Document:

EX-10.10

 Exhibit 10.10 

OTONOMY, INC. 
 LOAN AND
SECURITY AGREEMENT 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	

 This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of July 31, 2013, by and
between Square 1 Bank (“Bank”) and Otonomy, Inc. (“Borrower”). 
 RECITALS 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to Bank. 
 AGREEMENT 

The parties agree as follows: 
  

	 	1.	DEFINITIONS AND CONSTRUCTION. 

 1.1 Definitions. As used in this Agreement, all
capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code. 

1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all
calculations shall be made in accordance with GAAP (except for non-compliance with FAS 123R in monthly reporting). The term “financial statements” shall include the accompanying notes and schedules. 

 

	 	2.	LOAN AND TERMS OF PAYMENT. 

 2.1 Credit Extensions. 

(a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof. 

(b) Term Loan. 

(i) Subject to and upon the terms and conditions of this Agreement, Bank agrees to make one (1) or more term loans to Borrower in
an aggregate principal amount not to exceed Seven Million Dollars ($7,000,000) (each a “Term Loan” and collectively the “Term Loans”). Borrower may request Term Loans at any time from the date hereof through the Availability End
Date. The proceeds of the Term Loans shall be used for general working capital purposes. 
 (ii) Interest shall accrue from the date
of each Term Loan at the rate specified in Section 2.3(a), and prior to the Availability End Date for the applicable Term Loan shall be payable monthly beginning on the last day of the month next following such Term Loan, and continuing on the
same day of each month thereafter. Any Term Loans that are outstanding on the Availability End Date shall be payable in 24 equal monthly installments of principal, plus all accrued interest, beginning on the last day of the month immediately
following 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	1

 
the Availability End Date, and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loans and any
other amounts due under this Agreement shall be immediately due and payable. Term Loans, once repaid, may not be reborrowed. Borrower may prepay any Term Loan without penalty or premium. 

(iii) When Borrower desires to obtain a Term Loan, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile
transmission to be received no later than 3:30 p.m. Eastern time on the day on which the Term Loan is to be made. Such notice shall be substantially in the form of Exhibit C. The notice shall be signed by an Authorized Officer. 

2.2 Intentionally Left Blank. 

2.3 Interest Rates, Payments, and Calculations. 

(a) Interest Rates. 

(i) Term Loans. Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance
thereof, at a variable annual rate equal to the greater of: (A) 2.00% above the Prime Rate then in effect; or (B) 5.50%. 

(b) Late Fee; Default Rate. At Bank’s election, if any payment is not made within 15 days after the date such payment is due,
Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default. 

(c) Payments. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments then due against any of
Borrower’s deposit accounts. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. 

(d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest (if such
applicable rate of interest is based on the Prime Rate) hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. 
 2.4 Crediting Payments. If no
Event of Default exists, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, Bank shall have
the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account
unless such payment is of 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	2

 
immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any
wire transfer or payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of
such extension. 
 2.5 Fees. Borrower shall pay to Bank the following: 

(a) Facility Fee. On or before the Closing Date, a fee equal to $25,000, which shall be nonrefundable;  

(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all
Bank Expenses, as and when they become due. 
 2.6 Term. This Agreement shall become effective on the Closing Date and, subject to
Section 12.7, shall continue in full force and effect for so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. 

 

	 	3.	CONDITIONS OF LOANS. 

 3.1 Conditions Precedent to Closing. The agreement of Bank
to enter into this Agreement on the Closing Date is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each the following items and completed each of the following requirements:  

(a) this Agreement; 

(b) an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery
of this Agreement; 
 (c) a financing statement (Form UCC-1);  

(d) Borrower shall have opened and funded not less than $50,000 in deposit accounts held with Bank; 

(e) payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of
Borrower’s accounts with Bank;  
 (f) current SOS Reports indicating that except for Permitted Liens, there are no
other security interests or Liens of record in the Collateral; 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	3

 (g) current financial statements, including unaudited statements for Borrower’s most
recently ended fiscal year, company prepared consolidated and consolidating balance sheets, income statements, and statements of cash flows for the most recently ended month in accordance with Section 6.2, and such other updated financial
information as Bank may reasonably request; 
 (h) current Compliance Certificate in accordance with Section 6.2; 

 (i) a Warrant in form and substance satisfactory to Bank;  

(j) a subordination agreement, in form and substance satisfactory to Bank, duly executed by each existing holder of debt
securities and Borrower, together with true and accurate copies of the transactional documents related to the issuance of such debt securities; 

(k) evidence that the security agreement related to Borrower’s debt securities issued on or before the Closing Date has been
amended to remove intellectual property from the definition of collateral therein; 
 (l) confirmation, provided by the
Borrower’s board of directors, that Borrower has achieved positive Phase1b data for Borrower’s OTO-201 product; 

(m) a Borrower Information Certificate; and  

(n) such other documents or certificates, and completion of such other matters, as Bank may reasonably request. 

3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is contingent upon the Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions: 

(a) timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1; 

(b) Borrower shall have transferred substantially all of its Cash assets into operating accounts held with Bank and otherwise be
in compliance with Section 6.6 hereof; and 
 (c) Prior to the initial Credit Extension, an audit of the Collateral, the
results of which shall be satisfactory to Bank; and 
 (d) the representations and warranties contained in Section 5 shall
be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred
and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such
date). The making of each Credit Extension shall be deemed to be a 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	4

 
representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2. 

 

	 	4.	CREATION OF SECURITY INTEREST. 

 4.1 Grant of Security Interest. Borrower grants
and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except for
Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired
Collateral. Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations (other than inchoate
indemnity obligations) are outstanding. 
 4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any time
financing statements, continuation statements, and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other
information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational
identification number issued to Borrower, if applicable. Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition
to the filing of a financing statement. Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank reasonably requests for Bank to (i) subject to Section 7.10 below, obtain an acknowledgment, in form
and substance satisfactory to Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, and (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights
or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and
substance satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit
with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise
transfer any part of such balances for so long as the specific Obligations are outstanding. Borrower shall take such other actions as Bank requests to perfect its security interests granted under this Agreement. 

 

	 	5.	REPRESENTATIONS AND WARRANTIES. 

 Except as disclosed in the Schedule on the Closing
Date, Borrower represents and warrants as follows: 
 5.1 Due Organization and Qualification. Borrower and each Subsidiary is a
corporation duly existing under the laws of the state in which it is organized and qualified and 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	5

 
licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be
expected to cause a Material Adverse Effect. 
 5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the
Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event
of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect. 

5.3 Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of
Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value not in excess of $100,000, is located
solely in the Collateral States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule, none
of the Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates. 
 5.4 Intellectual
Property. Borrower is the sole owner of the intellectual property created or purchased by Borrower, except as disclosed in the Schedule and for licenses granted by Borrower to its customers in the ordinary course of business. To the best of
Borrower’s knowledge, each of the Copyrights, Trademarks and Patents created or purchased by Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable,
in whole or in part, and no claim has been made in writing to Borrower that any part of the intellectual property created or purchased by Borrower violates the rights of any third party except to the extent such claim would not reasonably be
expected to cause a Material Adverse Effect. 
 5.5 Name; Location of Chief Executive Office. Except as disclosed in the Schedule or
as Borrower may have notified Bank pursuant to Section 7.2 hereof, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this
Agreement. The chief executive office of Borrower is located at the address indicated in Section 10 hereof or as Borrower may have notified Bank pursuant to Section 7.2 hereof. 

5.6 Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any
Subsidiary before any court or administrative agency that would reasonably be expected to have a Material Adverse Effect. 
 5.7 No
Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s
consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There has not been a material

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	6

 
adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank. 

5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of
Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities (excluding, for the purposes of this representation only, the liabilities in connection with the Subordinated Debt existing as of the
Closing Date); and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement. 
 5.9
Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to
comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material
Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good
faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect. 

5.10 Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted
Investments. 
 5.11 Government Consents. Except as disclosed in the Schedule, Borrower and each Subsidiary have obtained all
consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where
the failure to do so would not reasonably be expected to cause a Material Adverse Effect. 
 5.12 Inbound Licenses. Except as
disclosed on the Schedule, Borrower is not a party to, nor is bound by, any material license agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts in a manner enforceable under applicable law, Borrower
from granting a security interest in Borrower’s interest in such license agreement or any other property important for the conduct of Borrower’s business other than this Agreement or the other Loan Documents. 

5.13 Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished
to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or
statements not misleading in light of the circumstances in which they were made, it 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	7

 
being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during
the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results. 
  

	 	6.	AFFIRMATIVE COVENANTS. 

 Borrower covenants that, until payment in full of all
outstanding Obligations (other than inchoate indemnity obligations), and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following: 

6.1 Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and
good standing in the respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to
Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and
shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect. 

6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon as available, but in any event within
30 days after the end of each calendar month, a company prepared consolidated and consolidating balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to
Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event (A) within 270 days after the end of Borrower’s fiscal year with respect to Borrower’s 2012 fiscal year and (B) within 180 days after
the end of each subsequent fiscal year, audited (or such other level as is required by the Investment Agreement) consolidated and consolidating financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an
opinion which is either unqualified, qualified only for going concern so long as Borrower’s investors provide additional equity as needed or otherwise consented to in writing by Bank on such financial statements of an independent certified
public accounting firm reasonably acceptable to Bank; (iii) annual budget approved by Borrower’s Board of Directors as soon as available but not later than 15 days after the beginning of each fiscal year of Borrower during the term of this
agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened in writing against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs
to Borrower or any Subsidiary of $250,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems, (vii) such
budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as Bank 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	8

 
may reasonably request from time to time, and (viii) within 30 days after the last day of each month, a written update (which shall include updates provided to Borrower’s board of
directors), in form and substance satisfactory to Bank, of Borrower’s progress with respect to its clinical trials. 
 (a)
Within 30 days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially
the form of Exhibit D hereto. 
 (b) As soon as possible and in any event within 3 Business Days after becoming aware of the
occurrence or existence of an Event of Default hereunder, a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto. 

(c) Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the
Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral. 

Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and
Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and
reports to be delivered electronically. 
 6.3 Inventory and Equipment; Returns. Borrower shall keep all Inventory and Equipment in
good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States and such
other locations as to which Borrower gives prior written notice. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist
on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $100,000. 

6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state,
and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity
of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	9

 6.5 Insurance. Borrower, at its expense, shall (i) keep the Collateral insured
against loss or damage, and (ii) maintain liability and other insurance, in each case in as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such
companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and the general
liability insurance policy shall show Bank as an additional insured and specify that the insurer must give at least 30 days notice to Bank before canceling its policy for any reason (other than for non-payment of premium) and 10 days notice to Bank
before cancelling its policy for non-payment of premium. Except as set forth in the preceding sentence with respect to Borrower’s general liability insurance policy, all liability insurance policies shall specify that the insurer must give at
least 30 days notice to Bank for cancelling its policy for any reason. Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank a copy of its policies or certificate of insurance including any endorsements covering Bank or
showing Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds payable under any casualty policy will, at Borrower’s
option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property, shall be deemed Collateral in which Bank has been granted a first priority security interest (subject to Permitted Liens),
provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy, shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations. 

6.6 “Primary Depository”. Subject to the provisions of Section 3.1(d) and 3.2(b), Borrower within 30 days of the Closing
Date shall maintain all its depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates. 

6.7 Financial Covenants. Borrower shall at all times maintain the following financial ratios and covenants: 

(a) Gross Remaining Months Liquidity/Funding Milestones. At all times prior to the Next Financing Event, before Borrower’s Gross
Remaining Months Liquidity falls below 2.50 to 1.00, Borrower shall either (i) provide Bank with written confirmation from its board of directors that Borrower’s existing investors have committed to purchase additional Subordinated Debt or
equity securities of Borrower with net Cash proceeds to be received by Borrower therefrom of at least $15,000,000 (the “Option 1 Financing Event”), and the Option 1 Financing Event shall close with Borrower receiving at least
$15,000,000 in net Cash proceeds therefrom within 60 days immediately following Bank’s receipt of written confirmation from Borrower’s board of directors of the Option 1 Financing Event, or (ii) provide Bank with a signed and
accepted term sheet from investors reasonably acceptable to Bank for the purchase of the equity securities of Borrower with net Cash proceeds to be received by Borrower therefrom of at least $25,000,000 (the “Option 2 Financing Event”),
and the Option 2 Financing Event shall close within 60 days immediately following Bank’s receipt of the signed and accepted term sheet with respect to the Option 2 Financing Event, provided that any term sheet, including without
limitation, the Orbimed Term Sheet, shall not be considered a term sheet reasonably acceptable to Bank for purposes of this Section 6.7(a)(ii) unless and until all of the First Closing Conditions shall have been satisfied. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	10

 (b) Post Next Financing Event Covenants. Within 45 days following the consummation of the
Next Financing Event, Borrower shall provide Bank with an updated operating plan approved by Borrower’s board of directors, and Bank shall, acting in good faith, use that operating plan to establish covenants and covenant levels acceptable to
Bank, with such covenants and covenant levels being incorporated herein via a written amendment, which Borrower hereby agrees to promptly execute. 

6.8 Consent of Inbound Licensors. Prior to entering into or becoming bound by any material inbound license agreement, which would
prohibit, in a manner enforceable under applicable law, Borrower from granting a security interest in such license agreement Borrower shall (i) provide written notice to Bank of the material terms of such license or agreement with a description
of its likely impact on Borrower’s business or financial condition, and (ii) except for those agreements set forth in the Schedule, in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for Borrower’s interest in such license to be deemed Collateral and for Bank to have a security interest in it that might otherwise be restricted by the terms of the applicable license, whether now existing or
entered into in the future, provided, however, that the failure to obtain such consent or waiver shall not constitute a default under this Agreement. 

6.9 Creation/Acquisition of Subsidiaries. In the event any Borrower or any Subsidiary of any Borrower creates or acquires any
Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such
“New Subsidiary” (defined as a Subsidiary formed after the date hereof during the Term of this Agreement): (i) to cause New Subsidiary to become either a co-Borrower hereunder , if such New Subsidiary is organized under
the laws of the United States, or a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its
Subsidiaries of any such New Subsidiary which is organized under the laws of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under
the laws of the United States. 
 6.10 Further Assurances. At any time and from time to time Borrower shall execute and deliver such
further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. 
  

	 	7.	NEGATIVE COVENANTS. 

 Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until the outstanding Obligations (other than inchoate indemnity obligations) are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without
Bank’s prior written consent, which shall not be unreasonably withheld: 
 7.1 Dispositions. Convey, sell, lease, license,
transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	11

 
financial institution (except to the extent such other accounts are expressly permitted to be maintained under Section 6.6), other than Permitted Transfers. 

7.2 Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control.
Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief financial officer without
delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief financial officer for more than 30 consecutive days; suffer a change on its board of
directors which results in the failure of both (i) Jay Lichter (in his capacity as a representative of Avalon Ventures), and (ii) Brian Dovey (in his capacity as a representative of Domain Associates), to serve as voting members, or suffer
the resignation of one or more directors from its board of directors in anticipation of Borrower’s insolvency, in each case without the prior written consent of Bank which may be withheld in Bank’s sole discretion; take action to
liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently
engaged in by Borrower; change its fiscal year end; have a Change in Control. 
 7.3 Mergers or Acquisitions. Merge or consolidate,
or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable: (i) the consideration paid in connection with such transactions (including assumption of
liabilities) does not in the aggregate exceed $250,000 during any fiscal year, (ii) no Event of Default has occurred and is continuing or would exist after giving effect to such transactions, (iii) such transactions do not result in a
Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations (other than inchoate indemnity obligations) are repaid in full concurrently with the closing of any merger or consolidation of Borrower in which Borrower
is not the surviving entity; provided, however, that Borrower shall not, without Bank’s prior written consent, enter into any binding contractual arrangement with any Person to attempt to facilitate a merger or acquisition of Borrower unless
(i) no Event of Default exists when such agreement is entered into by Borrower and (ii) such agreement does not give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s
investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure,
bankruptcy or similar liquidation, and (iii) Borrower notifies Bank in advance of entering into such agreement (provided, the failure to give such notification shall not be deemed a material breach of this Agreement). 

7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so
to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness to Bank and (ii) the conversion of Subordinated Debt to equity
securities and the payment of cash in lieu of issuing fractional 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	12

 
shares (provided, however, that the aggregate amount of cash that Borrower shall be permitted to pay in lieu of issuing fractional shares shall not exceed $10,000 per year). 

7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (i) the licensors of in-licensed property with respect to such property,
(ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment or (iii) the counterparties to a merger or acquisition agreement or similar agreement for the sale of
Borrower, provided that such covenants do not prohibit or restrict Bank from receiving or maintaining a security interest in any of Borrower’s property, including its intellectual property, that Borrower in the future will refrain from
creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property . 
 7.6 Distributions. Pay any
dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may (i) pay dividends in equity securities, (ii) convert any securities into other equity
securities pursuant to the terms of such convertible securities, (iii) make payments in lieu of the issuance of fractional shares (provided, that the aggregate amount of cash paid by Borrower as payments in lieu of the issuance of fractional
shares shall not exceed $10,000 per year), (iv) repurchase the stock of founders or former employees, directors and officers pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would
not exist after giving effect to such repurchase, and (v) repurchase the stock of founders or former employees, directors and officers pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such founders or former
employees, directors or officers to Borrower regardless of whether an Event of Default exists. 
 7.7 Investments. Directly or
indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its Investment Property with a Person other than Bank or Bank’s
Affiliates (unless expressly otherwise permitted pursuant to Section 6.6) or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance satisfactory to Bank, or suffer or permit any
Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower. 

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of
Borrower except for (i) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a
non-affiliated Person and (ii) equity and bridge debt financings with Borrower’s existing investors, so long as any equity financings do not result in a Change of Control and any bridge debt financings constitute Subordinated Debt. 

7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such
payment, except in compliance with the 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	13

 
terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without Bank’s prior written consent.

 7.10 Inventory and Equipment. Store the Inventory or the Equipment of a book value in excess of $100,000 with a bailee,
warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and (a) Bank has received an acknowledgment from the third party that it is holding or will hold the Inventory
or Equipment for Bank’s benefit or (b) Bank is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of business and for movable items of personal
property having an aggregate book value not in excess of $100,000, and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 and such other
locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Bank’s rights in the Collateral.
Notwithstanding the above, Borrower shall be permitted to store Inventory or Equipment with a book value up to $300,000 at 9342 Jeronimo Rd., Irvine, CA 92618 without Bank receiving an acknowledgment from Alliance Medical Products, Inc. 

7.11 No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the
Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension
for such purpose. 
  

	 	8.	EVENTS OF DEFAULT. 

 Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement: 
 8.1 Payment Default. If Borrower fails to pay any of the Obligations when due 

8.2 Covenant Default. 

(a) If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary
accounts) or 6.7 (financial covenants), or violates any of the covenants contained in Article 7 of this Agreement; or  

(b) If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this
Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 10
days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 10 day period or cannot after diligent attempts by Borrower be cured within
such 10 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	14

 
default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made. 

8.3 Material Adverse Change. If there occurs any circumstance or any circumstances which would reasonably be expected to have a
Material Adverse Effect;  
 8.4 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or
rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon
any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such
action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);  

8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding); 

8.6 Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party with a third
party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $650,000 (b) in connection with any lease of real property that
would permit such landlord to terminate the lease, or (c) that would reasonably be expected to have a Material Adverse Effect; 

8.7 Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of
at least $650,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or 

8.8 Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or
representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document. 

 

	 	9.	BANK’S RIGHTS AND REMEDIES. 

 9.1 Rights and Remedies. Upon the occurrence
and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	15

 (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other
Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

 (b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining
undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and
Borrower shall promptly deposit and pay such amounts; 
 (c) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement or under any other agreement between Borrower and Bank; 
 (d) Settle or adjust disputes and
claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable; 

(e) Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the
Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses
incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s
rights or remedies provided herein, at law, in equity, or otherwise; 
 (f) Set off and apply to the Obligations any and all
(i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank; 

(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with
Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit; 

(h) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the
Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	16

 
commercial reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by
Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale; 

(i) Bank may credit bid and purchase at any public sale; 

(j) Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard
to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and 

(k) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower. 

Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will
not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. 
 9.2 Power of Attorney.
Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send
requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession;
(c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and
upon terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of
attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of
Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and Bank’s obligation to provide advances hereunder is
terminated. 
 9.3 Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, Bank may
notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and
immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	17

 9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of
payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) obtain
and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of Default under this Agreement. 
 9.5 Bank’s Liability for Collateral. Bank has no obligation
to clean up or otherwise prepare the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower. 

9.6 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other
person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require
Bank to pursue any other Person for any of the Obligations. 
 9.7 Remedies Cumulative. Bank’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall
be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or
modified by Bank by course of performance, conduct, estoppel or otherwise. 
 9.8 Demand; Protest. Except as otherwise provided in
this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations. 

 

	 	10.	NOTICES. 

 Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below: 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	18

					
	If to Borrower:	  	Otonomy, Inc.
		  	6275 Nancy Ridge Drive, Suite 100
		  	San Diego, CA 92121
			
		  	Attn:	  	Paul E. Cayer, Chief Business Officer
		  	FAX:	  	(858) 200-0933
		
	If to Bank:	  	Square 1 Bank
		  	406 Blackwell Street, Suite 240
		  	Durham, North Carolina 27701
		
		  	Attn: Loan Operations Manager
		  	FAX:	  	(919) 314-3080
		
	with a copy to:	  	Square 1 Bank
		  	12481 High Bluff Drive, Suite 350
		  	San Diego, CA 92130
			
		  	Attn:	  	Lisa Foussianes
		  	FAX:	  	(858) 436-3501

 The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing
in the foregoing manner given to the other. 
  

	 	11.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. 

 This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of California. All disputes, controversies, claims, actions and similar proceedings arising with
respect to Borrower’s account or any related agreement or transaction shall be brought in the Superior Court of San Mateo County, California or the United States District Court for the Northern District of California, except as provided below
with respect to arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	19

 BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury waiver set forth in this Section 11 is not
enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held
in San Mateo County, California in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The arbitrator shall apply California law to the
resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction
thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section. The costs and expenses of the arbitration,
including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be
apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both parties shall share equally in the payment of
the arbitrator’s fees as and when billed by the arbitrator. 
  

	 	12.	GENERAL PROVISIONS. 

 12.1 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be
assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder. 
 12.2
Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents (each, an “Indemnified Person”) against: (a) all obligations, demands, claims, and liabilities claimed or asserted by
any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by an Indemnified Person as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this Agreement or otherwise (including without limitation reasonable attorneys fees and expenses), except for losses caused by such Indemnified Person’s gross negligence or
willful misconduct. 
 12.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this
Agreement. 
 12.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this
Agreement for the purpose of determining the legal enforceability of any specific provision. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	20

 12.5 Amendments in Writing, Integration. All amendments to or terminations of this
Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan
Documents, if any, are merged into this Agreement and the Loan Documents. 
 12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed
copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect,
and the parties waive any rights they may have to object to such treatment. 
 12.7 Survival. All covenants, representations and
warranties made in this Agreement shall continue in full force and effect so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against
Bank have run. 
 12.8 Confidentiality. In handling any confidential information, Bank and Borrower and all employees and agents of
such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this
Agreement except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower, provided that such subsidiaries or Affiliates of Bank are obligated to keep such information
confidential to the same extent Bank is required to keep such information confidential in connection with their present or prospective business relations with Borrower, (ii) in the case of Bank, to prospective transferees or purchasers of any
interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial
order or similar order, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either: (a) is in the public domain through no fault of Bank or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the
public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such receiving party does not have actual knowledge that such third party is
prohibited from disclosing such information. 
 ******** 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	21

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

			
	OTONOMY, INC.
		
	By:	 	 /s/ David A. Weber

	Name:	 	 David A. Weber

	Title:	 	 President & Chief Executive Officer

	
	SQUARE 1 BANK
		
	By:	 	 /s/ Lan Zhu

	Name:	 	 Lan Zhu

	Title:	 	 Client Manager

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	22

 EXHIBIT A 

DEFINITIONS 
 “Accounts” means all presently existing
and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or
the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefore, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing. 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners. 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the
transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the
most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement. 
 “Availability End Date”
means July 31, 2014. 
 “Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses)
incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside
counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought. 

“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities,
the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information. 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required
to close. 
 “Cash” means unrestricted cash and cash equivalents. 

“Cash Burn” means an amount equal to the prior period’s Cash minus the current period’s ending Cash that has been adjusted for any changes
to Cash as a result of borrowings and repayments of borrowings, proceeds from the sale of equity and the exercise of stock options or warrants, paid-in-capital and minority interest, and capital expenditures financed under a capital lease. 

“Change in Control” shall mean a transaction other than a bona fide equity financing or series of financings on terms and from investors reasonably
acceptable to Bank in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction. 
 “Closing
Date” means the date of this Agreement. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	1

 “Code” means the California Uniform Commercial Code as amended or supplemented from time to time. 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B,
except to the extent (i) any such property is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without
limitation, §9406 and §9408 of the Code), (ii) to which the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall
automatically become part of the Collateral, (iii) such property constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled
foreign corporations entitled to vote, or (iv) such property constitutes property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clause (c) of the definition of Permitted
Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property
will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien. 
 “Collateral State” means the state or
states where the Collateral is located, which is California. 
 “Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement. 
 “Copyrights” means any and all copyright rights, copyright applications, copyright registrations and
like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held. 

“Credit Extension” means each Term Loan or any other extension of credit, by Bank to or for the benefit of Borrower hereunder. 

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

 “Escrow Payment” means those certain payments in an aggregate amount of up to $200,000 owing by Borrower to IncuMed, LLC in connection with the
Asset Transfer Agreement, dated as of April 30, 2013, by and between Borrower and IncuMed, LLC and the Escrow Agreement, dated as of April 30, 2013, by and among Borrower, JP Morgan Chase Bank, NA and IncuMed, LLC. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	2

 “Event of Default” has the meaning assigned in Article 8. 

“First Closing Conditions” means each of the following conditions: (i) the United States Food and Drug Administration shall have lifted its
clinical hold on Borrower’s OTO-104 program, and (ii) the data from the ongoing Phase 1b trial of Borrower’s OTO-201 program shall support commencement of a Phase 3 registration trial. 

“GAAP” means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States. 

“Gross Remaining Months Liquidity” means a ratio of Liquidity to Cash Burn. 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all
Contingent Obligations, including but not limited to any sublimit contained herein. 
 “Insolvency Proceeding” means any proceeding commenced by
or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions,
extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 
 “Inventory” means all present and
future inventory in which Borrower has any interest. 
 “Investment” means any beneficial ownership of (including stock, partnership or limited
liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person. 
 “Investment Agreement”
means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock. 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 

“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank at Borrower’s request. 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 

“Liquidity” means the sum of: (i) unrestricted Cash in Bank: plus (ii) the principal amount of the Term Loans remaining undrawn that
Borrower shall be permitted to request hereunder. 
 “Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower
in connection with this Agreement, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time. 

“Material Adverse Effect” means a material adverse effect on: (i) the operations, business or financial condition of Borrower and its
Subsidiaries taken as a whole; (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents; or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s
security interest in the Collateral. 
 “Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a
beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	3

 “Next Financing Event” means the occurrence of any one of the following after the Closing Date:
(a) receipt by Borrower of at least $25,000,000 in net Cash proceeds from the sale or issuance of Borrower’s equity securities to investors reasonably acceptable to Bank; or (b) receipt by Borrower of at least $15,000,000 in net Cash
proceeds from the sale or issuance of Borrower’s Subordinated Debt or equity securities to Borrower’s existing investors. 

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from
Borrower to others that Bank may have obtained by assignment or otherwise. Notwithstanding the foregoing, Borrower’s obligations under any warrants issued to Bank shall not be deemed “Obligations” hereunder. 

“Orbimed Term Sheet” means that certain Term Sheet For Series C Convertible Preferred Stock Financing dated July 3, 2013 entered into between
the Borrower and Orbimed Private Investments IV, L.P. 
 “Patents” means all patents, patent applications and like protections including without
limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. 
 “Periodic Payments”
means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 “Permitted Indebtedness” means: 

(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;  

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

(c) Indebtedness not to exceed $650,000 in the aggregate in any fiscal year of Borrower secured by a lien described in clause
(c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness; 

(d) Subordinated Debt;  

(e) Indebtedness to trade creditors incurred in the ordinary course of business and to Bank in connection with corporate credit card
arrangements;  
 (f) Other unsecured Indebtedness not to exceed $250,000 outstanding at any time; and  

(g) Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased
or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 
 “Permitted Investment” means: 

(a) Investments existing on the Closing Date disclosed in the Schedule; 

(b) (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either
Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	4

 
certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking
accounts held with Bank or subject to a control agreement in favor of Bank; and (vi) Investments consistent with any investment policy adopted by the Borrower’s board of directors; 

(c) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed
$650,000 in the aggregate in any fiscal year;  
 (d) Investments not to exceed $650,000 outstanding in the aggregate at any
time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities
of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;  

(e) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;  

(f) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are
not Affiliates, in the ordinary course of business, provided that this subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary;  

(g) Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive
licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $650,000 in the aggregate in any fiscal year;  

(h) Investments permitted under Section 7.3; 

“Permitted Liens” means the following:  

(a) Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the
Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank; 

(b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings and for which Borrower maintains adequate reserves; 
 (c) Liens not to exceed $650,000 in the
aggregate in any fiscal year of Borrower (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such Equipment; 
 (d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does not increase;  
 (e) Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments); 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	5

 (f) Liens securing Subordinated Debt; 

(g) Liens arising from non-exclusive licenses and non-exclusive sublicenses granted to others in the ordinary course of business which
do not interfere in any material respects with the business of Borrower and its Subsidiaries taken as a whole;  

(h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection
with the importation of goods;  
 (i) Liens of materialmen, mechanics, warehousemen, carriers, artisans or other similar
Liens arising in the ordinary course of Borrower’s business or by operation of law, which are not past due or which are being contested in good faith by appropriate proceedings and for which reserves have been established in accordance with
GAAP;  
 (j) Deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business (other than for indebtedness or any Liens arising under ERISA); and  

(k) Subject to Section 6.6 of this Agreement, banker’s liens, rights of setoff and similar liens on deposits made in the
ordinary course of business, including all deposit accounts and securities accounts. 
 “Permitted Transfer” means the conveyance, sale, lease,
transfer or disposition by Borrower or any Subsidiary of:  
 (a) Inventory in the ordinary course of business; 

(b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of
business;  
 (c) worn-out, surplus, or obsolete Equipment not financed with the proceeds of Credit Extensions; 

 (d) grants of security interests and other Liens that constitute Permitted Liens;  

(e) dividends or distributions expressly permitted pursuant to Section 7.6, and Permitted Investments; 

(f) the Escrow Payment; and  

(g) other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $650,000 during any fiscal year. 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency. 
 “Prime
Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank. 

“Responsible Officer” means each of the Chief Executive Officer, the Chief Business Officer, the Chief Financial Officer, Vice President of Finance
and the Controller of Borrower, as well as any other officer or employee identified in as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement. 

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	6

 “SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the
state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of
record as of the date of such report. 
 “Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing
by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank). 
 “Subsidiary” means any
corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof
ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate. 

“Term Loan Maturity Date” means July 31, 2016. 

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	7

					
	DEBTOR:	  	OTONOMY, INC.	  	
			
	SECURED PARTY:	  	SQUARE 1 BANK	  	

 EXHIBIT B 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to: 
 (a) all accounts (including health-care-insurance
receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including
patents, trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing,
and the computers and equipment containing said books and records;  
 (b) any and all cash proceeds and/or noncash
proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions. 

Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature
whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the
Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”). 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of July 31, 2013, include the Intellectual Property to the extent and only to the extent
necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely
limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	1

 CORPORATE RESOLUTION 

The undersigned duly elected and qualified [Assistant] Secretary of Otonomy, Inc. (the “Company”) do hereby certify that the following is a true and
correct copy of certain resolutions adopted by the Company’s Board of Directors in accordance with applicable law and the Company’s bylaws, and that such resolutions are now unmodified and in full force and effect: 

BE IT RESOLVED, that: 
  

	1)	Any one (1) of the following, duly elected officers of the Company (each, an “Authorized Officer”) whose genuine original signature appears next to his or her name is authorized to act for, on behalf of,
and in the name of the Company in connection with the resolutions below: 

  

									
	 Title
	 	 	  	 Name
	  	  	  	 Authorized Signature

	  
	 		  	  
	  		  	  

	  
	 		  	  
	  		  	  

	  
	 		  	  
	  		  	  

	  
	 		  	  
	  		  	  

  

	2)	Any Authorized Officer may: 

  

	 	a)	Borrow money from time to time from Square 1 Bank (the “Bank”), and may negotiate and procure loans, letters of credit, foreign exchange contracts and other financial accommodations from Bank, including
without limitation, that certain Loan and Security Agreement dated as of July 31, 2013, and also to execute and deliver to Bank one or more renewals, extensions, or modifications thereof; 

 

	 	b)	Give security for any liabilities of the Company to Bank by grant, security interest, assignment, lien, deed of trust or mortgage upon any real or personal property, tangible or intangible of the Company;

  

	 	c)	Purchase, sell, exchange, assign, endorse for transfer and/or deliver certificates and/or instruments representing stocks, bonds, evidences of Indebtedness or other securities owned by the Company, whether or not
registered in the name of the Company; 

  

	 	d)	Discount with the Bank, commercial or other business paper belonging to the Company made or drawn by or upon third parties, without limit as to amount; 

 

	 	e)	Authorize and direct the Bank to pay the proceeds of any such loans or discounts as directed by the persons so authorized to sign; 

  

	 	f)	Issue to Bank a warrant or warrants to purchase the Company’s capital stock; and 

  

	 	g)	Execute and deliver in form and content as may be required by the Bank any and all notes, evidences of indebtedness, applications for letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages, trust receipts and other agreements, instruments or documents to carry out the purposes of these Resolutions, any or all of which may relate to all or to substantially
all of the Company’s property and assets; 

  

	3)	The Authorized Officers may designate additional or alternate individuals as being authorized to request loan advances, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and
deliver such other documents and agreements as he or she may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions. 

 

	4)	 Any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved,
and the authority conferred herein may be exercised singly by any such officer, and these resolutions shall continue in full force and effect until written notice of modification or revocation is received and accepted by Bank (such notice to have no
effect on any action previously taken by the Bank in reliance on these Resolutions). Bank may rely upon any form of notice, which 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	2

	 	
it in good faith believes to be genuine or what it purports to be. 

  

	5)	The Resolutions are in full force and effect as of the date of this Certificate and are intended to replace, as of this date, any Resolutions previously given by the Company to Bank in connection with the matters
described herein; these Resolutions and any borrowings or financial accommodations under these Resolutions have been properly noted in the corporate books and records, and have not been rescinded, revoked or modified; neither the foregoing
Resolutions nor any actions to be taken pursuant to them are or will be in contravention of any provision of the certificate of incorporation or bylaws of the Company or of any agreement, indenture or other instrument to which the Company is a party
or by which it is bound; and to the extent the articles of incorporation or bylaws of the Company or any agreement, indenture or other instrument to which the Company is a party or by which it is bound require the vote or consent of shareholders of
the Company to authorize any act, matter or thing described in the foregoing Resolutions, such vote or consent has been obtained. 

 In
Witness Whereof, I have affixed my name as [Assistant] Secretary and have caused the corporate seal (where available) of said Company to be affixed on July 31, 2013. 

 

	
	  

	[Assistant] Secretary*

  

	*	If the certifying officer is designated as the only signer in these resolutions then another corporate officer must also sign. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	3

 USA PATRIOT ACT NOTICE 

OF 
 CUSTOMER
IDENTIFICATION 
 IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an account. 
 WHAT THIS MEANS FOR YOU: when you open an account, we will ask
your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. 

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	4

 SQUARE 1 BANK 

AUTOMATIC DEBIT AUTHORIZATION 
 Member
FDIC 
 To: Square 1 Bank 
 Re: Loan #
                     
 You are hereby authorized and
instructed to charge account No.                      in the name of 

Otonomy, Inc. 
 for facility fees, principal, interest and other
payments due on above referenced loan as set forth below and credit the loan referenced above. 

x Debit the Facility Fee as it becomes due according to the terms of the Loan and Security
Agreement and any renewals or amendments thereof. 
 x Debit each interest payment as it
becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof. 
 x Debit each principal payment as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof. 

x Debit each payment for Bank Expenses as it becomes due according to the terms of the Loan and
Security Agreement and any renewals or amendments thereof. 
 This Authorization is to remain in full force and effect until revoked in writing. 

 

			
	Borrower Signature	  	Date
		  	
		  	

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	5

			
	Phone                            	  	SQUARE 1 BANK
	Fax                            	  	CLIENT AUTHORIZATION

  
 General
Authorization 
 I hereby authorize Square 1 Bank to use my company name, logo, and information relating to our banking relationship in its marketing and
advertising campaigns which is intended for Square 1 Bank’s customers, prospects and shareholders. 
 Square 1 Bank will forward any advertising or
article including client for prior review and approval. 
  

			
	  

	Signature
	
	  

	Printed Name                  Title
	
	 Otonomy, Inc.

	Company
	
	 6275 Nancy Ridge Drive, Suite 100

	Mailing Address
	
	 San Diego, CA 92121

	City, State, Zip Code
	
	  

	Phone Number
	
	  

	Fax Number
	
	  

	E-Mail
	
	  

	Date

  

					
	

	  	Otonomy, Inc. LSA Execution Version	  	6EX-10.11

 Exhibit 10.11 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND
REPLACED WITH AN ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 LICENSE AND COMMERCIALIZATION
AGREEMENT 
 THIS LICENSE AND COMMERCIALIZATION AGREEMENT including the exhibits referred to herein and attached
hereto which are hereby incorporated by reference (the “Agreement”), entered into as of April 30, 2013 (“Signature Date”), by and between Otonomy, Inc., a Delaware corporation having a principal place of
business located at 6275 Nancy Ridge Road, Suite 100, San Diego, CA 92121 (“Otonomy”) and DURECT Corporation, a Delaware corporation having a principal place of business located at 10260 Bubb Road, Cupertino, California 95104
(“DURECT”). 
 RECITALS 

A.    WHEREAS, DURECT owns or has rights to certain information and data relating to the development of
Gacyclidine and has conducted certain pre-clinical investigations regarding the use of Gacyclidine in the treatment of tinnitus. 

B.    WHEREAS, DURECT has licensed certain rights to Active Agents as locally delivered therapeutics with
rights to sublicense to Otonomy pursuant to an Amended and Restated Agreement No. 98238 between Institut National de la Sante et de la Recherche Medicale (“INSERM”) and DURECT dated May 1, 2001 as amended and restated in
January 2002 (the “INSERM Agreement”), a copy of which is attached as Exhibit C. 

C.    WHEREAS, DURECT and NeuroSystec Corporation (“NeuroSystec”) previously entered into
a license and commercialization dated May 13, 2004 (the “Prior Agreement”), pursuant to which DURECT granted to NeuroSystec an exclusive license to certain technology for site-specific and time-released delivery of Gacyclidine
and certain other drugs to the middle or inner ear, including certain rights obtained by DURECT under the INSERM Agreement. 

D.    WHEREAS, Otonomy and IncuMed, LLC (“IncuMed”), an affiliate of NeuroSystec, have
entered into that certain Asset Transfer Agreement of even date herewith pursuant to which Otonomy purchased from IncuMed substantially all of the assets of NeuroSystec relating to Gacyclidine, including without limitation NeuroSystec’s
interest in the Prior Agreement. 
 E.    WHEREAS, Otonomy and DURECT desire to amend and restate the
Prior Agreement to modify and/or clarify certain of the provisions of the Prior Agreement. 
 NOW, THEREFORE, in
consideration of the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Otonomy and DURECT hereby agree as follows: 

  
 Page 1 of 26 

	1.	 DEFINITIONS 

As used in this Agreement, the following terms shall have the meanings indicated herein: 

1.1.    “Active Agent” shall mean Gacyclidine, as well as each of the separate
diasteriomers comprising Gacyclidine, together with all salt forms, solvates and esters of any of the foregoing, in each case to the extent claimed or otherwise disclosed in the DURECT Patent Rights. 

1.2.    “Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediates, is controlled by, controls, or is under common control with such Person, as of or after the Effective Date. For purposes of this definition only, the term “control” means
the possession of the power to direct or cause the direction of the management and policies of an entity, whether by ownership of voting stock or partnership interest, by contract or otherwise, including, without limitation, direct or indirect
ownership of fifty percent (50%) or more of the voting interest in the entity in question. 

1.3.    “Approval” shall mean the approval, including pharmacological,
toxicological, and clinical approvals, which need to be granted by the relevant governmental authorities of a territory, for importation, promotion, distribution, sale, and administration thereof to patients of a Licensed Product in such territory
(including, without limitation, an NDA or PMA granted by the FDA, including variations, extensions, and renewals thereof). 

1.4.    “Commercially Reasonable Efforts” shall mean a level of effort that would
ordinarily be applied by [***] 
 1.5.    “Confidential Information” shall have
the meaning set forth in Section 11.1 below. 
 1.6.    “Control” or
“Controlled” shall mean owned or in-licensed from a Third Party, with the ability to grant access to or a license or sublicense to Otonomy in accordance with this Agreement without violating the terms of any agreement or other
arrangement with any Third Party. 
 1.7.    “Cover”, “Covering” or
“Covered” means, with respect to a Licensed Product, that the using, selling, or offering for sale of such Licensed Product would, but for the license granted under this Agreement to the relevant DURECT Patent Rights, infringe a
Valid Claim of the relevant DURECT Patent Rights in the country in which the activity occurs. 

1.8.    “Deductible Expenses” shall mean to the extent actually incurred or
allowed with respect to any sale of a Licensed Product: (i) normal and customary trade, cash and/or quantity discounts, including any volume discount paid or credited to the third party, rebates, chargebacks, retroactive price adjustments and
administrative fees (including U.S. Medicaid and Medicare programs or equivalents and other private or government sponsored rebates and administrative fees paid granted to purchasing groups in relation to Licensed Products); (ii) import,
export, sales, use, excise and other consumption taxes and custom duties or tariffs, to the extent and up to the amount mentioned in that respect on the invoice, and any other governmental taxes (other than income taxes) 

 
 *** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 2 of 26 

 
or charges imposed upon the importation, use or sale of a Licensed Product; (iii) any charges for freight, postage, shipping, security or special handling or insurance; (iv) returns;
and (v) reasonable provisions for allowance for uncollectible amounts. 

1.9.    “DURECT Data” shall mean all data and information owned or Controlled by
DURECT as of or after the Effective Date related to the development, manufacturing, administration and use of Active Agent or the practice of the Joint Patent Rights, including but not limited to pre-clinical and clinical investigation protocols,
data, and other results (including safety and efficacy data), information typically found in a Chemistry, Manufacturing and Controls (CMC) section of an FDA filing, all FDA, EMA and other regulatory submissions and correspondence, and information
for investigations, including but not limited to investigator brochures. 

1.10.    “DURECT Know-How” shall mean all proprietary data, information and
materials owned or Controlled by DURECT relating to the development, manufacturing, administration and use of any Active Agent and/or the practice of the Joint Patent Rights including, without limitation, know-how, test results, knowledge,
techniques, discoveries, inventions, specifications, designs, regulatory filings, reports and all other documents, and specifically includes, but is not limited to, the DURECT Data. 

1.11.    “DURECT Patent Rights” shall mean the Patent Rights listed on Exhibit B.

 1.12.    “DURECT Intellectual Property” shall mean DURECT Know-How and DURECT
Patent Rights. 
 1.13.    “Effective Date” shall mean May 13, 2004. 

1.14.    “EMA” shall mean the European Medicines Agency or any successor thereto.

 1.15.    “FDA” shall mean the United States Food and Drug Administration, or
any successor thereto. 
 1.16.    “GAAP” shall mean United States generally
accepted accounting principles, consistently applied or, if applicable, corresponding accounting principles in effect in relevant jurisdictions outside the United States, consistently applied. 

1.17.    “Gacyclidine” shall mean [***]. 

1.18.    “Joint Patent Rights” shall mean the intellectual property disclosed in
the patent application filed as [***], as well as any Patent Rights covering Inventions as that term is defined in the INSERM Agreement. A complete list all Joint Patent Rights existing as of the Signature Date is attached hereto as Exhibit B. 

1.19.    “Licensed Product” shall mean any pharmaceutical formulation containing
an Active Agent, either alone or in association or combination with one or several other active or inactive ingredients, as a stand-alone product, or in combination with appropriate devices or 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

  
 Page 3 of 26 

 
bioerodable compounds which provide for site-directed delivery and/or extended release of such pharmaceutical formulation. 

1.20.    “Marketing Approval Application” shall mean generally a marketing
authorization application filed with the FDA, EMA or other applicable health/regulatory authority, for approval to market and distribute Licensed Products in the applicable jurisdiction, including, without limitation, an NDA or PMA filed with the
FDA. 
 1.21.    “NDA” shall mean a new drug application filed with or granted
by the FDA with respect to a Licensed Product seeking approval to commercially market said new drug. 

1.22.    “Net Sales” shall mean with respect to a Licensed Product on a
country-by-country basis the gross amount invoiced, recognized or otherwise charged by Otonomy, its Affiliates and/or Sublicensees for the sale of a Licensed Product on a country-by-country basis in the Territory, less Deductible Expenses with
respect thereto. It is acknowledged that Net Sales shall not include amounts for Licensed Product furnished to a Third Party for use in clinical trials conducted to obtain regulatory approval and Licensed Product distributed as free goods.
Furthermore, Net Sales shall not include amounts from sales or other dispositions of Licensed Product between Otonomy and any of its Affiliates or between Otonomy (or any of its Affiliates) and Sublicensees, so long as such Affiliates and/or
Sublicensees are not the end user of such Licensed Product. 
 1.23.    “Patent
Rights” shall mean any patent applications, continuations, continuations-in-parts, divisionals, or other patent applications (including, without limitation, provisional applications and PCT patent applications) and patents issuing from any
of the foregoing including, but not limited to, any extension, renewal, reexamination, substitution, or reissue of such patents and all foreign equivalents of any of the foregoing. 

1.24.    “Party” shall mean either Otonomy or DURECT, as appropriate, and
collectively Otonomy and DURECT are referred to herein as the “Parties”. 

1.25.    “Person” shall mean an individual, corporation, partnership, limited
liability company (“LLC”), trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein. 

1.26.    “PMA” shall mean a pre-marketing application filed with or granted by the
FDA with respect to a Licensed Product seeking approval to commercially market said new device. 

1.27.    “Sublicensee(s)” shall mean any Third Party other than an
Affiliate of Otonomy to whom Otonomy (or its Affiliate) has granted a sublicense of any or all of the rights in, to and under the DURECT Intellectual Property to make and sell Licensed Products. 

1.28.    “Sublicensing Income” means upfront, milestones or other payments received by
Otonomy from a Sublicensee in consideration of a grant of a sublicense under the DURECT Patent Rights. Notwithstanding the foregoing, the following are specifically excluded from the definition of Sublicensing Income: [***] 

 
 *** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 4 of 26 

 
[***] 
 1.29.    “Term”
shall have the meaning set forth in Section 10.1 of this Agreement. 

1.30.    “Territory” shall mean the world. 

1.31.    “Third Party” shall mean any Person or entity other than a Party. 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

  
 Page 5 of 26 

 1.32.    “Valid Claim” shall mean any
claim of an issued and unexpired patent within the DURECT Patent Rights, which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction in an unappealed and unappealable decision, and which has not
been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise. 
 For purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise requires: (a) the use herein of the plural shall include the single and vice versa and the use of the masculine shall include the feminine; (b) unless otherwise
set forth herein, the use of the term “including” means “including but not limited to”; and (c) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular provision. Additional terms may be defined throughout this Agreement. 
  

	2.	 LICENSES 

2.1.    License Grant. DURECT hereby grants to Otonomy an exclusive, royalty-bearing license,
including the right to grant sublicenses, under the DURECT Intellectual Property, to research and develop, make, use, sell, offer for sale, import, export, and otherwise commercialize any Licensed Product and to have any of the foregoing performed
on its behalf by a Third Party, in each case within the Territory. 
 2.2.    Exclusivity. The
license granted to Otonomy in section 2.1 is exclusive even with respect to DURECT. For clarity, DURECT shall not retain any rights under the DURECT Intellectual Property to research and develop, make, have made, use, sell, offer for sale or
otherwise commercialize, import, and export any Licensed Product. 
 2.3.    Sublicensing.
Otonomy may, under the rights granted to it hereunder, freely grant sublicenses to any Third Party, including the right to grant further sublicenses, provided that all such sublicenses shall be in writing and shall be subordinate to the terms
and conditions of this Agreement. 
 2.4.    Termination of Exclusivity by DURECT. In the event
that Otonomy has failed to use Commercially Reasonable Efforts to develop and commercialize a Licensed Product, DURECT shall notify Otonomy in writing. Otonomy shall have [***] to remedy such failure (the “Cure Period”). By
way of example without limitation, it is hereby agreed that [***] If Otonomy has failed to remedy such failure within the Cure Period, then DURECT may elect, in its sole discretion, by written notice to Otonomy to (i) terminate this Agreement,
such termination to take effect in due course so as to permit an orderly wind down of operations pertaining to this agreement, provided that any sublicenses granted by Otonomy prior to the date of such termination shall survive in accordance with
Section 10.5.2 below; or (ii) convert the license granted in Section 2.1 to DURECT 
  

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

  
 Page 6 of 26 

 
Intellectual Property into a non-exclusive license, provided that any such conversion of the license granted in Section 2.1 to a non-exclusive status shall not affect the exclusivity of any
exclusive sublicenses granted by Otonomy prior to the date of such conversion. However, if Otonomy disputes such lack of diligence in writing within the Cure Period, [***] DURECT acknowledges and agrees that as a part of its development activities
and diligence obligations hereunder Otonomy may conduct feasibility studies for the application of Licensed Product(s) to specific indications before undertaking further development. 

 

	3.	 DISCLOSURE OF DURECT KNOW-HOW. 

3.1.    Disclosure of DURECT Know-How. DURECT certifies that it has previously transferred to
NeuroSystec all DURECT Know-How necessary or useful for the research, development and commercialization of the Active Agents. 
  

	4.	 ROYALTIES, PAYMENTS AND RELATED OBLIGATIONS 

4.1.    Payments by Otonomy to DURECT. As a partial reimbursement to DURECT for research and
development and other expenses incurred by DURECT in connection with its efforts researching and developing Active Agents, Otonomy shall pay to DURECT the amounts set forth in Sections 4.1.1 and 4.1.2 below: 

    4.1.1.    Milestones. Upon the first
occurrence of the following milestones by Otonomy, its Affiliates or any Sublicensee, each a one-time, non-refundable fee, due and payable within [***] days after such event: 

 

							
	 (i)
	  	[***]	  	    $[***]	  	
				
	 (ii)
	  	[***]	  	    $[***]	  	
				
	 (iii)
	  	[***]	  	    $[***]	  	
				
	 (iv)
	  	[***]	  	    $[***]	  	

 Each of the above milestones shall be payable once only and only for the first occurrence of each such
milestone, irrespective of the number of Licensed Products that may achieve such milestone, and only to the extent the Licensed Product triggering such milestone is Covered by a Valid Claim in the country in which the applicable filing or approval
occurs. 
 *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions.

  
 Page 7 of 26 

 4.1.2.       Sublicense
Fees.    [***] percent ([***]%) of all Sublicensing Income realized by Otonomy. 

4.1.3.       Royalties.    In addition to the foregoing,
earned running royalties shall be due as follows with respect to Licensed Products sold by Otonomy, its Affiliates and Sublicensees in countries in the Territory where at least one Valid Claim within the DURECT Patent Rights exists Covering such
Licensed Product: 
  

	 	(i)	 a royalty of [***]% on that portion of annual Net Sales of such Licensed Products which does not exceed $[***]; and 

 

	 	(ii)	 a royalty of [***]% on that portion of annual Net Sales of such Licensed Products in excess of $[***]. 

4.2.      Payments by Otonomy to INSERM.    In addition to the
royalties of Section 4.1.3 above, Otonomy shall pay to INSERM, on behalf of DURECT, earned running royalties for worldwide net sales of Licensed Products by Otonomy, its Affiliates and Sublicensees where such products are Covered by a Valid
Claim under the Joint Patent Rights. Such royalty shall be [***] percent ([***]%) of net sales of such products. For the purposes of this Section 4.2, net sales shall be calculated as [***] Such payments will be calculated at the end of
each calendar year and paid to INSERM within [***] days of the end of each calendar year. All calculations of fees payable to INSERM will be based on United Stated Dollars. Net sales in currency other than United Stated Dollars will be
converted to United States Dollars using the currency exchange rate quoted in the Wall St. Journal (or comparable publication if not quoted in the Wall St. Journal) on the last day of the calendar year for which net sales are calculated. Along with
payment, Otonomy will provide a statement showing the calculation used to calculate net sales and the royalty payment. 

4.3.      Royalty Term.    Otonomy’s obligation to pay royalties
under Sections 4.1.3 shall continue on a Licensed Product-by-Licensed Product and on a country-by-country basis in the Territory until expiration or determination of invalidity of the last Valid Claim within the DURECT Patent Rights Covering such
Licensed Product in such country. Otonomy’s obligation to pay royalties to INSERM under Section 4.2 shall continue so long as DURECT’s obligations to INSERM continue under the INSERM AGREEMENT. 

4.4.      Royalty Reports.    Otonomy shall deliver to DURECT, within
[***] in which a Licensed Product is sold, transferred or otherwise disposed of by Otonomy, its Affiliates or Sublicensees, a written report setting forth in reasonable detail (a) the number and types of Licensed Product(s) sold in each
country, (b) the gross proceeds from such sales, (c) the calculation of the royalties payable to DURECT for such calendar year under Section 4.1, including the amount of Net Sales and Deductible Expenses (broken down by category) and
(d) the calculation of royalties payable to INSERM. Notwithstanding the foregoing, Otonomy shall have no obligation under this Section 4.5 for so long as no royalties are payable under this Article 4. 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

  
 Page 8 of 26 

 4.5.      Payment Terms. 

4.5.1.      Otonomy shall pay all royalties due and payable on Net Sales by it, its
Affiliates and Sublicensees pursuant to Sections 4.1.5 on a per [***] in which the applicable Licensed Product is sold, transferred or otherwise disposed of by Otonomy, its Affiliates and Sublicensees. 

4.5.2.      Unless expressly stated otherwise, all payments made under this Agreement
shall be made in United States Dollars and by wire transfer (net of bank charges which shall be borne by the paying party) to one or more bank accounts to be designated in writing by each Party or by INSERM as the case may be. In the event that a
Licensed Product is sold by Otonomy, its Affiliates or Sublicensees in currencies other than United States Dollars, Net Sales shall be calculated by conversion of foreign currency to U.S. Dollars at the conversion rate equal to the average of the
conversion rates existing in the United States (referencing the “U.S. dollar noon buying rates”, or its equivalent, published in the Wall Street Journal) on the last working day of each month of the period during which royalties are being
calculated. 
 4.5.3.      No multiple royalties shall be due or payable for any
Licensed Product notwithstanding that the manufacture, use, offer for sale, sale or import of any Licensed Product by or for Otonomy, its Affiliates or Sublicensees is or shall be covered by more than one Valid Claim within DURECT Patent Rights. For
the avoidance of doubt, royalties due under Sections 4.2 shall not be deemed multiple royalties. 

4.6.      Taxes.    Each Party shall be responsible for and pay all
taxes, duties and levies directly imposed by all foreign, federal, state, local or other taxing authorities (including, without limitation, export, sales, use, excise, and value-added taxes) based on such Party’s transactions or payments under
this Agreement, other than taxes imposed or based on net income. If withholding under the applicable laws of any country is required with respect to any payment to be made by either Party under this Agreement, the paying Party shall withhold the
required amount and pay such amount to the appropriate governmental authority and all amounts due hereunder shall be reduced by the amount required to be withheld. In such a case, the withholding Party shall, upon the other Party’s request,
promptly provide the other Party with original receipts or other evidence sufficient to allow the other Party to obtain the benefits of any such tax withholding. The Parties shall use reasonable efforts, if applicable and appropriate, to cooperate
in reducing any tax withholding on payments made hereunder. 
 4.7.      Inspection of
Books and Records.    Otonomy shall maintain, and require its Affiliates and Sublicensees to maintain in accordance with GAAP, complete and accurate books and records which enable the calculation of royalties and other
payments payable hereunder to be verified. Otonomy, its Affiliates and its Sublicensees shall retain such books and records for each annual period for three (3) years after the submission of the corresponding report under Section 4.4. Upon
two (2) weeks prior written notice to Otonomy, independent accountants reasonably acceptable to Otonomy may have access to such books and records to conduct a review or audit for the sole purpose of verifying the accuracy of the royalty reports
and payments due under this 
 *** Certain information on this page has been omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 9 of 26 

 Agreement for any annul period ending not more than three (3) years prior to the date of
such request, provided that DURECT may conduct no more than one such audit in any twelve (12) month period and shall not audit any given annual period more than once. Such access shall be permitted during Otonomy’s normal business hours
during the term of this Agreement and for two (2) years after the expiration or termination of this Agreement. The independent accountant shall execute and deliver to Otonomy a standard confidentiality agreement (i.e., consistent with industry
norms). In the event of any underpayment, Otonomy shall promptly pay to DURECT the difference between the amount actually paid by Otonomy and the amount determined to be owed under this Section 4.7. Any amounts determined to have been overpaid
shall be credited against future payments owed to DURECT. Any such inspection or audit shall be at DURECT’s expense, unless the inspection or audit results in a determination that DURECT has been underpaid by Otonomy in any annual period by
more than [***] percent ([***]%) of the amount actually owed by Otonomy for such annual period, in which case Otonomy shall pay all reasonable costs and expenses incurred by DURECT in the course of making such determination, including the
reasonable fees and expenses of such accountant. 
 4.8.      Royalty
Anti-stacking.    [***] 
  

	5.	 [THIS SECTION INTENTIONALLY LEFT BLANK] 

  

	6.	 DEVELOPMENT, REGISTRATION, COMMERCIALIZATION AND ADVERSE EVENTS 

6.1.      Annual Development Reports.    During the period beginning
on the Signature Date and continuing until the commercial launch of the first Licensed Product, Otonomy shall provide annual written reports to DURECT summarizing material development and regulatory activities undertaken by Otonomy with respect to
the Licensed Products. All such reports shall be provided to DURECT strictly for information purposes only and all information contained therein shall be treated as Otonomy’s Confidential Information in accordance with Article 11. 

6.2.      Regulatory Reporting.    The Parties understand and agree
that Otonomy, itself or through its agents or designees, shall have the sole right to correspond with appropriate regulatory agencies and submit INDs and Marketing Approval Applications for Licensed Products as Otonomy deems useful or necessary to
fulfill its obligations hereunder. Accordingly, except as otherwise 
 *** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 10 of 26 

 required by law, DURECT shall not correspond directly with the FDA or any other regulatory
authority relating to the process of obtaining Approvals for Licensed Products, without Otonomy’s prior permission. Notwithstanding the foregoing, DURECT agrees to provide such reasonable assistance, as requested by Otonomy and at
Otonomy’s expense, in preparing, submitting and maintaining such INDs and Marketing Approval Applications. 

6.3.      Development and Commercialization Responsibilities.  Otonomy (itself
or through its Affiliates or designees) shall pay for all costs related to and shall bear all responsibility for the development, manufacturing, registration and sale of the Licensed Product(s). Otonomy (itself or through its Affiliates or
designees) shall pay for all costs related to and shall bear all responsibility for all marketing and promotional activities related to Licensed Product(s) in the Territory and shall decide on the strategy regarding such activities. Otonomy shall
use Commercially Reasonable Efforts to develop, obtain Approvals for, promote and sell Licensed Product(s) being granted Approval in the Territory, it being understood that the efforts of Otonomy’s Affiliates and Sublicensees shall count
towards Otonomy’s own Commercially Reasonable Efforts. 
  

	7.	 PATENT MAINTENANCE AND ENFORCEMENT 

7.1.      Prosecution of DURECT Patent Rights.  DURECT hereby appoints Otonomy
as its agent to, at its expense, file, prosecute and maintain the patent applications or patents within the DURECT Patent Rights. Otonomy shall provide DURECT and INSERM reasonable opportunity to review and comment on such activities, including
providing DURECT and INSERM promptly and in a timely fashion with copies of all relevant communications to or from any patent authority in the Territory regarding the DURECT Patent Rights and providing drafts of any material filings or responses to
be made to such patent authorities reasonably in advance of the submission of such filings or responses. Otonomy shall consider in good faith any reasonable comments provided by DURECT or INSERM in connection with the prosecution of such DURECT
Patent Rights in the Territory, provided that it is understood that Otonomy shall retain final decision-making authority with respect thereto. If Otonomy elects not to prepare, file, prosecute or maintain any patent applications or patents within
the DURECT Patent Rights in any given country(ies), Otonomy shall give DURECT written notice thereof within a reasonable period, not less than thirty (30) calendar days, prior to allowing such patent applications or patents to lapse or become
abandoned or unenforceable, and DURECT shall thereafter have the right, at DURECT’s sole expense and discretion, to prepare, file, prosecute and maintain such patent applications or patents in such countries. 

7.2.      Patent Enforcement.  If either Party becomes aware that any patents
within the DURECT Patent Rights are being or have been infringed by any Third Party, such Party shall promptly notify the other Party in writing describing the facts relating thereto in reasonable detail. Otonomy shall have the initial right, but
not the obligation, to institute, prosecute and control any action, suit or proceeding (an “Action”) with respect to such infringement including any declaratory judgment action, at its expense, using counsel of its choice. DURECT
shall cooperate reasonably with Otonomy, including being named in such Action if necessary, at Otonomy’s written request and expense, in connection with any such Action. Any amounts recovered in such Action shall be used first to reimburse
costs and expenses incurred by Otonomy and then DURECT, to the extent such 

  
 Page 11 of 26 

 
costs and expenses have been reasonably incurred in connection with such Action (including attorneys and expert fees) and any remainder attributable to compensatory damages shall be retained by
Otonomy and shall be treated as Net Sales hereunder except to the extent that DURECT has already received royalty payments pursuant to Section 4.1.3 for such amounts; provided, however, that any remainder that is attributable to an increase by
the court pursuant to 35 USC Section 284 or equivalent foreign law provision shall be retained by Otonomy. For the avoidance of doubt, in the event that the court awards increased damages pursuant to 35 USC Section 284 or equivalent
foreign law provision, the reimbursement of costs and expenses shall be subtracted first from such increased damages. 

7.3.      Step-In Enforcement.    In the event Otonomy fails to take
action to abate any commercially significant infringement of the DURECT Patent Rights (i.e., by initiating an Action or by entering into negotiations with the alleged infringer regarding the terms under which Otonomy would grant a sublicense to the
infringer) within two (2) months of receiving notice thereof (or a shorter period of time if DURECT’s rights in the DURECT Patent Rights are reasonably likely to be prejudiced by such a delay), DURECT shall have the right, but not the
obligation, to initiate and/or maintain such Action in its own name and at its own expense, and Otonomy shall cooperate reasonably with DURECT, at DURECT’s written request and expense, in connection with any such Action. Any amounts recovered
in such Action shall be used first to reimburse costs and expenses incurred by DURECT and then Otonomy, to the extent such costs and expenses have been reasonably incurred in connection with such Action (including attorneys and expert fees) and any
remainder attributable to compensatory damages shall be retained by Otonomy and shall be treated as Net Sales hereunder except to the extent that DURECT has already received royalty payments pursuant to Section 4.1.3 for such amounts; provided,
however, that any remainder that is attributable to an increase by the court pursuant to 35 USC Section 284 or equivalent foreign law provision shall be retained by DURECT. For the avoidance of doubt, in the event that the court awards
increased damages pursuant to 35 USC Section 284 or equivalent foreign law provision, the reimbursement of costs and expenses shall be subtracted first from such increased damages. 

7.4.      Cooperation.    In any Action, the parties shall provide
each other with reasonable cooperation and assistance, including agreeing to be named as a party to such Action, causing other necessary parties and parties with an interest to join and be named as necessary, and, upon the written request and at the
expense of the Party bringing such Action, the other Party shall make available, at reasonable times and under appropriate conditions, all relevant personnel, records, papers, information, samples, specimens, and the like in its possession.
Notwithstanding any other provision of this Article 7, neither Party shall make any settlements of any suit, proceeding or action relating to an infringement of any DURECT Patent Rights that would materially and adversely affect the other Party or
the rights and licenses granted hereunder (which in the case of any suit, proceeding or action being brought by DURECT, would include any settlement that would not terminate all further use by the alleged infringer of such DURECT Patent Rights)
without first obtaining such other Party’s prior written consent, such consent not to be unreasonably withheld or delayed or conditioned upon receipt of consideration. 

  
 Page 12 of 26 

	8.	 REPRESENTATIONS, WARRANTIES AND COVENANTS 

8.1.      Representations, Warranties and Covenants of
Otonomy.    Otonomy represents and warrants that, as of the Signature Date: 

8.1.1.      Otonomy is a corporation, duly organized, validly existing and in good
standing under the laws of Delaware. 
 8.1.2.      The execution, delivery and
performance of this Agreement has been duly authorized by all necessary corporate action on the part of Otonomy. 

8.1.3.      There is no pending, or to its knowledge, threatened Third Party lawsuit,
claim, action or demand against Otonomy. 
 8.1.4.      The execution, delivery and
performance of this Agreement will not conflict with any agreement to which Otonomy is a party or by which it is bound. 

8.2.      Representations, Warranties and Covenants of
DURECT.    DURECT represents, warrants and covenants that, as of the Signature Date: 

8.2.1.      DURECT is a corporation, duly organized validly existing and in good
standing under the laws of Delaware; 
 8.2.2.      The execution, delivery and
performance of this Agreement has been duly authorized by all necessary corporate action on the part of DURECT; 

8.2.3.      DURECT has the right and authority to grant the rights and licenses granted
to Otonomy under this Agreement; 
 8.2.4.      DURECT has not granted any right,
license or interest in, to or under the DURECT Patent Rights or DURECT Know-How inconsistent with the rights, license and interests granted to Otonomy in this Agreement, and DURECT shall not grant during the term of this Agreement any right, license
or interest in, to or under the DURECT Intellectual Property that is inconsistent with the rights, licenses and interests granted to Otonomy hereunder; 

8.2.5.      DURECT has provided to Otonomy a true copy (including any amendments
thereto) of each agreement with a Third Party referring or relating substantially to the manufacture, use or sale of any Active Agent. Exhibit A contains a complete list of all such Third Party agreements. 

8.2.6.      There is no pending or, to DURECT’s knowledge, threatened Third Party
lawsuit, claim, action or demand against DURECT which relates to the use of any Active Agent or the DURECT Intellectual Property. 

8.2.7.      Other than the patents and patent applications listed on Exhibit B, DURECT
represents and warrants that it is not the assignee, co-assignee, or licensee, of any patents, or patent 

  
 Page 13 of 26 

 
applications, that would (i) Cover the Active Agents or (ii) preclude Otonomy from exercising any of the rights granted hereunder. 

8.2.8.      To its knowledge, DURECT does not own or control any investigational new
drug application, drug master file or comparable regulatory filing for any Active Agent not included in this Agreement. 

8.3.      Disclaimer.    EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS
AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT AND ANY WARRANTY ARISING OUT OF PRIOR COURSE OF DEALING AND USAGE OF TRADE. 
  

	9.	 INDEMNIFICATION AND INSURANCE 

9.1.      Indemnification by Otonomy.    Otonomy shall indemnify and
hold harmless DURECT, its Affiliates and their respective officers, directors, employees and agents (each a “DURECT Indemnitee”) from and against claims, demands, liabilities, damages, losses and expenses, including reasonable
attorney’s fees and costs, actually incurred by the indemnified party arising out of or in connection with any lawsuit, claim, action or demand (“Claims”) brought by a third party based upon (i) the negligence or
intentional misconduct of Otonomy or its Affiliates; (ii) breach by Otonomy or its Affiliates of the representations and warranties made by it in this Agreement; (iii) use by or on behalf of Otonomy of any Active Agents or Licensed
Products for clinical trials, and (iv) the use, manufacture, marketing, promotion, sale, advertising, transportation, handling, storage, or distribution of Licensed Products by or on behalf of Otonomy, including any claims with respect to a
defect or alleged defect in the labeling of such Licensed Products or any defect or alleged defect in the design or formulation of such Licensed Products; except in each case for (x) Claims arising due to the negligence, intentional misconduct,
or breach of this Agreement by DURECT or its Affiliates, and (y) Claims for which DURECT is obligated to indemnify Otonomy Indemnitees pursuant to Section 9.2. 

9.2.      Indemnification by DURECT.    DURECT shall indemnify and
hold harmless Otonomy, its Affiliates and their respective officers, directors, employees and agents (each a “Otonomy Indemnitee”) from and against claims, demands, liabilities, damages, losses and expenses, including reasonable
attorney’s fees and costs, actually incurred by the indemnified party arising out of or in connection with any Claims brought by a third party based upon (i) the negligence or intentional misconduct of DURECT or its Affiliates; and
(ii) breach by DURECT or its Affiliates of the representations and warranties made by it in this Agreement; except in each case for (x) Claims arising due to the negligence, intentional misconduct omissions of, or breach of this Agreement
by Otonomy or its Affiliates and (y) Claims for which Otonomy is obligated to indemnify DURECT Indemnitees pursuant to Section 9.1. 

  
 Page 14 of 26 

 9.3.    Procedure.    The
foregoing indemnifications are subject to the following procedural requirements: the Otonomy Indemnitee or DURECT Indemnitee shall give prompt written notice to the indemnifying party of any claims, suits or proceedings by Third Parties which may
give rise to any claim for which indemnification may be required under this Article 9, and the Otonomy Indemnitee or DURECT Indemnitee shall reasonably cooperate with the indemnifying party and its counsel in the course of the defense of any such
suit, claim or demand, such cooperation to include without limitation using reasonable efforts to provide or make available documents, information and witnesses at the expense of the indemnifying party. The indemnifying party shall be entitled to
assume the defense and control of any such claim at its own cost and expense; provided, however, that the Otonomy Indemnitee or DURECT Indemnitee shall have the right to be represented by its own counsel at its own cost in such matters. Neither the
indemnifying party nor the indemnified party shall settle or dispose of any such matter in any manner which would materially and adversely affect the rights or interests of the other party (including the obligation to indemnify hereunder) without
the prior written consent of the other party, which shall not be unreasonably withheld or delayed or conditioned on further consideration. 

9.4.    Otonomy Insurance.    Prior to dosing the first human with the Licensed
Product in the first clinical trial, Otonomy shall, at its sole cost and expense, procure and maintain comprehensive general liability insurance and clinical trial insurance policies from a qualified insurance company which has a superior rating
from a recognized rating service, with minimum limits of $2,000,000 for combined bodily injury and property damage. Additionally, prior to launch of any Licensed Product hereunder, Otonomy shall, at its sole cost and expense, procure and maintain
products liability insurance policies from a qualified insurance company which has a superior rating from a recognized rating service, with coverage terms and limits standard and customary for commercialization of products similar to the Licensed
Products in the pharmaceutical industry, but no less than $5,000,000 for combined bodily injury and property damage. All such insurance policies shall include DURECT as an additional named insured. 

Otonomy will furnish to DURECT certificates of all such insurance policies: 

– at least 30 days prior to the scheduled commencement of a clinical trial for a Licensed Product (and within 30 days of
the date of each anniversary of the related insurance certificate date), evidence of coverage in accordance with this Section 9.4; and 

– at least 60 days prior to the first commercial sale by Otonomy in the Territory (and within 30 days of the date of each
anniversary of the related insurance certificate date), evidence of insurance coverage in accordance with this Section 9.4. 

If Otonomy is unable to secure or maintain all such insurance policies and coverage as provided for herein, the parties will
negotiate in good faith reasonable accommodations regarding risk exposure of the parties. 
  

	10.	 TERM AND TERMINATION 

10.1.    Term.    This Agreement shall commence on the Effective Date and
continue in full force and effect until the expiration of all of Otonomy’s royalty payment obligations as specified 

  
 Page 15 of 26 

 
under Section 4.4, unless terminated earlier pursuant to Sections 2.4, 10.2, 10.3, 10.4 or 12.6 (the “Term”). Upon such expiration or termination (excluding
termination under Sections 2.4, 10.2, 10.3, 10.4 or 12.6), the license granted under Section 2.1 shall be thereafter paid-up, perpetual and royalty-free. 

10.2.    Otonomy Termination.    Otonomy may terminate this Agreement upon
sixty (60) days prior written notice for any reason, including if Otonomy decides to halt development of Licensed Products. 

10.3.    Termination by Either Party.    Either Party may terminate this
Agreement upon written notice to the other Party if the other Party (i) makes a general assignment for the benefit of creditors; (ii) files an insolvency petition in bankruptcy; (iii) petitions for or acquiesces in the appointment of
any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; (iv) commences under the laws of any jurisdiction any proceeding for relief under the Bankruptcy Code of 1986, as amended
(“Code”) or similar bankruptcy laws in applicable jurisdictions, involving its insolvency, reorganization, adjustment of debt, dissolution, liquidation or any other similar proceeding for the release of financially distressed
debtors; or (v) becomes a party to any proceeding or action of the type described above in (iii) or (iv), and such proceeding or action remains undismissed or unstayed for a period of more than sixty (60) days. 

10.4.    DURECT Termination.    DURECT may terminate this agreement upon
written notice if Otonomy is in material breach of any provision hereunder and has not cured such breach within [***] days following the receipt of a first notice which specifies in reasonable detail the nature of the breach sent to it by DURECT;
provided, however, that if Otonomy disputes such breach in writing within the Cure Period, [***]. 

10.5.    Effect of Termination. 

10.5.1.  Upon termination of this Agreement in its entirety pursuant to Section 2.4, 10.2, or 10.4, the
licenses granted by DURECT to Otonomy hereunder shall terminate and except as reasonably necessary for surviving rights or obligations under this Section 10.5: (i) Otonomy shall, at DURECT’s option, promptly destroy or return to
DURECT all copies of Confidential Information of DURECT in Otonomy’s or its Affiliates’ possession, and (ii) DURECT shall promptly destroy or return all Confidential Information of Otonomy’s then in DURECT’s possession.
Notwithstanding the foregoing, each Party may retain one (1) copy of the Confidential Information of the other Party in its archival files, subject to the non-use and non-disclosure provisions herein, solely for purposes of determining the
scope of its rights and obligations hereunder. Termination of this Agreement by any Party shall not require resort to any court or compliance with any other formality and shall not prejudice the right of either party to recover any damages for
breach of this Agreement. 
 *** Certain information on this page has been omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 16 of 26 

 10.5.2.  Upon termination of this Agreement in its entirety
pursuant to Sections 10.2-10.4, the licenses granted by DURECT to Otonomy hereunder shall terminate. Notwithstanding the foregoing, any sublicenses granted by Otonomy to a Sublicensee hereunder shall survive, provided that upon request by DURECT,
such Sublicensee promptly agrees in writing to be bound by the applicable terms of this Agreement. For purposes of clarity, it is understood and agreed that (i) each Sublicensee shall be responsible for paying to DURECT all royalties and
milestones to which DURECT would have been entitled to had this Agreement not been so terminated based on such Sublicensee’s development and commercialization of Licensed Products, and (ii) the duties of DURECT under such surviving
sublicense will not be greater than the duties of DURECT under this Agreement. 

10.6.    Survival.    Articles 4 (solely with respect to amounts owed prior to
expiration or termination), 1, 9, 11 and 12 and Sections 7.2, 7.3, and 7.4 (each solely with respect to any Actions on-going at the time of termination), 8.3, 10.5 and 10.6 shall survive expiration or termination of this Agreement. 

 

	11.	 CONFIDENTIAL INFORMATION AND PUBLICATION 

11.1.    Confidentiality.    In connection with the Non-Disclosure Agreement,
as defined below, and with this Agreement, the parties have disclosed and will disclose or make available to each other information, data and materials of a confidential or proprietary nature (“Confidential Information”),
including but not limited to each Party’s proprietary know-how, invention disclosures, materials and/or technologies, economic information, business or research strategies, clinical trial data and information, trade secrets and material
embodiments thereof. 
 11.2.    Confidentiality and Non-Use.    The
recipient of a disclosing Party’s Confidential Information shall maintain such Confidential Information in confidence, and shall disclose such Confidential Information only to those of its employees, agents, consultants, Sublicensees,
attorneys, accountants, advisors, existing and potential investors, and potential development and commercialization partners who have a reasonable need to know such Confidential Information for purposes contemplated by this Agreement and who are
bound by obligations of confidentiality and non-use no less restrictive than those set forth herein. The recipient of the disclosing Party’s Confidential Information shall use such Confidential Information solely to exercise its rights and
perform its obligations under this Agreement (including, without limitation, the right to use and disclose such Confidential Information, to the extent required, in regulatory applications and filings), unless otherwise mutually agreed in writing.
The recipient of the disclosing Party’s Confidential Information shall take the same degree of care that it uses to protect its own confidential and proprietary information of a similar nature and importance (but in any event no less than
reasonable care). 
 11.3.    Exclusions.    Confidential Information of a
disclosing Party shall not include information that: (a) was in the recipient’s possession prior to receipt from the disclosing Party as demonstrated by contemporaneous documentation; (b) was or becomes, through no fault of the
recipient, publicly known; (c) was furnished to the recipient by a Third Party without breach of a duty or obligation of confidentiality to the disclosing Party; (d) was independently developed by the

  
 Page 17 of 26 

 
recipient without use of, application of or reference to the disclosing Party’s Confidential Information as demonstrated by contemporaneous documentation. 

11.4.    Legal Disclosures.    It shall not be a violation of this Article 11
for the recipient to disclose the disclosing Party’s Confidential Information when such information is required to be disclosed under applicable law, but such disclosure shall be for the sole purpose of and solely to the extent required by such
law, and provided that the recipient, to the extent possible, shall give the disclosing Party prior written notice of the proposed disclosure and cooperate fully with the disclosing Party to minimize the scope of any such required disclosure, to the
extent possible and in accordance with applicable law and will use all reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed. 

11.5.    Termination.    All obligations of confidentiality and non-use imposed
under this Article 11 shall expire [***] years after the date of expiration or termination of this Agreement. 

11.6.    Publications and Press Releases.    Neither Party shall issue any
press release, publication, or any other public announcement relating to this Agreement, without obtaining the other Party’s prior written approval, provided, however, that the parties may issue a mutually agreed upon joint press release
regarding this Agreement at a time to be mutually agreed upon. Once such press releases or other public announcements have been approved for disclosure by the parties, such approval will not be required again before a Party may subsequently repeat
disclosure of information contained therein. Notwithstanding the foregoing, each Party shall have the right to make such disclosures as may be required by applicable laws, including applicable securities laws. 

 

	12.	 MISCELLANEOUS 

12.1.    Trademarks.    Otonomy (itself or through its Affiliates or designees)
will have sole responsibility for, and ownership of, any and all trademarks for the Licensed Product used in the Territory. 

12.2.    Marking Requirement.    Each Party agrees to mark the appropriate
patent number or numbers as reasonably requested by the other Party on such Licensed Products made or sold in accordance with all applicable governmental laws, rules and regulations to the extent reasonably possible, and to require its Affiliates
and Sublicensees to do the same. Each Party acknowledges and agrees that by agreeing to mark Licensed Products, the other Party is not agreeing or otherwise admitting that any such marked product is covered by the claims of the DURECT Patent Rights
or any other patent. All uses of the DURECT name and marks shall be subject to prior review and approval by DURECT, such approval not to be unreasonabley withheld or conditioned on further consideration. 

12.3.     Governing Law; Dispute Resolution. 

12.3.1.  This Agreement shall be governed by, and construed and interpreted, in accordance with the internal
laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
  

  
 Page 18 of 26 

 12.3.2.  In the event of any controversy, claim or dispute
arising out of or related to this Agreement or to the breach or interpretation thereof (a “Dispute”), the parties shall first refer such Dispute to the Chief Executive Officer, or his or her duly appointed representative (each a
“Responsible Executive”) of each Party for attempted resolution by good faith executive negotiations within [***] days after such referral is made. In the event such officers are unable to resolve such Dispute within such
[***] day period, either Party may assert its rights in a manner in accordance with the provisions of Section 12.3.3-12.3.6. 

12.3.3.  Subject to Section 12.3.5, any Dispute that is not resolved under Section 12.3.2 shall be
solely and exclusively settled by final and binding arbitration in accordance with the then current commercial arbitration rules of the American Arbitration Association, subject to the terms and conditions of this Section 12.3. Either Party may
initiate the arbitration of a Dispute by sending written notice of such election to the other Party clearly marked “Arbitration Demand” (the “Arbitration Demand”). The Dispute shall be adjudicated by three
(3) neutral and impartial arbitrators. Each Party shall nominate one arbitrator within [***] days after the other Party’s receipt of the Arbitration Demand, and the two arbitrators so named will then jointly appoint the third
arbitrator as chairman of the arbitration tribunal. The decision of the arbitration tribunal shall be final and binding upon the parties hereto, and may be entered in any competent court for judicial acceptance of such an award and order of
enforcement. 
 12.3.4.  All costs of the arbitration shall be shared equally by the parties, and each
Party shall be responsible for its own legal and other costs. The arbitrators shall not have the right or authority to award punitive damages to either Party. 

12.3.5.  Notwithstanding anything to the contrary in this Section 12.3, each Party may, and expressly
reserves the right to, seek judicial relief from any court of competent jurisdiction in order to obtain an injunction or other equitable relief or to enforce a breach of the confidentiality provisions in Article 11 or to otherwise obtain temporary
relief pending the outcome of the arbitration. 
 12.3.6.  Arbitration will take place in [***]. The
proceedings shall be conducted and all documentation shall be presented in English. The parties agree that the arbitration proceedings and its contents shall be kept confidential, except as may otherwise be required by applicable law. 

12.4.    Export Regulations.    The parties agree that this Agreement is
subject in all respects to the laws and regulations of the United States of America, including the Export Administration Act of 1979, as amended, and any regulations thereunder. 

12.5.    Limitation of Liability.    IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR SPECIAL DAMAGES OF THE OTHER PARTY ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

  
 Page 19 of 26 

 12.6.    Force Majeure.    Neither
Party shall be held responsible for any delay or failure in performance hereunder to the extent caused by strikes, embargoes, unexpected government requirements, civil or military authorities, acts of God, earthquake, or by war, insurrection,
terrorism or other causes beyond such Party’s control and without such Party’s fault or negligence; provided that the affected Party notifies the unaffected Party as soon as reasonably possible, and resumes performance hereunder as soon as
reasonably possible following cessation of such force majeure event. Each Party agrees to give the other Party prompt written notice of the occurrence of any such condition set forth herein, the nature thereof, and the extent to which the affected
Party will be unable fully to perform its obligations hereunder. Each Party further agrees to use all reasonable efforts to correct the condition as quickly as possible, and to give the other prompt written notice when it is again fully able to
perform such obligations. If, as a result of conditions set forth herein, either Party is unable to substantially perform any of its material obligations hereunder for any consecutive period of three hundred and sixty-five (365) days, the other
Party shall have the right to terminate this Agreement upon written notice. 
 12.7.    Independent
Contractors.    The relationship of Otonomy and DURECT established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between Otonomy and
DURECT. Neither Party shall have any right, power or authority to bind the other or assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 

12.8.    Assignment.    Otonomy and DURECT may assign this Agreement to an
Affiliate or in connection with the merger, acquisition or sale by Otonomy or DURECT, as the case may be, of all or substantially all of its assets relating to this Agreement upon prior written notice to DURECT or Otonomy, as the case may be, and
without the need for DURECT’s or Otonomy’s consent, as applicable, provided however that (a) any such assignee shall assume all obligations of Otonomy or DURECT, as the case may be, under this Agreement and (b) no assignment
shall relieve Otonomy or DURECT of responsibility for the performance of any accrued obligations which Otonomy or DURECT then has hereunder. Aside from the foregoing, no rights or obligations under this Agreement may be transferred or assigned by a
Party to a Third Party without the prior written consent of the other Party. Any assignment not in conformance with this Section 12.8 shall be null, void and of no legal effect. 

12.9.    Notices.    All notices required or permitted to be given hereunder
shall be (a) delivered in person or (b) sent by express courier (via a reliable courier company such as FedEx or DHL), or (c) sent by registered airmail, with postage prepaid, and return receipt requested or (d) sent by facsimile
(with a confirmation letter thereof sent by express courier or registered airmail) to the address specified below or to such changed address as may have been previously specified in writing by the addressed Party from time to time during the term of
this Agreement. If notice is given in person, by courier or by fax, it shall be effective upon receipt; if notice is given by overnight delivery service, it shall be effective two (2) business days after deposit with the delivery service; and
if notice is given by mail, it shall be effective five (5) business days after deposit in the mail. Notices shall be sent as follows: 

  
 Page 20 of 26 

 If to DURECT: 

Attn: General Counsel 

DURECT Corporation 

10260 Bubb Road 

Cupertino, CA 95014 

Main: (408) 777-1827 

Facsimile: (408) 777-3577 

If to Otonomy: 

Otonomy, Inc. 

Attn: CEO 

6275 Nancy Ridge Road, 

Suite100 

San Diego, CA 92121 

Main: (858) 242-5200 

Facsimile: (858) 200-0933 

With copy to: 

Wilson Sonsini Goodrich & Rosati 

Attn: Kenneth A. Clark, Esq. 

650 Page Mill Road 

Palo Alto, California 94304 

Facsimile: (650) 493-6811 

12.10.    Modification; Waiver.    This Agreement may not be altered, amended
or modified in any way except by a writing signed by authorized representatives of both of the parties. The failure of a Party to enforce any rights or provisions of the Agreement shall not be construed to be a waiver of such rights or provisions,
or a waiver by such Party to thereafter enforce such rights or provision or any other rights or provisions hereunder. No waiver shall be effective unless made in writing and signed by the waiving Party. 

12.11.    Severability.    If any provision of this Agreement shall be found by
a court of competent jurisdiction or the arbitration panel described in Section 12.3 to be void, invalid or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of the remainder of this Agreement. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction or the arbitration panel described in Section 12.3 to be void, invalid
or unenforceable, and reformation or striking of such provision materially changes the economic benefit of this Agreement to either Otonomy or DURECT, Otonomy and DURECT shall modify such provision in accordance with this Section 12.13 to
obtain a legal, valid and enforceable provision and provide an 

  
 Page 21 of 26 

 
economic benefit to Otonomy and DURECT that most nearly effects Otonomy’s and DURECT’s intent on entering into this Agreement. 

12.12.    Bankruptcy Treatment of Licenses.    The parties agree that the
rights granted to Otonomy hereunder, including, without limitation, those rights granted in Section 2, are rights in “intellectual property” within the scope of Section 101 (or its successors) of the United States Bankruptcy Code
(the “Code”). Licensee shall have the rights set forth herein with respect to the Licensed Products when and as developed or created. In addition, Otonomy, as a licensee of intellectual property rights hereunder, shall have
and may fully exercise all rights available to a licensee under the Code, including, without limitation, under Section 365(n) or its successors. In the event of a case under the Code involving DURECT, Otonomy shall have the right to obtain (and
DURECT or any trustee for DURECT or its assets shall, at Otonomy’s written request, deliver to Otonomy) a copy of all embodiments (including, without limitation, any work in progress) of any intellectual property rights granted hereunder,
including, without limitation, embodiments of any Licensed Products, and any other intellectual property necessary or desirable for Otonomy to use or exploit any Licensed Products or to exercise its rights hereunder. In addition, DURECT shall take
all steps reasonably requested by Otonomy to perfect, exercise and enforce its rights hereunder, including, without limitation, filings in the U.S. Copyright Office and U.S. Patent and Trademark Office, and under the Uniform Commercial Code. 

12.13.    Entire Agreement.    The parties hereto acknowledge that this
Agreement, together with the exhibits attached hereto, sets forth the entire agreement and understanding of the parties as to the subject matter hereto, and supersedes all prior and contemporaneous discussions, agreements and writings in respect
hereto. This Agreement supersedes the Non-Disclosure Agreement to the extent indicated in Section 11.6 hereunder. 

12.14.    Headings.    The article, section and paragraph headings contained
herein are for the purposes of convenience only and are not intended to define or limit the contents of the articles, sections or paragraphs to which such headings apply. 

12.15.    Counterparts.    This Agreement may be executed in two or more
counterparts (including faxed counterparts), each of which shall be deemed an original and all of which together shall constitute one instrument. 

12.16.    No Third-Party Beneficiaries.    Nothing in this Agreement, express
or implied, is intended to confer, nor shall anything herein confer on, any person other than the parties and the respective successors or permitted assigns of the parties, any rights, remedies, obligations or liabilities. For the avoidance of
doubt, any payment made to INSERM pursuant to Section 4.2 represents payments owed by Otonomy to DURECT, which DURECT would otherwise remit to INSERM pursuant to DURECT’s payment obligations, and are paid by Otonomy to INSERM directly on
behalf of DURECT solely for the convenience of DURECT and Otonomy. Such payments do not relieve DURECT of its obligations to pay 1NSERM and do not create an independent right on the part of INSERM under this Agreement. 

  
 Page 22 of 26 

 IN WITNESS WHEREOF, Otonomy and DURECT have executed this Agreement by
their respective duly authorized representatives. 
  

									
	 OTONOMY, INC.
	 		 	 DURECT CORPORATION

					
	 By:
	 	 /s/ David A. Weber, PhD
	 		 	 By:
	 	 /s/ James E. Brown

					
	 Name:
	 	 David A. Weber, PhD
	 		 	 Name:
	 	 James E. Brown

					
	 Title:
	 	 President & Chief Executive Officer
	 		 	 Title:
	 	 CEO

  
 Page 23 of 26 

 EXHIBIT A 

DURECT THIRD PARTY LICENSES 

[***] 
 *** This exhibit has been
omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 24 of 26 

 EXHIBIT B 

DURECT PATENT RIGHTS 

[***] 
 *** This
exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  
 Page 25 of 26 

 EXHIBIT C 

INSERM AGREEMENT 
 [***]

 *** This exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

  
 Page 26 of 26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}]]