party (as used in this Section 13.2, the “Breaching Party”)
shall have breached or defaulted in the performance of any of its material obligations hereunder (a “Termination Event”), and such Termination Event shall have continued for [* * *] after written notice of such Termination
Event was provided to the Breaching Party by the Non-Breaching Party (or, if such Termination Event cannot reasonably 

 

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be cured within such [* * *] period, then one additional [* * *] period if the Breaching Party has commenced and diligently
continued actions to cure such Termination Event during such initial [* * *] period); provided, however, that notwithstanding anything to the contrary in this Section 13.2 or in this Agreement, DURECT may not terminate this
Agreement unless (i) Endo in the performance of its material obligations hereunder has committed a bad faith, intentional breach or default, (ii) Endo fails to comply with a final arbitration decision within [* * *] of such decision being
entered pursuant to Section 16.13, or (iii) ALZA terminates the ALZA Agreement in accordance with the terms thereof as a result of Endo’s breach or default in the performance of a material obligation under this Agreement; provided
that DURECT provides Endo with immediate written notice upon becoming aware of any such breach or default hereunder and uses all commercially reasonable efforts to assist Endo, at Endo’s expense, to cure such breach or default. Failure
to pay any amounts due under this Agreement within [* * *] after written notice that such amounts are overdue (and subject to the dispute procedures in Section 4.6(b) and 8.6(b)) shall be deemed a material breach of this Agreement.

 
13.3 Additional Termination Rights by Endo. 
 
(a) Endo shall have the right, upon 10 days’ prior
written notice to DURECT setting forth the reasons therefor, to have the JEC determine whether or not there exists a significant concern regarding a regulatory or patient safety issue that would seriously impact the long term viability of the
Product; provided that Sections 2.1(d)(ii) and (iii) shall not apply with respect to such matter. If the JEC cannot reach agreement regarding such a question, then the matter shall be resolved in accordance with the Accelerated Arbitration
Provisions of Section 16.13(b). This Agreement shall immediately terminate upon a finding by the JEC or arbitrators, as the case may be, that there exists a significant concern regarding a regulatory or patient safety issue that would seriously
impact the long term viability of the Product. In such event, Endo shall pay to DURECT before or on the effective date of termination a termination fee equal to [* * *] % of any then-outstanding payment obligations of DURECT’s
contractual obligations to Third Parties as set forth under the Product Development Plan and to Third Party Manufacturers. Notwithstanding the foregoing, in the event such a significant concern arises during or immediately following the First Trial,
Endo shall have the right to terminate this Agreement pursuant to this Section 13.3(a) without having to obtain the JEC’s or the arbitrator’s 
 

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determination and without being obligated to pay any then-outstanding payment obligations as set forth in the immediately preceding sentence.

 
(b) Following the one-year anniversary of the
Effective Date, Endo shall have the right in its sole discretion to terminate this Agreement, if not terminated by Endo under any other provision of this Agreement, effective immediately upon giving DURECT notice of such termination, provided
that (i) if Endo provides such termination notice prior to the second anniversary of the Effective Date, then Endo shall pay to DURECT an amount equal to 35% of the remaining Development Costs (if, and to the extent, Endo is obligated to make such
payments under Section 4.6(c)) set forth in the Summary Development Plan for the 12-month period following such termination, or, (ii) if Endo provides such termination notice after the second anniversary of the Effective Date, then Endo shall pay to
DURECT an amount equal to 25% of the remaining Development Costs (if, and to the extent, Endo is obligated to make such payments under Section 4.6(c)) set forth in the Summary Development Plan for the 12-month period following such termination;
provided that in the case of either of the foregoing clauses (i) and (ii), (A) Endo shall only be obligated to pay DURECT amounts under this Section 13.3(b) when such Development Costs are actually due and owing during the twelve-month
period following such termination and (B) in any event, Endo shall not be obligated to pay more than $10,000,000 in the aggregate in the event of a termination under this 13.3(b). Such termination shall be effective 30 days following written
notice of termination by Endo under this Section 13.3(b). 
 
(c) In the event that, in connection with the protocol for the first Placebo-Controlled Study, DURECT receives a final Special Protocol Assessment Letter, or the like, from the FDA that requires [* * *] in connection with the
administration of the Product and/or any one or more of the following [* * *] measures following administration of the Product, such as: (i) [* * *], (ii) [* * *], (iii) [* * *] or (iv) [* * *], then Endo
shall have the right to terminate this Agreement effective upon [* * *] days’ written notice with no further rights or obligations hereunder (other than those rights or obligations which are expressly indicated herein to survive
termination or expiration of this Agreement). 
 
(d) In the event that the Trial Commencement Date shall not have occurred on or before December 31, 2003, Endo shall have the right to terminate this Agreement effective upon 

 

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[* * *] days’ written notice with no further rights or obligations hereunder (other than those rights or obligations which are
expressly indicated herein to survive termination or expiration of this Agreement); provided that such written notice is delivered to DURECT no later than January 31, 2004. 
 
(e) In the event that the Trial Commencement Date shall not have occurred on or before June 30, 2004, Endo
shall have the right to terminate this Agreement effective upon [* * *] days’ written notice with no further rights or obligations hereunder (other than those rights or obligations which are expressly indicated herein to survive
termination or expiration of this Agreement); provided that such written notice is delivered to DURECT no later than July 31, 2004. 
 
(f) In the event that DURECT has not complied in all material respects with its obligations under the Common Stock Purchase Agreement
(including registration of the shares of DURECT Common Stock pursuant to Section 8(a) thereof), Endo shall have the right to terminate this Agreement effective upon 10 days’ written notice with no further rights or obligations
hereunder (other than those rights or obligations which are expressly indicated herein to survive termination or expiration of this Agreement). 
 
13.4 Termination in Connection With Additional Studies. If, pursuant to Section 4.7, the PDC does not receive the approval of the
JEC to undertake the additional clinical studies required by the FDA within [* * *] days of making its formal recommendation of its conclusions to the JEC, then Endo may terminate this Agreement effective immediately upon giving DURECT notice
of such termination. In the event of such a termination by Endo, DURECT shall pay to Endo [* * *] of all proceeds and other consideration received by DURECT and its Affiliates in the subsequent [* * *] years in connection with sales of
(or permitting Third Parties to sell) Product or Finished Product in the Territory, pursuant to the payments and reports procedures set forth in Section 7 (substituting DURECT for Endo and Endo for DURECT, and the proceeds under this Section 13.4
for Distribution Fees, therein). In the event that Endo does not elect to terminate this Agreement under this Section 13.4, then (i) Endo may elect to pay for such additional clinical studies required by the FDA, and shall be entitled to reduce (A)
by [* * *] % any payments otherwise due and owing to DURECT hereunder until Endo has recovered through such reductions an amount equal to [* * *] % of all costs incurred by Endo in connection 

 

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with such additional clinical studies and (B) the Distribution Fee by [* * *] for a period of [* * *] years from such election,
or (ii) if Endo does not so elect to pay for such additional clinical studies required by the FDA, then DURECT may elect to pay for such additional clinical studies and shall be entitled to receive from Endo an increase of (A) [* * *] % of
any payments otherwise due and owing to DURECT hereunder until DURECT has recovered through such increases an amount equal to [* * *] % of all costs incurred by DURECT in connection with such additional clinical studies and (B) [* * *]
of the Distribution Fee for a period of [* * *] years from such election. The other Party shall fully cooperate with the Party paying for such additional clinical studies under this Section 13.4. If neither Party elects to pay for any such
additional clinical studies, then this Agreement shall terminate. 
 
13.5 Termination in Connection with Bankruptcy. Any Party may terminate this Agreement (or, at its option, Sections 3.6 or 3.7) effective immediately in the event that the other Party (i) has become insolvent or has
been dissolved or liquidated, filed or has filed against it, a petition, case or other proceeding under any Bankruptcy Laws, and such petition, case or proceeding is not dismissed within 60 days of the filing; (ii) makes a general assignment for the
benefit of creditors; or (iii) has a receiver, custodian, trustee or other Person exercising similar functions appointed for all or substantially all of its assets. 
 
13.6 Effect of Expiration or Termination. If this Agreement expires or is terminated by any Party
pursuant to this Section 13, all rights and obligations of the Parties hereunder shall terminate except as specified in Section 13.9, and in addition to any other remedies available to the Parties at law or in equity: (i) Endo shall promptly
transfer to DURECT copies of all data, reports, records and materials in its possession or control that relate solely to the Product, Finished Product and Implanter, and return to DURECT all relevant records and materials in its possession or
control containing Confidential Information of DURECT (provided that Endo may keep one copy of such Confidential Information of DURECT for archival purposes only); (ii) Endo shall transfer to DURECT, or shall cause its designees to transfer to
DURECT, ownership of all INDs, Registration Applications, Registrations and other regulatory filings made or filed for the Product (to the extent that any are held in Endo’s name), if permitted by applicable laws and regulations; (iii) Endo
shall assign to DURECT, and hereby does assign, conditioned upon and effective only upon the termination or expiration of this Agreement, with no additional 

 

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consideration all of Endo’s right, title and interest in the Co-Owned Trademarks (which shall thereafter be deemed DURECT Trademarks)
including all goodwill associated therewith, (iv) Endo shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Section 13.6
(subject to DURECT reimbursing all reasonable out-of-pocket expenses incurred by Endo in connection therewith), and (v) DURECT shall promptly return to Endo all relevant records and materials in DURECT’s possession or control containing
Confidential Information of Endo (provided that DURECT may keep one copy of such Confidential Information of Endo for archival purposes only). 

	

13.7 Additional Rights. In the event that a Party
(“Exercising Party”) exercises its rights pursuant to Sections 3.5, 8.11, 8.15 or 13.8, and without limiting any other rights or remedies available to the Exercising Party, the other Party (“Responding Party”)
shall, at the election of the Exercising Party or its designees exercised within [* * *] of the Exercising Party or its designees’ notice to the Responding Party, promptly and free of charge: 
 
(a) deliver to the Exercising Party or its designees all
Technical Information in the Responding Party’s possession or under its control necessary for such Exercising Party to exercise its rights; and 
 
(b) cooperate with and provide promptly to the Exercising Party all reasonable assistance to enable the Exercising Party to exercise its
rights as effectively and expeditiously as possible. 
 

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13.8 Nature
of Licenses. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of 11 U.S.C. 365(n) of the Bankruptcy Laws, licenses of rights to “intellectual property” as defined under
11 U.S.C. 101(35A) of the Bankruptcy Laws. The Parties agree that Endo, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights, including any right to enforce any exclusivity provision of this
Agreement, remedies, and elections under the Bankruptcy Laws. To the fullest extent permitted by law, the Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against DURECT under the Bankruptcy Laws, Endo
shall be entitled to all applicable rights under 11 U.S.C. 365(n) of the Bankruptcy Laws, including copies and access to, as appropriate, any such intellectual property and all embodiments of such intellectual property upon written request therefor
by Endo, and such, if not already in its possession, shall be promptly delivered to Endo. 
 
13.9 Accrued Rights; Surviving Obligations. 
 
(a) Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the
benefit of any Party prior to such termination or expiration, including any remedies available to a Party with respect to a breach or default by the other Party hereunder. Such termination or expiration shall not relieve any Party from obligations
which are expressly indicated herein to survive termination or expiration of this Agreement. 
 
(b) All of the Parties’ rights and obligations under, and/or the provisions contained in, Sections 1, 3.4(c), 3.8, 4.1(e), 4.2, 6.5(a), 7.3-7.5, 9.1, 10, 12, 13.4, 13.6, 13.9 and 16 shall survive
termination or expiration of this Agreement. 
 
14. FORCE MAJEURE.

 
14.1 Events of Force Majeure. Except
where expressly provided for herein, neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any
obligation of this Agreement to the extent that such failure or delay is due to Force Majeure, and without the willful wrongdoing, recklessness or gross negligence of the Party so failing or delaying. For purposes of this Agreement, “Force
Majeure” is defined as causes beyond the 

 

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reasonable control of the Party, including acts of God; changes in regulations or laws of any government; war; civil commotion; destruction
of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event that the ability of DURECT or Endo to perform its obligations under
this Agreement, as the case may be, shall be so affected, the affected Party shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon
be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and the 30 days thereafter. To the extent possible, each Party shall use all commercially reasonable efforts to
minimize the duration of any Force Majeure. 
 

	15.	 	ENDO’S RIGHT TO CURE ON BEHALF OF DURECT. 

 
15.1 Endo’s Right to Cure. If DURECT at any time during the term of this Agreement, defaults in its monetary obligations (or
any non-monetary default) with respect to any Third Party contractual obligation (including under the ALZA Agreement or a Third Party Manufacturing Agreement), which default could give rise, whether immediately or with the passage of time, to
termination of such agreement or restriction of DURECT’s rights thereunder in a manner that adversely affects the rights granted by DURECT to Endo under this Agreement, then Endo shall, at its option, in its sole discretion, be entitled to cure
any and all such defaults on DURECT’s behalf. Any payments or other financial accommodations or consideration made by Endo in order to cure such defaults shall be offset against any fees and payments due to DURECT under this Agreement, with
annual interest for any amount paid by Endo at a rate of prime plus [* * *] (or the maximum rate permitted by applicable law, whichever is less). DURECT shall give prompt written notice to Endo of any actual or alleged breaches or defaults
which are or potentially are within the scope of this Section 15.1. Any rights provided to Endo under this Section 15.1 shall be in addition to any other rights or remedies available to Endo under this Agreement, at law or equity. 
 
16. MISCELLANEOUS. 
 
16.1 Relationship of Parties. Nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship between the 

 

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Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

 
16.2 Assignment. Neither Party shall
assign this Agreement or its rights or obligations hereunder without the express written consent of the other Party hereto, except that either Party may assign or transfer this Agreement and its rights and obligations hereunder without the consent
of the other Party to (i) an Affiliate, (ii) any assignee of all or substantially all of its business, or (iii) its successor in the event of its merger, consolidation or involvement in a similar transaction. An assignment or transfer by a Party
pursuant to this Section 16.2 shall be binding on its successors or assigns. No such assignment or transfer shall be valid or effective unless done in accordance with this Section 16.2. 
 
16.3 Books and Records. Any books and records to be maintained under this Agreement by a Party or its
Affiliates shall be maintained in accordance with GAAP. 
 
16.4 Further Actions. Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

 
16.5 Notice. Any notice, request or other
communication required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile
transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: 
 
In the case of DURECT, to: 
 
DURECT Corporation 
10240 Bubb Road 
Cupertino, CA 95014 
Attention: General Counsel 
Facsimile No: (408) 777-3577 
Telephone No.: (408) 777-1417 
 

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In the case
of Endo, to: 
 
Endo
Pharmaceuticals Inc. 
100 Painters Dr. 
Chadds Ford, PA 19317 
Attention: General Counsel 
Facsimile No: (610) 558-9684

Telephone No.: (610) 558-9800 
 
or to such other address for such Party as it shall have specified by like notice to the other Party, provided that
notices of a change of address shall be effective only upon receipt thereof. If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight
express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the third business day
after such notice or request was deposited with the U.S. Postal Service. 
 
16.6 Use of Name. Except as otherwise provided herein, DURECT, on the one hand, and Endo on the other hand, shall not have any right, express or implied, to use in any manner the name or other designation of the other
or any other trade name, trademark or logos of the other (including the DURECT Trademarks and Endo Trademarks, respectively) for any purpose. 
 
16.7 Public Announcements; Disclosures. Except as permitted by Section 10.4 or as required by law, none of the Parties shall make
any public announcement or non-confidential disclosure concerning this Agreement, or the Product, Finished Product or Implanter in the Field in the Territory, without the prior written approval of the other Party. 
 
16.8 Waiver. A waiver by any Party of any of the terms
and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party. 
 

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16.9
Compliance with Law. Nothing in this Agreement shall be deemed to permit a Party to export, reexport or otherwise transfer any Product sold under this Agreement without compliance with applicable laws. 
 
16.10 Severability. When possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 
 
16.11 Amendment. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each
Party. DURECT shall not, without the prior written consent of Endo, amend, terminate or otherwise modify the ALZA Agreement, in each case in any way that would, individually or in the aggregate, adversely affect (a) Endo’s rights under this
Agreement or (b) the ability of DURECT to perform its obligations under this Agreement. 
 
16.12 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to conflicts of law principles. 
 
16.13 Arbitration. 
 
(a) Except as expressly otherwise provided in this Agreement,
any dispute arising out of or relating to the interpretation of any provisions of this Agreement or the failure of either Party to perform or comply with any obligation of such Party pursuant to this Agreement or the breach, termination or validity
thereof (“Dispute”), shall be exclusively and finally settled by arbitration under the Commercial Arbitration rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”), as
modified by the terms set forth in this Section 16.13(a): 
 
(i) The place of arbitration of any Dispute shall be in Wilmington, Delaware. Such arbitration shall be conducted by three arbitrators, one appointed by each of Endo and DURECT and the third selected
by the party-appointed arbitrators. Each arbitrator shall be neutral and impartial and shall have relevant experience in the pharmaceutical industry. Endo and DURECT shall make their respective appointments within 20 business days of receipt by the
respondent of a copy of the demand for 

 

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arbitration. Such party-appointed arbitrators shall select the third arbitrator within 20 business days of the appointment of the second
arbitrator. If any arbitrator is not timely appointed, on the request of any Party such arbitrator shall be appointed by the AAA in accordance the listing, striking and ranking provisions in the Rules. The arbitrators shall render an award as
expeditiously as possible; if practicable, within six months after the appointment of the third arbitrator. 
 
(ii) Any award rendered by the arbitrators shall be final and binding upon the Parties. Judgment upon any award rendered
may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. Except as provided in Section 12.6, each Party shall pay its own
expenses of arbitration, and the fees and expenses of the arbitrators shall be equally shared between Endo and DURECT. Any costs or fees (including attorney’s fees and expenses) incident to enforcing the award shall be charged against the Party
resisting such enforcement. 
 
(iii) This Section 16.13(a) shall not prohibit a Party from seeking preliminary injunctive relief in aid of arbitration from a court of competent jurisdiction in the event of a breach or prospective breach of this Agreement by any
other Party which would cause irreparable harm to the Party seeking such relief. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitrators shall have full authority to grant provisional
remedies and to direct the Parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitrators’ orders to that effect.

 
(b) Whenever a Dispute is expressly designated
in this Agreement as one to be resolved through the Accelerated Arbitration Provisions, then such Dispute shall be finally settled by arbitration under the then current AAA Expedited Procedures applicable to the Rules (“Expedited
Rules”) and in accordance with the terms set forth in this Section 16.13(b) (the “Accelerated Arbitration Provisions”): 
 

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(i) The place of arbitration shall be Wilmington, Delaware. Such arbitration shall be conducted by a single neutral and impartial arbitrator agreed upon by the Parties within five days of receipt by respondent of a copy of the demand
for arbitration. If the Parties fail to timely agree, on the request of any Party, such arbitrator shall be appointed by the AAA in accordance with the Expedited Rules. The Dispute shall be resolved by submission of documents unless the arbitrator
determines (or the Parties agree) that an oral hearing is necessary. The award shall be rendered, if practicable, within 45 days of the appointment of the arbitrator. 
 
(ii) Any award rendered by the arbitrator shall be final and binding upon the Parties.
Judgment upon any award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. Each Party shall pay its own expenses
of arbitration, and the fees and expenses of the arbitrator shall be equally shared between Endo and DURECT. Any costs or fees (including attorney’s fees and expenses) incident to enforcing the award shall be charged against the party resisting
such enforcement. 
 
(iii) This
Section 16.13(b) shall not prohibit a Party from seeking preliminary injunctive relief in aid of arbitration from a court of competent jurisdiction in the event of a breach or prospective breach of this Agreement by any other Party which would cause
irreparable harm to the Party seeking such relief. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitrator shall have full authority to grant provisional remedies and to direct the Parties
to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitrator’s orders to that effect. 
 
16.14 Entire Agreement. This Agreement (together with
the Common Stock Purchase Agreement) constitutes the entire agreement among the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, among the Parties with
respect to the subject matter of this Agreement. 
 

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16.15
Parties in Interest. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns. 
 
16.16 No Third Party Beneficiaries. Nothing in this
Agreement is intended to confer on any Person other than DURECT or Endo any rights or obligations under this Agreement, and there are no intended Third Party beneficiaries to this Agreement. 
 
16.17 Descriptive Headings; Certain Terms. The
descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement. The term “including” when used herein shall be interpreted to mean
“including but not limited to”, except in Exhibits A and B for Fully Burdened Manufacturing Costs and Development Costs. 
 
16.18 Fees and Payments. All fees and payments made by one Party to the other under this Agreement shall be deemed non-refundable
unless expressly provided to the contrary herein. 
 
16.19 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute
one and the same agreement. 
 
[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 
 

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

	 DURECT Corporation

	
	 By:
	 	 /s/    JAMES E.
BROWN        

	 	 	 Name:James E. Brown

	 	 	 Title:President and Chief Executive Officer

	
	 Endo Pharmaceuticals Inc.

	
	 By:
	 	 /s/    CAROL A.
AMMON        

	 	 	 Name:Carol A. Ammon

	 	 	 Title:Chairman and Chief Executive Officer

 

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EXHIBIT
A—Fully Burdened Manufacturing Costs 
 
“Fully Burdened Manufacturing Costs” shall mean [* * *] 
 

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been filed separately with the SEC. 

 
EXHIBIT
B—Development Costs 
 
Development Costs are equal to [* *
*] 
 

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been filed separately with the SEC. 

 
EXHIBIT
C—Examples of Development Expenses 
 
[* * *] 
 
 

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been filed separately with the SEC. 

 
EXHIBIT
D—DURECT Trademarks 
 

	 Mark

	  	 Country

	  	 Appln. No.

	  	 Goods

	  	 Status

	 CHRONOGESIC®
  
 (Class 5)
	  	 Canada
	  	 1117897
	  	 Pharmaceuticals for the treatment of pain; analgesics; and drug delivery devices containing medications for the treatment
of pain, namely implantable devices for the delivery of pain medication by implantation and release in the human body
	  	 Pending

	
	 CHRONOGESIC®1
  
 (Class 5)
	  	 U.S.
	  	 75/658,684
	  	 Pharmaceuticals, namely analgesics
	  	 Allowed for registration. Statement of Use accepted July 31, 2002

	
	 CHRONOGESIC®
  
 (Class 5)
	  	 U.S.
	  	 76/270,055
	  	 Pharmaceuticals for the treatment of pain; analgesics; and drug delivery devices containing medications for the treatment
of pain, namely implantable devices for the delivery of pain medication by implantation and release in the human body.
	  	 [* * *] –see endnotes)1

	
	 DURECT
  
 (Class 5)
	  	 Canada
	  	 1019851
	  	 Prescription pharmaceuticals, namely, pharmaceuticals prescribed by physicians and delivered by means of implantable drug
delivery methods for the treatment of chronic diseases of the central nervous systems, cardio-vascular disease, occlusions of blood vessels and grafts, ear disorders, cancer, spasticity, failed back pain, spinal cord injuries, neuro-degenerative
diseases, and chronic
	  	 [* * *]

	1	 	Note – [* * *] 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

	 Mark

	  	 Country

	  	 Appln. No.

	  	 Goods

	  	 Status

	
	 	  	 	  	 	  	 pain; and drug delivery devices containing medications, namely implantable devices for delivery of drugs by
implantation and release of medications in the human body.
	  	 
	
	 DURECT
  
 (Class 10)
	  	 Canada
	  	 1071762
	  	 Miniature fluid dispensers for experimental use in laboratory animals and in vitro; implantable and non-implantable
pumps for use in dispensing fluids and medications into animals for scientific use; surgical, medical, dental and veterinary instruments and apparatus, namely speculum, measuring devices, sizing devices and surgical insertion instruments; products
and instruments for delivery of fluids to the ear and for the treatment of ear disorders, namely ear catheters; implantable and non-implantable pumps sold without medication for use in dispensing fluids and medications into humans and
animals.
	  	 [* * *]

	
	 DURECT
  
 (Class 5)
	  	 U.S.
	  	 75/625,710
	  	 Prescription pharmaceuticals, namely, pharmaceuticals prescribed by physicians and delivered by means of implantable
drug delivery methods for the treatment of chronic diseases of the central nervous systems, cardio-vascular disease, occlusions of blood vessels and grafts, ear disorders, cancer, spasticity, failed back pain, spinal cord injuries,
neuro-degenerative diseases, and chronic pain; and drug delivery devices containing medications, namely implantable devices for delivery of drugs by implantation and release of medications
	  	 [* * *]

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

	 Mark

	  	 Country

	  	 Appln. No.

	  	 Goods

	  	 Status

	 	  	 	  	 	  	 in the human body.
	  	 
	
	 DURECT
  
 (Class 10)
	  	 U.S.
	  	 76/137,001
	  	 Surgical, medical, dental, and veterinary instruments and apparatus, namely, speculum; products and instruments for the
delivery of fluids to the ear and for the treatment of ear disorders, namely, ear catheters; implantable and non-implantable pumps sold without medication for use in dispensing fluids and medications into humans and animals; measuring devices,
diagnostic devices, sizing devices and surgical insertion instruments used in connection with products and instruments for the delivery of fluids to the ear and for the treatment of ear disorders.
	  	 Approved for Publication August 5, 2002.

 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
EXHIBIT
E—Endo Trademarks 
 

	 Mark

	  	 Country

	  	 Appln. No.

	  	 Goods

	  	 Status

	 ENDO
	  	 U.S.
	  	 2004648
	  	 House mark for a full line of pharmaceutical preparations.
	  	 Registered
 October 1, 1996.

	 ENDO (Stylized)
	  	 U.S.
	  	 2189503
	  	 House mark for a full line of pharmaceutical preparations.
	  	 Registered
 September 15, 1998.

	 ENDO LABORATORIES
	  	 U.S.
	  	 2317044
	  	 House mark for a full line of pharmaceutical preparations.
	  	 Registered
 February 8, 2000.

	 Endo Logo
	  	 U.S.
	  	 Newly Filed
	  	 House mark for a full line of pharmaceutical preparations.
	  	 Pending
 Filed September 25, 2002.

 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT F—DURECT New Products and Related Products 
 
Development Projects as of Effective Date 
 
New Products 
 
[* * *] 
 
Related Products 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT G—Patents 
 
I. PATENTS OWNED BY DURECT 
 
[* * *] 
 
II. PATENTS OWNED BY ALZA 
 
Those patents owned by ALZA in the Territory under which DURECT has a license pursuant to Section 5.1(a) of the ALZA Agreement.

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT H—Initial Members (including co-chairpersons and secretary) of JEC

 
DURECT MEMBERS 
 
[* * *] 
 
ENDO MEMBERS 
 
[* * *] 
 
SECRETARY 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT I—Initial Members (including chairperson and secretary) of PDC 
 
DURECT MEMBERS 
 
[* * *] 
 
ENDO MEMBERS 
 
[* * *] 
 
SECRETARY 
 
[* * *] 
 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT J—Initial Members (including chairperson and secretary) of JCC 
 
ENDO MEMBERS 
 
[* * *] 
 
DURECT MEMBERS 
 
[* * *] 
 
SECRETARY 
 
[* * *] 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT K—Initial Members (including chairperson and secretary) of JMC 
 
DURECT MEMBERS 
 
[* * *] 
 
ENDO MEMBERS 
 
[* * *] 
 
SECRETARY 
 
[* * *] 
 
***Material has been omitted pursuant to a request for confidential
treatment and such material has been filed separately with the SEC. 

EXHIBIT L—Initial Alliance Managers 
 
DURECT 
 
[* * *] 
 
 
ENDO 
 
[* * *] 
 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

EXHIBIT M—Examples of Calculation of Distribution Fee 
 
[* * *] 

EXHIBIT N—DURECT Activities 
 
[* * *] 

 
EXHIBIT
O—Common Stock Purchase Agreement 
 
COMMON STOCK PURCHASE AGREEMENT 
 
THIS COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of November 8, 2002, by and between DURECT Corporation, a Delaware corporation (the “Company”) and Endo
Pharmaceuticals Inc., a Delaware corporation (the “Purchaser”). 
 
1. Authorization and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, the Company has authorized the issuance and sale of 1,533,742 shares (the
“Shares”) of its common stock, par value $0.0001 per share (the “Common Stock”). 
 
2. Agreements to Sell and Purchase. On the basis of the representations and warranties contained in this Agreement, and subject to
the conditions set forth in this Agreement, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company 1,533,742 Shares, for an aggregate purchase price of $4,999,998.92 (the “Purchase
Price”). 
 
3. Closing; Payment and
Delivery. The purchase and sale of the Shares (the “Closing”) shall take place at the offices of Venture Law Group, 2775 Sand Hill Road, Menlo Park, California, at 2:00 p.m. on Tuesday, November 12, 2002, or at such other time
and place as the Company and the Purchaser shall mutually agree. Certificates for the Shares shall be registered in the name of the Purchaser. The certificates evidencing the Shares shall be delivered to the Purchaser at the Closing, with any
transfer taxes to be paid by the Company. 
 
4.
Conditions to the Company’s Obligations. The Company’s obligation to issue and sell the Shares to the Purchaser is subject to the following conditions: 
 
(a) Receipt by the Company of the Purchase Price in immediately available funds, by wire transfer to an
account designated by the Company to the Purchaser in writing five days prior to the Closing Date. 
 
(b) Accuracy of the representations and warranties made by the Purchaser and the fulfillment in all material respects of those
undertakings of the Purchaser to be fulfilled prior to the Closing. 
 
(c) The Development, Commercialization, Supply and License Agreement, dated as of November 8, 2002 (the “Development Agreement”) shall have been executed and delivered by the parties hereto. 
 
5. Conditions to the Purchaser’s Obligations. The
obligations of the Purchaser to purchase and pay for the Shares on the Closing Date are subject to the following conditions: 
 
(a) The Purchaser shall have received on the Closing Date stock certificates evidencing the Shares duly endorsed in blank, or
accompanied by stock powers duly executed in 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

blank in proper form for transfer (affixed with all required stamps evidencing payment of transfer taxes). 
 
(b) The Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company
has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. 
 
The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. 
 
(c) The Purchaser shall have received on the Closing Date an
opinion of Venture Law Group, A Professional Corporation, counsel for the Company, dated the Closing Date, in the form set forth as Exhibit A. Such opinion shall be rendered to the Purchaser at the request of the Company and shall so state therein.

 
(d) The Purchaser shall have received on the
Closing Date a receipt for the Purchase Price. 
 
(e) The Development Agreement shall have been executed and delivered by the parties hereto. 
 
6. Representations, Warrantiesand Covenants of the Company. The Company represents and warrants to, and covenants with, the
Purchaser that, as of the date hereof and as of the Closing Date (or as of such other date as may be expressly set forth below): 
 
(a) The forms, reports and documents (collectively, the “Exchange Act Documents”) filed with the Securities and Exchange
Commission (the “Commission”) since September 27, 2000 constitute all forms, reports and documents required to be filed by the Company under the Securities Act of 1933 (the “Securities Act”) and the Securities
Exchange Act of 1934, as amended (the “Exchange Act” and, together with the Securities Act, the “Securities Laws”) since that date. As of their respective dates, the Exchange Act Documents complied as to form in all
material respects with the applicable requirements of the Securities Laws, and did not contain any untrue statements of material facts or omit material facts required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading. No subsidiary of the Company is required to file any form, report or other document with the Commission. The financial statements included in the Exchange Act Documents (together
with accompanying notes, the “Financial Statements”) (a) have been prepared from, and are in accordance with, the books and records of the Company and its subsidiaries, (b) complied in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with respect thereto, (c) have been prepared in accordance with the generally accepted accounting principles of the United States applied on a basis consistent with the past
practices of the Company (except as may be indicated in the notes thereto) and (d) fairly present the consolidated financial position and the consolidated results of operations and cash flows (and changes in 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

financial position, if any) of the Company and its subsidiaries as of the times and for the periods referred to therein. 
 
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own or lease its properties and to conduct its business as currently conducted and as described in the
Exchange Act Documents and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole. 
 
(c) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as currently conducted and described in the Exchange Act Documents and is duly qualified to
transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing
would not reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company, free and clear of all liens, encumbrances, equities or claims. 
 
(d) The execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Company or its stockholders. This Agreement has been duly executed and delivered by the Company and
(assuming due authorization, execution and delivery by the Purchaser) constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and general principles of equity and except as rights to indemnification and contribution in Section 12 hereof may be limited under applicable law. 
 
(e) The authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the Exchange Act Documents. 
 
(f) As of the date hereof, the company’s authorized capital stock consists of 120,000,000 shares of common stock, 48,899,451 shares of which are issued and outstanding. All shares of the
Company’s capital stock outstanding are duly authorized, validly issued, fully paid and non-assessable. As of the date hereof, other than as set forth in the Investors’ Rights Agreement, there are no (y) antidilution rights or preemptive
rights with respect to capital stock of the Company or (z) agreements restricting the transfer of, relating to the voting of, requiring registration of, or granting any preemptive or antidilutive rights with respect to, any securities of the
Company. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
(g) The
Shares, when issued, sold and delivered by the Company pursuant to this Agreement, will be duly authorized, validly issued, fully paid, non-assessable delivered by the Company free and clear of any liens. The sale and purchase of the Shares
pursuant to this Agreement conveys to the Purchaser good and valid title to such securities, free and clear of any liens and will entitle the Purchaser to all the rights of a holder of such securities. 
 
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any registration rights or similar agreement or any other
agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as
may be required by the securities or Blue Sky laws of the various states or foreign jurisdictions in connection with the offer and sale of the Shares and by Federal and state securities laws with respect to the Company’s obligations under
Sections 8 and 11 of this Agreement. 
 
(i) The
Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof will not be, required to register as, an “investment company” as such term is defined in the Investment Company Act
of 1940, as amended. 
 
(j) Subject to the
accuracy of the Purchaser’s representations herein, it is not necessary in connection with the offer, sale and delivery of the Shares to the Purchaser in the manner contemplated by this Agreement to register the Shares under the Securities Act.

 
(k) The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with respect to the issuance of the Shares and the listing thereof on The Nasdaq National Market. 
 
7. Representations, Warranties and Covenants of the Purchaser. 
 
The Purchaser represents and warrants to, and covenants
with, the Company that: 
 
(a) The Purchaser is
an “accredited investor” as defined by Rule 501(a) of the Securities Act of 1933, as amended, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares. The
Purchaser is acquiring the number of Shares set forth on the first page of this Agreement for its own account for investment only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other
persons regarding the distribution of such Shares, other than as contemplated in Section 8 of this Agreement. 
 
(b) The Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit offers to buy,
purchase or otherwise acquire or take a pledge of) 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

any of the Shares, except in compliance with the Securities Act and the applicable rules and regulations of the Commission or any exemption
thereunder. 
 
(c) The Purchaser agrees to provide
to the Company all information reasonably requested by the Company, in a timely manner, for use in preparation of the Registration Statement (as defined in Section 8 of this Agreement) and all of the information contained therein will be true and
correct as of the date such information is provided. The Purchaser will notify the Company immediately of any change in any such information until such time as the Purchaser has sold all of its Shares or until the Company is no longer required to
keep the Registration Statement effective. 
 
(d)
The Company may in its discretion imprint any or all certificates representing Shares purchased hereunder by the Purchaser with the following legend, such imprinting to be without prejudice, however, to the rights of the
Purchaser at all times to sell or otherwise dispose of all or any part of such Shares, subject to the terms of this Agreement, under an effective registration statement or under an exemption from the registration requirement
available under the Securities Act: 
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, UNLESS THE SECURITIES ARE OTHERWISE SOLD, TRANSFERRED OR ASSIGNED IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, AND THE COMPANY RECEIVES AN OPINION OF COUNSEL AS TO THE EXEMPTION FROM REGISTRATION OF SUCH
SALE, TRANSFER OR ASSIGNMENT.” 
 
Notwithstanding anything to
the contrary contained herein, the Company shall be obligated to remove the preceding legend from the certificates representing the Shares upon the filing of a registration statement with respect to the Shares or if the Shares are otherwise sold in
compliance with the Securities Act. 
 
(e) The
Purchaser will notify the Company promptly of the sale of any of its Shares, other than (i) sales pursuant to a Registration Statement as contemplated in Section 8 of this Agreement and (ii) sales following termination of the transfer restrictions
pursuant to Section 11 of this Agreement, and the Purchaser will furnish any information reasonably requested by the Company, including an opinion of counsel reasonably satisfactory to the Company, to evidence the exemption from the registration
requirements of the Securities Act, the applicable rules and regulations of the Commission thereunder, and state securities laws, in reliance upon which such sales have been made. 
 
(f) The execution and delivery of this Agreement by the Purchaser, the performance by the Purchaser of its
obligations hereunder and the consummation by the Purchaser of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Purchaser. This Agreement has been duly executed and delivered by the

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

Purchaser and (assuming due authorization, execution and delivery by the Company) constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity and except as rights to indemnification
and contribution in Section 12 hereof may be limited under applicable law. 
 
8. Registration. The Company shall: 
 
(a) Prepare and file or cause to be prepared and filed with the Commission in accordance herewith, a shelf registration statement under Rule 415 of the Securities Act or any successor provision (the
“Registration Statement”) registering the resale from time to time by Purchaser of all of the Shares. The Registration Statement shall be on Form S-3 or another appropriate form permitting registration of such Shares for resale by
the Purchaser from time to time through the automated quotation system of The Nasdaq National Market or the facilities of a national security exchange on which the Shares are then traded, or in privately negotiated transactions. The Company shall
use its best efforts, subject to receipt of necessary information from the Purchaser, to cause the Registration Statement to be declared effective under the Securities Act as promptly as is practicable after the date the Registration Statement is
filed and in any event no later than November 8, 2003 (the “Registration Statement Effective Date”) and to keep such Registration Statement effective for the period set forth in Section 8(b) of this Agreement. 
 
(b) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement continuously effective for a period which shall not be less than 180 days following the date that the Registration Statement is declared
effective by the Commission (such period, the “Effectiveness Period”); cause the related prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and use its best efforts to comply with the provisions of the Securities Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the
Effectiveness Period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or such Prospectus as so supplemented. 
 
(c ) As promptly as practicable give notice to the Purchaser
(i) when any Prospectus, Prospectus supplement, or the Registration Statement or a post-effective amendment to the Registration Statement has been filed with the Commission and, with respect to a Registration Statement or any post-effective
amendment, when the same has been declared effective. 
 
(d) Use reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Shares
for sale in any jurisdiction in which they have been qualified for sale, in either case at the earliest possible moment, and to provide prompt notice to the Purchaser of the withdrawal of any such order. 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
(e) During the
Effectiveness Period, deliver to the Purchaser in connection with any sale by the Purchaser of Shares pursuant to the Registration Statement, without charge, as many copies of the Prospectus or Prospectuses relating to such Shares (including each
preliminary prospectus) and any amendment or supplement thereto as such the Purchaser may reasonably request. 
 
(f) File documents required of the Company for customary Blue Sky clearance in states specified in writing by the Purchaser; provided that
the Company will not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Agreement or (ii) take any action that would subject it to
general service of process in suits or to taxation in any such jurisdiction where it is not then so subject. 
 
(g) Bear all fees and expenses incurred in connection with the performance by the Company of its obligations under paragraphs (a) through
(f) of this Section whether or not the Registration Statement is declared effective, other than fees and expenses, if any, of counsel or other advisors to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the
Purchaser. 
 
9. Delay in Registration Statement
Effective Date. 
 
If the Registration
Statement is not declared effective by the Commission by the Registration Statement Effective Date, then for each day following the Registration Statement Effective Date, until but excluding the date the Commission declares the Registration
Statement effective, the Company shall, for each such day, pay to the Purchaser, as liquidated damages and not as a penalty, an amount equal to a daily rate of 2.0% of the Purchase Price; and for any such day, such payment shall be made no later
than the first business day of the calendar week next succeeding the week in which such day occurs. 
 
The parties hereto agree that the sole damages payable for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be the liquidated damages. The parties hereto agree that the liquidated damages provided for in this Section 9 constitute a reasonable estimate of the damages that may be incurred by the Purchaser by reason of
the failure of the Registration Statement to be filed or declared effective in accordance with the provisions hereof. 
 
10. Piggyback Registrations. 
 
If the Company proposes to register for the account of Alza Corporation and/or Brookside Capital Partners Fund, L.P. any of their
respective shares of Common Stock or other equity interests in the Company in connection with the public offering for cash of such securities as a result of Alza Corporation and/or Brookside Capital Partners Fund, L.P.’s exercise of their
registration rights under the Second Amended and Restated Investors’ Rights Agreement dated March 28, 2000, or any amendment thereto (“Investors’ Rights Agreement”), the Company shall, at such time, promptly give the Purchaser
written notice of such registration. Upon the written request of the Purchaser given in writing to the Company within fifteen (15) days after receipt of such notice by the Company, the Company shall, subject to the provisions of this Section 10,

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

include in such registration statement all of the Shares that the Purchaser has requested to be registered. The Purchaser’s rights under
this Section 10 shall terminate upon the termination of Alza Corporation’s and Brookside Capital Partners, L.P.’s registration rights under the Investors’ Rights Agreement. 
 
11. Transfer of Shares After Registration; Suspension. 
 
(a) The Purchaser agrees that it will not effect any
disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act except as (i) contemplated in the Registration Statement, (ii) pursuant to a piggyback registration as set forth in
Section 10 of this Agreement or (iii) as otherwise permitted by this Agreement or applicable law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its
plan of distribution. 
 
(b) The Company shall, as
promptly as practicable, give notice to the Purchaser (i) of any request, following the effectiveness of the Registration Statement under the Securities Act, by the Commission or any other federal or state governmental authority for amendments or
supplements to any Registration Statement or related prospectus or for additional information, (ii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceedings for that purpose and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. 
 
(c) The Purchaser agrees that, upon receipt of any notice (a “Suspension Notice”) from the Company of the happening of
any event of the kind which, in the opinion of the Company, requires the amendment or supplement of any prospectus, the Purchaser will forthwith discontinue disposition of Shares until the Purchaser’s receipt of the copies of the supplemented
or amended prospectus, or until it is advised in writing (the “Advice”) by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by
reference in the prospectus, and, if so directed by the Company, the Purchaser will deliver to the Company all copies, other than permanent file copies then in the Purchaser’s possession, of the prospectus covering the Shares current at the
time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of the Registration Statement set forth in Section 8(b) hereof shall be extended by the number of days during the period
from and including the date of the giving of the Suspension Notice to and including the date when the Purchaser shall have received the copies of the supplemented or amended prospectus or the Advice. 
 
The Company shall use all commercially reasonable efforts to
limit the duration and number of any trading suspensions pursuant to this Section 11(c). The Purchaser hereby agrees that upon receipt of any Suspension Notice from the Company, the Purchaser shall, and shall cause each of its officers, directors,
employees, affiliates, advisors, agents and 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

representatives to, keep confidential all nonpublic information set forth in such notice including the existence and terms of such Suspension
Notice. 
 
12. Indemnity and Contribution.

 
(a) The Company agrees to indemnify and hold
harmless the Purchaser and its directors, officers, employees, affiliates, controlling persons, agents, representatives and their successors and assigns and each person, if any, who controls the Purchaser within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating
any such action or claim) arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the prospectus included in the Registration Statement, as amended or supplemented by any
amendment or prospectus supplement, including post-effective amendments, and all material incorporated by reference in such prospectus (the “Prospectus”) or in any amendment or supplement thereto or in any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by (i) any
such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Purchaser furnished to the Company in writing by such Purchaser expressly for use therein, or (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in Sections 7 and 11 hereof respecting resale of the Shares. 
 
(b) The Purchaser agrees to indemnify and hold harmless the Company, its directors, officers, employees, affiliates, controlling persons,
agents, representatives and their successors and assigns and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim), insofar as such losses, claims, damages or liabilities arise out of the
failure of the Purchaser to comply with the covenants and agreements contained in Sections 7 and 11 hereof respecting resale of the Shares, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement
or the Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information relating to the Purchaser
furnished in writing by the Purchaser to the Company expressly for use in the Registration Statement or Prospectus. 
 
(c ) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 12(a) or 12(b) of this Agreement, such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying
Party”) in writing and the Indemnifying Party, upon request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any 

 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

others the Indemnifying Party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such
proceeding. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have adversely prejudiced the Indemnifying Party. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in respect of the legal expenses of any Indemnified Party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final non-appealable judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
non-appealable Indemnified Party from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such proceeding. 
 
(d) To the extent that the indemnification provided for under Section 12(a) or 12(b) of this Agreement is unavailable to an Indemnified Party or is insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Party under such paragraph, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party or parties on the one hand and of the Indemnified Party or parties on the other hand in connection with the
statements or omissions or other matters that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Purchaser on the one hand and the Company on the other hand
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, or the inaccurate or the alleged inaccurate representation or
warranty relates to information supplied by the Purchaser or by the Company and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 
 
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 12(d) were determined by pro rata allocation or by any other method or allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action or claim. Notwithstanding this Section 12(d), the Purchaser shall not be required to contribute any amount in excess of the amount by which the net amount received by
the Purchaser from the sale of the Shares to which such loss relates exceeds the amount of any damages that such Indemnifying Party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 
 
(e) The indemnity and contribution provisions contained in
this Section 12 shall survive the completion of any offering or sale of Shares pursuant to the Registration Statement. 
 
13. Termination of Conditions and Obligations. The conditions precedent imposed by Sections 7, 8 and 11 of this Agreement upon the
transferability of the Shares shall cease and terminate as to any particular number of the Shares (and any legend on the Shares will be removed by the Company) at such time as such Shares have been effectively registered under the Securities Act and
sold or otherwise disposed of in accordance with the intended method of disposition set forth in the Registration Statement covering such Shares, or at such time as an opinion of counsel satisfactory to the Company shall have been rendered to the
effect that such conditions are not necessary in order to comply with the Securities Act. 
 
14. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, by telecopier, by courier guaranteeing overnight delivery or by
first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) business day after being deposited with such courier, if made by overnight
courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: 
 
(a) if to the Purchaser, at its address on the signature page hereto; 
 
(b) if to the Company, to: 
 
Durect Corporation 
10240 Bubb Road 
Cupertino, CA 95014 
Attention: Jean Liu, Vice President and General Counsel 
Facsimile: (650) 865-1406 
 
with a copy to: 
 
Venture Law Group 
2775 Sand Hill Road 
Menlo Park, CA 94025 
Attention: Mark Weeks 
Facsimile: (650) 233-8386 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

or to such other address as such person may have furnished to the other persons identified in this Section 13 in writing in accordance
herewith. 
 
15. Severability. If any term
provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated thereby, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 
 
16. Modification; Amendment. The provisions of this Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented unless pursuant to an instrument in writing signed by the Company and the Purchaser. 
 
17. Entire Agreement. This Agreement, together with the Development Agreement, is intended by the parties as a final expression of
their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein. Except as provided in this Agreement, there are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein, with respect to such matters. This Agreement supersedes all prior agreements and undertakings among the parties with respect to such matters. No party hereto
shall have any rights, duties or obligations other than those specifically set forth in this Agreement. 
 
18. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. 
 
19. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of laws.

 
20. Headings. The headings of the
sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement. 
 
 

***Material has been omitted pursuant to a request for confidential treatment and such material has
been filed separately with the SEC. 

 
IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written above. 
 

	 ENDO PHARMACEUTICALS INC.

	
	 By:
	 	 /s/    CAROL A.
AMMON        

	 	 	 Name: Carol A. Ammon
 Title: Chairman & Chief Executive Officer

	
	 	 	 Address:
	 	 100 Painters Drive
 Chadds Ford, PA 19317

	
	 	 	 Contact Name:
	 	 Caroline B. Manogue
 Senior Vice President,
 General Counsel & Secretary

	
	 	 	 Telephone:
	 	 (610) 558-9800

	 	 	 Facsimile:
	 	 (610) 558-9684

 
Agreed to and Accepted by: 
 

	 DURECT Corporation

	
	 By:
	 	 /s/    JAMES E.
BROWN        

	 	 	 Name: James E. Brown
 Title: President and Chief Executive Officer

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