Document:

EX-10.3

 

Exhibit 10.3

NEW JERSEY RESOURCES CORPORATION

2007 Stock Award and Incentive Plan

Restricted Stock Agreement

     This Restricted Stock Agreement (the “Agreement”), which includes the attached “Terms and
Conditions of Restricted Stock” (the “Terms and Conditions”), confirms the grant on                      ___,
200___(the “Grant Date”) by NEW JERSEY RESOURCES CORPORATION, a New Jersey corporation (the
“Company”), to                      (“Employee”), under Section 6(d) of the 2007
Stock Award and Incentive Plan (the “Plan”), of Restricted Stock as follows:

	 	 	 	 	 
	 

	 	Number granted:
	 	                    shares of Restricted Stock
	 
	 	 	 	 
	 

	 	Fair Market Value

at Grant Date:
	 	$                      per share

How Restricted Stock Vests: The Restricted Stock, if not previously forfeited, will
vest on the dates and as to the number of shares in the following table:

	 	 	 	 	 
	 	 	Number of Shares That
	Stated Vesting Date	 	Vest at that Date
	_________, 200__
	 	 	33.33	%
	_________, 200__
	 	 	33.33	%
	_________, 200__
	 	 	33.33	%

In addition, if not previously forfeited, the Restricted Stock will become
immediately vested in full upon a Change in Control, and will become vested upon the
occurrence of certain events relating to Termination of Employment to the extent
provided in Section 3 of the attached Terms and Conditions. The terms “vest” and
“vesting” mean that the Restricted Stock has become transferable and
non-forfeitable. If Employee has a Termination of Employment prior to a Stated
Vesting Date and shares of Restricted Stock are not otherwise deemed vested by that
date, such Restricted Stock will be immediately forfeited. Forfeited Restricted
Stock ceases to be outstanding and in no event will thereafter result in any
delivery of shares of Stock to Employee.

     The Restricted Stock is subject to the terms and conditions of the Plan and this Agreement,
including the attached Terms and Conditions. The number and kind of shares of Restricted Stock and
other terms of the Restricted Stock are subject to adjustment in accordance with Section 4(b) of
the attached Terms and Conditions and Section 11(c) of the Plan. Capitalized terms used in this
Agreement but not defined herein shall have the same meanings as in the Plan.

     Employee acknowledges and agrees that (i) Restricted Stock is nontransferable, except as
provided in Section 2 of the attached Terms and Conditions and Section 11(b) of the Plan, (ii) the
Restricted Stock is subject to forfeiture in the event of Employee’s Termination of Employment in
certain circumstances prior to vesting, as specified in Section 3 of the attached Terms and
Conditions, and (iii) sales of the shares of Stock following vesting of the Restricted Stock will
be subject to the Company’s policy regulating trading by employees,

     IN WITNESS WHEREOF, NEW JERSEY RESOURCES CORPORATION has caused this Agreement to be executed
by its officer thereunto duly authorized, and Employee has duly executed this Agreement, by which
each has agreed to the terms of this Agreement.

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	EMPLOYEE	 	NEW JERSEY RESOURCES CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	[Employee Name]

	 	 	 	[Name]
	 

	 	 	 	[Title]

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TERMS AND CONDITIONS OF RESTRICTED STOCK

     The following Terms and Conditions apply to the Restricted Stock granted to Employee by NEW
JERSEY RESOURCES CORPORATION (the “Company”), and Restricted Stock resulting from Dividend
Equivalents (as defined below), if any, as specified in the Restricted Stock Agreement (of which
these Terms and Conditions form a part). Certain terms of the Restricted Stock, including the
number of shares granted and vesting date(s), are set forth on the preceding pages, which is an
integral part of this Agreement.

     1. General. The Restricted Stock is granted to Employee under the Company’s 2007 Stock Award
and Incentive Plan (the “Plan”), a copy of which has been previously delivered to Employee and/or
is available upon request to the Corporate Benefits Department. All of the applicable terms,
conditions and other provisions of the Plan are incorporated by reference herein. Capitalized
terms used in this Agreement but not defined herein shall have the same meanings as in the Plan.
If there is any conflict between the provisions of this document and mandatory provisions of the
Plan, the provisions of the Plan govern. Employee agrees to be bound by all of the terms and
provisions of the Plan (as presently in effect or later amended), the rules and regulations under
the Plan adopted from time to time, and the decisions and determinations of the Leadership
Development and Compensation Committee of the Company’s Board of Directors (the “Committee”) made
from time to time.

     2. Nontransferability. Until such time as the Restricted Stock has become vested in
accordance with the terms of this Agreement, Employee may not transfer Restricted Stock or any
rights hereunder to any third party other than by will or the laws of descent and distribution.
This restriction on transfer precludes any sale, assignment, pledge, or other encumbrance or
disposition of the shares of Restricted Stock (except for forfeitures to the Company).

     3. Termination Provisions. The following provisions will govern the vesting and forfeiture of
the Restricted Stock that is outstanding at the time of Employee’s Termination of Employment (as
defined below), unless otherwise determined by the Committee (subject to Section 7(a) hereof):

     (a) Death, Disability or Retirement. In the event of Employee’s Termination of
Employment due to death, Disability or Retirement (as defined below), a Pro-Rata Portion of
the outstanding Restricted Stock will vest immediately. Any portion of the outstanding
Restricted Stock not vested at the date of Termination will be forfeited.

     (b) Termination by the Company or Voluntarily by Employee. In the event of Employee’s
Termination of Employment by the Company for any reason or by Employee voluntarily (other
than a Retirement), any portion of the outstanding Restricted Stock not vested at the date
of Termination will be forfeited.

     (c) Certain Definitions. The following definitions apply for purposes of this
Agreement:

     (i) “Disability” means Employee has been incapable of substantially fulfilling
the positions, duties, responsibilities and obligations of his employment because of
physical, mental or emotional incapacity resulting from injury, sickness or disease
for a period of at least six consecutive months. The Company and Employee shall
agree on the identity of a physician to resolve any question as to Employee’s
disability. If the Company and Employee cannot agree on the physician to make such
determination, then the Company and Employee shall each select a physician and those
physicians shall jointly select a third physician, who shall make the determination.
The determination of any such physician shall be final and conclusive for all
purposes of this Agreement.

     (ii) “Pro Rata Portion” means, for each tranche of Restricted Stock, a fraction
the numerator of which is the number of days that have elapsed from the Grant Date
to the date of Employee’s Termination of Employment and the denominator of which is
the

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number of days from the Grant Date to the Stated Vesting Date for that tranche.
A “tranche” is that portion of the Restricted Stock that has a unique Stated
Vesting Date.

     (iii) “Retirement” means the Employee terminates employment at or after age 65,
or at or after age 55 with 20 or more years of service.

     (iv) “Subsidiary” means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code (“Section 424(f) Corporation”) and any
partnership, limited liability company or joint venture in which either the Company
or Section 424(f) Corporation is at least a fifty percent (50%) equity participant.

     (v) “Termination of Employment” and “Termination” means the earliest time at
which Employee is not employed by the Company or a Subsidiary of the Company and is
not serving as a non-employee director of the Company or a Subsidiary of the
Company.

     4. Dividends and Adjustments.

     (a) Dividends. In the event of dividends or distributions on Stock, the following
terms and conditions shall apply except as provided in Section 4(b) below:

     (i) In the event of a cash dividend or distribution on Stock or a non-cash
dividend or distribution in the form of property other than Stock payable on Stock
(including shares of a Subsidiary of the Company distributed in a spin-off), the
Company shall retain in its custody the cash or property so distributed in respect
of Employee’s Restricted Stock, which cash or property thereafter will become vested
if and to the same extent as the original Restricted Stock with respect to which the
cash or property was distributed becomes vested and, to the greatest extent
practicable, shall be subject to all other terms and conditions as applied to the
original Restricted Stock, including in the event of any dividends or distributions
paid in respect of such property or with respect to the placement of any legend on
certificate(s) or documents representing such cash or property; provided, however,
that any dividend or distribution of rights that expire before the applicable Stated
Vesting Date will be unrestricted and exercisable by Employee in accordance with
their terms; and

     (ii) In the event of a dividend or distribution in the form of Stock or
split-up of shares, the Stock issued or delivered as such dividend or distribution
or resulting from such split-up will be deemed to be additional Restricted Stock and
will become vested if and to the same extent as the original Restricted Stock with
respect to which the dividend or distribution was payable becomes vested, and shall
be subject to all other terms and conditions as applied to the original Restricted
Stock.

     (b) Adjustments. The number and kind of shares of Restricted Stock, the number of such
shares to be vested and other terms and conditions of Restricted Stock or otherwise
contained in this Agreement shall be appropriately adjusted, in order to prevent dilution or
enlargement of Employee’s rights hereunder, to reflect any changes in the number of
outstanding shares of Stock resulting from any event referred to in Section 11(c) of the
Plan, taking into account any Restricted Stock or other amounts paid or credited to Employee
in connection with such event under Section 4(a) hereof, in the sole discretion of the
Committee. In addition, the Committee may vary the treatment of any dividend or
distribution as specified under Section 4(a), in its discretion. The Committee may
determine how to treat or settle any fractional share resulting under this Agreement.

     5. Other Terms of Restricted Stock.

     (a) Voting and Other Shareholder Rights. Employee shall be entitled to vote Restricted
Stock on any matter submitted to a vote of holders of Stock, and shall have all other

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rights of a shareholder of the Company except as expressly limited by this Agreement and the Plan.

     (b) Consideration for Grant of Restricted Stock. Employee shall be required to pay no
cash consideration for the grant of the Restricted Stock, but Employee’s performance of
services to the Company prior to the vesting of the Restricted Stock shall be deemed to be
consideration for this grant of Restricted Stock.

     (c) Insider Trading Policy Applicable. Employee acknowledges that sales of shares
resulting from Restricted Stock that has become vested will be subject to the Company’s
policies regulating trading by executive officers and employees.

     (d) Certificates Evidencing Restricted Stock. Restricted Stock shall be evidenced by
issuance of one or more certificates in the name of Employee, bearing an appropriate legend
referring to the terms, conditions, and restrictions applicable hereunder, and shall remain
in the physical custody of the General Counsel of the Company or his designee until such
time as such shares of Restricted Stock have become vested and the restrictions hereunder
have therefore lapsed. In addition, Restricted Stock shall be subject to such stop-transfer
orders and other restrictive measures as the General Counsel of the Company shall deem
advisable under federal or state securities laws, rules and regulations thereunder, and
rules of the New York Stock Exchange, or to implement the terms, conditions and restrictions
hereunder, and the General Counsel may cause a legend or legends to be placed on any such
certificates to make appropriate reference to the terms, conditions and restrictions
hereunder.

     (e) Stock Powers. Employee agrees to execute and deliver to the Company one or more
stock powers, in such form as may be specified by the General Counsel, authorizing the
transfer of the Restricted Stock to the Company, at the Grant Date or upon request at any
time thereafter.

     6. Employee Representations and Warranties and Release. As a condition to any non-forfeiture
of the Restricted Stock that vests upon Termination of Employment, the Company may require Employee
(i) to make any representation or warranty to the Company as may be required under any applicable
law or regulation, and (ii) to execute a release from claims against the Company arising at or
before the date of such release, in such form as may be specified by the Company.

     7. Miscellaneous.

     (a) Binding Agreement; Written Amendments. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties. This Agreement constitutes
the entire agreement between the parties with respect to the Restricted Stock, and
supersedes any prior agreements or documents with respect to the Restricted Stock. No
amendment or alteration of this Agreement which may impose any additional obligation upon
the Company shall be valid unless expressed in a written instrument duly executed in the
name of the Company, and no amendment, alteration, suspension or termination of this
Agreement which may materially impair the rights of Employee with respect to the Restricted
Stock shall be valid unless expressed in a written instrument executed by Employee.

     (b) No Promise of Employment. The Restricted Stock and the granting thereof shall not
constitute or be evidence of any agreement or understanding, express or implied, that
Employee has a right to continue as an officer or employee of the Company for any period of
time, or at any particular rate of compensation.

     (c) Governing Law. The validity, construction, and effect of this Agreement shall be
determined in accordance with the laws (including those governing contracts) of the state of
New Jersey, without giving effect to principles of conflicts of laws, and applicable federal
law.

     (d) Mandatory Tax Withholding. Unless otherwise determined by the Committee, at

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the time of vesting the Company will withhold from any shares of Stock deliverable, in
accordance with Section 11(d)(i) of the Plan, the number of shares of Stock having a value
nearest to, but not exceeding, the amount of income and employment taxes required to be withheld under
applicable laws and regulations, and pay the amount of such withholding taxes in cash to the
appropriate taxing authorities. Employee will be responsible for any withholding taxes not
satisfied by means of such mandatory withholding and for all taxes in excess of such
withholding taxes that may be due upon vesting of the Restricted Stock.

     (e) Notices. Any notice to be given the Company under this Agreement shall be
addressed to the Company at its principal executive offices, in care of the Vice President,
Corporate Services or the officer designated by the Company as responsible for the
administration of this Agreement, and any notice to Employee shall be addressed to Employee
at Employee’s address as then appearing in the records of the Company.

     (i) Shareholder Rights. Employee and any Beneficiary shall not have any rights with
respect to shares of Stock (including voting rights) covered by this Agreement prior to the
settlement and distribution of the shares of Stock as specified herein.

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Sample Section 83(b) Election Form

	 	 	 
	Election Statement Under Internal Revenue Code Section 83(b)
	 
	 	 
	Taxpayer Name:

	 	                                        
	 
	 	 
	Address:

	 	                                        
	 
	 	 
	 

	 	                                                              
	 
	 	 
	Social Security or Taxpayer ID Number:

	 	                                        
	 
	 	 
	Description of Property:

	 	                     [number] shares of common stock of
	 

	 	New Jersey Resources Corporation granted
as a an award of Restricted Stock on
                     ___, 200___
	 
	 	 
	Taxable Year for which the election is being
made:

	 	200___(year of grant of Restricted Stock)
	 
	 	 
	Nature of the restriction:

	 	Restricted Stock is non-transferable and
subject to a risk of forfeiture until
vesting, The Restricted Stock vests ___%
per year on the first ___anniversaries of
the grant date.
	 
	 	 
	Fair market value of stock on date of transfer:

	 	 $                    
	 
	 	 
	Amount paid to purchase the stock:

	 	$- 0 -
	 
	 	 
	I have furnished copies of this statement to persons required by U.S. Treasury Regulation
1.83-2(d)
	 
	 	 
	                                         Signature of Taxpayer

	 	Date                                         
	 
	 	 
	                                         Print or type signature
	 	 

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This is a sample Election Form which may be used to make a Section 83(b) election to be taxed on a
grant of Restricted Stock at the time of grant rather than at the time of vesting. You are free to
use whatever election form you and your financial advisor deem appropriate. New Jersey Resources
Corporation (the “Company”) makes no recommendation as to whether a person granted Restricted Stock
should make a Section 83(b) election, but issues the following cautionary statements:

Cautionary Statements:

	(1)	 	If you make a Section 83(b) election and later forfeit the Restricted Stock, you will not be
able to rescind the election, claim a capital loss relating to the shares, receive a refund of
the taxes paid, apply the taxes paid to any other liability you may have, or otherwise get any
benefit whatsoever from your payment of taxes on the Restricted Stock. This is a risk that
you will avoid if you do not file a Section 83(b) election, because absent the election you
will be taxed at the time the Restricted Stock vests (if it is not previously forfeited) based
on the fair market value of the shares at the time of vesting.
	 
	(2)	 	You must have cash available to pay the taxes due as a result of your making a Section 83(b)
election, including withholding taxes. You may not sell any of the shares of Restricted Stock
and you may not direct us to withhold any of the shares of Restricted Stock to satisfy this
obligation.
	 
	(3)	 	In considering whether you might benefit from a Section 83(b) election, you should consider
alternatives that might be of greater benefit. A Section 83(b) election could be advantageous
if the market value of the shares of Restricted Stock has gone up significantly at the time of
vesting. However, if you do not make a Section 83(b) election but, instead, you use the cash
that you would have paid in taxes to invest in additional shares of Company common stock in
the market, in some cases your total return, net of taxes, would be greater. This strategy
would also avoid the risk described in (1) above.
	 
	(4)	 	Filing a Section 83(b) election represents an increased financial investment in Company
common stock. As an employee and based on your other equity awards and ownership of Company
common stock, your financial well-being may already be significantly tied to the financial
success of the Company. You should consider whether your savings and financial assets are
adequately diversified before making a Section 83(b) election.

How to File a Section 83(b) Election

	(1)	 	To be valid, the Section 83(b) Election Form must be filed with the Internal Revenue Service
within 30 days after grant of the Restricted Stock.
	 
	(2)	 	To file the Section 83(b) Election, send it to the IRS Office where you file your income tax
return. It is recommended that you send it certified mail, return receipt requested, so that
you have proof of filing.
	 
	(3)	 	You must also send a copy to the Company. Please address the copy to the attention of Vice
President, Human Resources.
	 
	(4)	 	Attach a copy of the 83(b) when you file your income taxes.

8EX-10.1

 

Exhibit 10.1

			
	 	 	 
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	 	Confidential

LICENSE AGREEMENT

BETWEEN

DURECT CORPORATION

AND

EPICEPT CORPORATION

EpiCept License (final)

 

 

 
Confidential

LICENSE AGREEMENT

     This LICENSE AGREEMENT (the “Agreement”), entered into on the “Effective Date” (as defined
below), is made by and between the EPICEPT CORPORATION, a Delaware corporation having a principal
place of business at 777 Old Saw Mill River Road, Tarrytown, NY 10591 (“EpiCept”), and DURECT
CORPORATION, a Delaware corporation having a principal place of business at 2 Results Way,
Cupertino, California 95014 (“Durect”), each a “Party” and collectively the “Parties” to this
Agreement.

WITNESSETH:

     Whereas, EpiCept owns certain patent rights relating to methods and compositions for
use in the topical treatment of back pain, muscle tensions and myo-fascial pain, where such methods
and compositions feature a topical carrier system containing a local anesthetic agent and are
intended for use on intact mammalian skin and/or outer synovial membranes, and certain additional
patent rights relating to methods and compositions that include the use of certain intradermal
pharmaceutical penetration enhancing excipients;

     Whereas, Durect is engaged in the development, approval, commercialization and
marketing of certain proprietary pharmaceutical products for the treatment of pain, including
transdermal products containing analgesic and/or anesthetic pharmaceutical agents;

     Whereas, Durect desires to obtain from EpiCept, and EpiCept desires to grant to
Durect, certain exclusive rights under the EpiCept Licensed Patents and other EpiCept Technology
suitable for the manufacture, development, registration and commercialization of Licensed Products
in the Territory (each as defined herein below); and

     Whereas, EpiCept has previously granted certain exclusive rights and licenses under
the EpiCept Licensed Patents and EpiCept Technology by way of a license agreement with Endo
Pharmaceuticals Inc., dated 18 December 2003, and a license agreement with Adolor Corporation,
dated 23 July 2003.

     Now Therefore, in consideration of the foregoing premises and the covenants,
conditions, undertakings and agreements hereinafter set forth in this Agreement, the Parties
intending to be legally bound, hereby agree as follows:

1. DEFINITIONS

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

1.1 “AAA” has the meaning set forth in Section 12.13 of this Agreement.

EpiCept License (final)

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Confidential

1.2 “Affiliate” means a Person or entity that directly or indirectly through one or more
intermediates, controls, is controlled by, or is under common control with the person or entity
specified. For the purpose of this definition, “control” shall mean with respect to an entity, the
direct or indirect ownership of (a) more than fifty percent (50%) of the capital stock or share
capital entitled to vote for the election of directors of the entity or (b) more than fifty percent
(50%) of equity or voting interest of the entity. An entity will be an Affiliate for purposes of
this Agreement only so long as it satisfies the definition set forth herein.

1.3 “ANDA” means an abbreviated new drug application that is submitted to the FDA for
approval to manufacture and/or sell a pharmaceutical product in the United States pursuant to the
FDC Act.

1.4 “Annual Net Sales Period” has the meaning set forth in Section 4.3 of this Agreement.

1.5 “Applicable Law” shall mean all laws (including common law), treaties, statutes,
ordinances, rules, regulations, standards and guidelines as may be in effect from time to time and
that relate to the development, marketing, manufacturing, packaging or sale of the Licensed Product
in the Territory or the performance of either Party’s obligations under this Agreement including
all laws, treaties, regulations and guidelines governing the import, export, development,
marketing, distributions and sale of the Licensed Product in the Territory, to the extent
applicable and relevant, and including all marketing authorization applications in each
jurisdiction of the Territory, all good clinical manufacturing or practices standards or guidelines
promulgated by the FDA or other Regulatory Authorities and including trade association guidelines,
where applicable, as well as the United States’ export control laws and the U.S. Foreign Corrupt
Practices Act.

1.6 “Back Pain” means any kind of back pain, including acute and chronic pain and having
any etiology and/or cause including, but not limited to, pain deriving in whole or in part from
myofascial, muscle tension, and/or any combinations thereof.

1.7 “Clinical” means, when used with respect to studies or data, studies that are carried
out in humans and data obtained therefrom.

1.8 “Clinical Trial” means an investigation in human subjects and/or patients intended to
discover or verify the clinical, pharmacological and/or other pharmacodynamic effects of an
investigational product, and/or to identify any adverse reactions to an investigational product,
and/or to study absorption, distribution, metabolism, and excretion of an investigational product
with the objective of ascertaining its safety and/or efficacy.

1.9 ****

1.10 “Commercially Reasonable Efforts” with respect to any activity shall mean the efforts
and resources that an established pharmaceutical company would devote to such activity with respect
to its own comparable product, taking into account the reasonable sales and profitability
potential of the product while promoting the therapeutic profile and benefits of the product in the

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most commercially reasonable beneficial and responsible manner, duly respecting external factors
outside the Party’s control.

1.11 ****

1.12 “Control” or “Controlled” means possession by a Party or its Affiliate of the
right to grant to the other Party a license, sublicense or other right to use, of the scope
provided for in this Agreement, to intangible or intellectual property rights (including Patents,
Know-How, trade secrets, data and rights to access or cross-reference regulatory filings) without
violating the terms of any Applicable Law, agreement or other arrangement with any third party
existing at the time such Party or such Affiliate would be first required hereunder to grant the
other Party such license, sublicense or other right.

1.13 “Dispute” has the meaning set forth in Section 12.13 of this Agreement.

1.14 “Durect Know-How” means Know-How related to controlled release systems and transdermal
pharmaceutical patch products in general, and to Licensed Product in particular, that is (a)
Controlled by Durect or any of its Affiliates during the Term of this Agreement and (b) useful or
any way related to developing, making, having made, using, commercializing and/or registering
Licensed Product.

1.15 “Durect Improvements” means any and all Patents or Durect Know-How Controlled by
Durect during the Term of this Agreement but arising or otherwise obtained after the Effective Date
and relating to any improvement, enhancement, modification and/or extension of a Licensed Product.

1.16 “Durect Indemnified Parties” has the meaning set forth in Section 9.2 of this
Agreement.

1.17 “EDGAR” means the U.S. Government’s stated Education Department General Administrative
Regulations and, when used in connection with a particular document, refers to the copy of that
document as available from the U.S. Government Securities and Exchange website (www.sec.gov/) in
the form existing as of the Effective Date of this Agreement.

1.18 “EDGAR Licenses” have the meaning set forth in Section 7.2(j) of this Agreement.

1.19 “Effective Date” means the date upon which this Agreement is fully executed by the
Parties and the Hercules Consent is fully executed by Durect and Hercules Technology Growth
Capital, Inc.

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1.20 “EpiCept Improvements” means any and all Patents or EpiCept Know-How Controlled by
EpiCept during the Term of this Agreement but arising or otherwise obtained after the Effective
Date and relating to any improvement, enhancement, modification and/or extension of a Licensed
Product, wherein the practice of such EpiCept Improvements, in the absence of a license, would
infringe a Valid Claim within the EpiCept Licensed Patents.

1.21 “EpiCept Indemnified Parties” has the meaning set forth in Section 9.1 of this
Agreement.

1.22 “EpiCept Know-How” means any and all Know-How that is Controlled by EpiCept or any of
its Affiliates during the Term of this Agreement and is necessary or useful for Durect, or its
Affiliates and/or licensees to make, have made, develop, use, register, sell, have sold, import,
export, market and/or commercialize Licensed Product in the Territory.

1.23 “EpiCept Licensed Patents” means the Patents Controlled by EpiCept as of the Effective
Date and necessary to make, have made, develop, use, register, sell, have sold, import, export,
market and/or commercialize Licensed Product in the Territory. For clarity, the EpiCept Licensed
Patents include the patent rights detailed in Schedule 1.22 to this Agreement

1.24 “EpiCept Technology” means the EpiCept Licensed Patents, the EpiCept Know-How, and the
EpiCept Improvements.

1.25 “FDA” shall mean the United States Food and Drug Administration or any successor
thereto.

1.26 “FDC Act” means the Federal Food, Drug and Cosmetic Act set forth in 21 U.S.C. §§321
et seq., as amended, and the regulations promulgated thereunder from time to time.

1.27 “Field” shall mean all pharmaceutical applications for the palliative, prophylactic
and/or therapeutic treatment of Back Pain in humans.

1.28 “Final Regulatory Approval” means a Regulatory Approval that allows for the immediate
marketing and sale of Licensed Product in a jurisdiction within the Territory. With regard to the
United States, Final Regulatory Approval shall mean the written final approval of an NDA by the FDA
permitting the immediate marketing and sale of Licensed Product in the United States.

1.29 “First Commercial Sale” means with respect to any jurisdiction within the Territory,
after a Regulatory Authority in the Territory has granted Final Regulatory Approval of Licensed
Product, the first sale (as evidenced by an invoice or receivable) for use, consumption or resale
of such Licensed Product by Durect to a third party in a bona fide arms-length transaction in such
jurisdiction. A sale to an Affiliate shall not constitute a First Commercial Sale unless the
Affiliate is the end-user of such Licensed Product. For avoidance of doubt, the provision of a
reasonable number of free samples of Licensed Product shall not be construed to constitute a sale,
use, consumption or resale of Licensed Product for purposes of this definition.

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1.30 “Force Majeure” means causes beyond a reasonable control of the Party, including acts
of God; changes in regulations or laws of any government; war; terrorism; civil commotion;
destruction of production facilities or materials by fire, flood, earthquake, explosion or storm;
labor disturbances; epidemic; and failure of public utilities or common carriers.

1.31 “GAAP” means accounting procedures that are in accordance with United States generally
accepted accounting principles.

1.32 “Generic Product” means: (i) a generic transdermal patch pharmaceutical product
containing bupivacaine as the only active ingredient that is bioequivalent to and substitutable
(i.e., “AA” or “AB” therapeutic equivalence code or other therapeutic equivalence code hereafter
created with similar meaning) for Licensed Product and is sold under an ANDA pursuant to the FDC
Act or, if sold outside the United States, pursuant to the Applicable Law of the relevant
jurisdiction following expiry of any and all Marketing Exclusivity Rights for Licensed Product in
such jurisdiction; (ii) a generic transdermal patch pharmaceutical product containing bupivacaine
as the only active ingredient that is bioequivalent to and substitutable for Licensed Product and
sold under Article 10 of the EU Directive 2001/83/EC or other Applicable Laws of the relevant
jurisdiction following expiry of any and all Marketing Exclusivity Rights for Licensed Product in
such jurisdiction; or (iii) a generic bupivacaine product that is bioequivalent to and
substitutable for Licensed Product under the Applicable Laws relating to generic pharmaceutical
products of the relevant jurisdiction in the Territory other than in the United States or the EU.
For clarity, a Generic Product shall not include any product sold by Durect, its Affiliates or
licensees.

1.33 “Hercules Consent” means the fully executed Consent to License Agreement and Use of
Collateral agreement between Durect and Hercules Technology Growth Capital, Inc., a copy of which
is included as Schedule 1.33 to this Agreement.

1.34 “Hercules Loan” has the meaning set forth in Section 7.2(i) of this Agreement.

1.35 “IND” means an investigational new drug application (together with all subsequent
submissions, supplements and amendments thereto, and any materials, documents or information
referred to or relied upon thereby), as defined in the U.S. Federal Food, Drug and Cosmetic Act
(“FDC Act”) as amended, and the regulations promulgated thereunder, or the equivalent thereto as
specified in any succeeding legislation, and all supplements and amendments that may be filed and
enacted with respect to the foregoing.

1.36 “Indemnified Party” has the meaning set forth in Section 9.3 of this Agreement.

1.37 “Indemnifying Party” has the meaning set forth in Section 9.3 of this Agreement.

1.38 “Know-How” means all technical information and other technical subject matter,
including any and all compounds, materials, methods, equipment, specifications, ideas, concepts,
formulations, discoveries, inventions, devices, technology, trade secrets, compositions, designs,
formulae, know-how, show-how, specifications, drawings, techniques, data, results, processes,
procedures, designs, documentation and other technology, whether or not patented or patentable, and
whether or not protected or protectable as a trade secret.

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1.39 “Knowledge” means the actual knowledge of a Party’s executive officers.

1.40 “Losses” has the meaning set forth in Section 9.1 of this Agreement.

1.41 “Launch” when used as a noun, means, on a jurisdiction-by-jurisdiction basis, the
First Commercial Sale of Licensed Product to a major retail chain or a major distributor (as those
terms are commonly understood in the industry) after Final Regulatory Approval in such
jurisdiction, and when used as a verb, means to consummate such First Commercial Sale.

1.42 “Licensed Product” means a transdermal pharmaceutical patch product for sale only by
prescription containing bupivacaine as the only active ingredient, indicated and approved by a
Regulatory Authority for use in the Field, wherein such product and/or indication is covered by a
Valid Claim of the EpiCept Licensed Patents or a Valid Claim of a Patent under the EpiCept
Improvements.

1.43 “Marketing Exclusivity Rights” means: (i) a marketing or data exclusivity right
conferred as a result of designation as a drug for rare diseases or conditions under Sections 525
et seq. of the FDC Act, an exclusive right to sell under an NDA pursuant to Section 505(j)(5) or
505(c)(3)(D)(ii) and (iii) of the FDC Act or any relevant subsequent legislation, rules or
regulations, or the exclusive right granted by the FDA upon completion of pediatric studies
requested by the FDA under Section 505A(a) of the FDC Act or any successor legislation; (ii) a
marketing or data exclusivity right conferred as a result of Article 10 of EU Directive 2001/83/EC
and/or Article 3(3) of EU Regulation 726/2004/EC or EU Regulations 141/2000/EC and/or 847/2000/E,
as applicable; or (iii) any equivalent or similar rights in any jurisdiction in the Territory,
successor legislations of any of the foregoing or subsequent legislation that has the effect of
extending marketing or data exclusivity right to a pharmaceutical product.

1.44 “NDA” means an application (whether original, supplementary or abbreviated) to the
applicable Regulatory Authority in a country of the Territory, for approval by such Regulatory
Authority, necessary for the commercial sale of Licensed Product in such country. An NDA, together
with all supplemental filings referencing the initial NDA filing, shall be deemed one and the same
NDA for the purposes of this Agreement.

1.45 “Negotiation Period” has the meaning set forth in Section 6.1(a) of this Agreement.

1.46 “Net Sales” means the gross amount invoiced by Durect or its Affiliates or
sublicensees for sale of Licensed Product in commercial arms-length sales to a third party
(including third party distributors and wholesalers), commencing with the First Commercial Sale,
less deductions for: (i) normal and customary trade, cash and quantity discounts actually given,
credits, price adjustments or allowances for damaged products, returns or rejections of products;
(ii) chargeback payments and rebates (or the equivalent thereof) granted to group purchasing
organizations, managed health care organizations or to federal, state/provincial, local and other
governments, including their agencies, or to trade customers; (iii) freight, shipping insurance and
other transportation expenses (if separately identified in such invoice); (iv) sales, value-added,
excise taxes, tariffs and duties, and other taxes directly related to the sale, to the extent that
such

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items are included in the gross invoice price (but not including taxes assessed against the income
derived from such sale). Sales between Durect and any of its Affiliates or sublicensees for resale
shall not be a commercial sale by Durect for the purposes of this Section 1.46, and in such case,
Net Sales shall be based on the gross amount invoiced for the Licensed Products by such Affiliate
or sublicensee. In addition, any use of Licensed Product for promotional, sampling or
compassionate use purposes shall not be considered in determining Net Sales. Except as
specifically provided above, Net Sales shall be calculated in accordance with GAAP, consistently
applied.

1.47 ****

1.48 “Party” and “Parties” have the meaning set forth in the Preamble of this
Agreement.

1.49 “Patent” and “Patents” mean issued patents and patent applications, including
any and all provisionals, continuations, divisionals, continuation-in-part applications, foreign
counterparts, substitutions, reissues, renewals, re-examinations, supplementary protection
certificates, patent term extensions, adjustments or restoration rights, registrations,
confirmations, successor protective rights or subsequently issued protective rights of similar
nature of any of the above.

1.50 “Patent Term Extension” has the meaning set forth in Section 11.3 of this Agreement.

1.51 “Person” means an individual or a corporation, partnership, association, trust, or any
other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.

1.52 “Phase III Clinical Trial” means an expanded controlled or uncontrolled clinical trial
as required by 21 C.F.R. §312 performed after preliminary evidence suggesting effectiveness of a
Licensed Product has been obtained, the primary purpose of which is to establish effectiveness and
safety of Licensed Product in patients with the particular indication or indications being studied
and to provide an adequate basis for physician labeling.

1.53 “Proof of Concept Trial” means a Clinical Trial of Licensed Product in patients that
demonstrates efficacy on an efficacy endpoint and therefore justifies proceeding with pivitol Phase
III Clinical Trials or other pivitol registration Clinical Trials required for Final Regulatory
Approval of Licensed Product.

1.54 “Regulatory Approval” means the technical, medical and scientific licenses,
registrations, authorizations and approvals (including, without limitation, approvals of NDAs,
supplements and amendments, pre- and post-approvals, pricing and reimbursement approvals, and
labeling approvals) of a Regulatory Authority, necessary for the development (including the conduct
of Clinical Trials), manufacture, distribution, storage, transport, marketing, promotion, offer for
sale, use, import, reimbursement, export or sale of Licensed Product in a regulatory jurisdiction
within the Territory.

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1.55 “Regulatory Authority” means any national, supra-national, regional, state or local
regulatory agency, department, bureau, commission, council, ministry or other governmental entity
involved in the granting of Regulatory Approval in any jurisdiction within the Territory.

1.56 “Reversion of Rights” has the meaning set forth in Section 3.4 of this Agreement.

1.57 “Reverted Asian/Pacific Rights” has the meaning set forth in Section 3.4 of this
Agreement.

1.58 “Reverted European Rights” has the meaning set forth in Section 3.4 of this Agreement.

1.59 “Reverted Latin American Rights” has the meaning set forth in Section 3.4 of this
Agreement.

1.60 “ROFR Notice” has the meaning set forth in Section 6.1(a) of this Agreement.

1.61 “ROFR Reply” has the meaning set forth in Section 6.1(a) of this Agreement.

1.62 “Royalties” has the meaning set forth in Section 4.3 of this Agreement.

1.63 “Royalty Term” has the meaning set forth in Section 4.3 of this Agreement.

1.64 “Rules” has the meaning set forth in Section 12.13(c) of this Agreement.

1.65 “Serious Adverse Drug Experience” means any adverse drug experience occurring at any
dose that results in any of the following outcomes: death; a life-threatening adverse drug
experience; inpatient hospitalization or prolongation of existing hospitalization; a persistent or
significant disability/incapacity; or a congenital anomaly/birth defect. Important medical events
that may not result in death, be life-threatening, or require hospitalization may be considered a
Serious Adverse Drug Experience when, based upon appropriate medical judgment, they may jeopardize
the patient or subject and may require medical or surgical intervention to prevent one of the
outcomes listed in this definition.

1.66 “Term” has the meaning set forth in Section 10.1 of this Agreement.

1.67 “Territory” means worldwide.

1.68 “Third Party Offer” has the meaning set forth in Section 6.1(a) of this Agreement.

1.69 “Valid Claim” means a claim of any pending or issued unexpired EpiCept Licensed Patent
and/or a claim of any pending or issued unexpired Patent within the EpiCept Improvements, including
any patent term extensions thereto, where such claim has not been revoked or held invalid or
unenforceable by decision of a court or other governmental agency of competent jurisdiction from
which no appeal can be or has been taken and has not been held or admitted to be disclaimed,
invalid or unenforceable through re-examination or disclaimer, opposition procedure, nullity or
invalidity suit or otherwise, which claim covers a Licensed

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Product; provided, however, that if a claim of a pending patent application shall not have issued
within five (5) years after the filing date from which such claims takes priority entitlement such
claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until such
claim shall issue.

1.70 “Withholding Taxes” has the meaning set forth in Section 5.3 of this Agreement.

1.71 Interpretation

     (a) Whenever any provision of this Agreement uses the term “including” (or “includes”), such
term shall be deemed to mean “including without limitation” and “including but not limited to” (or
“includes without limitations” and “includes but is not limited to”) regardless of whether the
words “without limitation” or “but not limited to” actually follow the term “including” (or
“includes”);

     (b) “Herein”, “hereby”, “hereunder”, “hereof” and other equivalent words shall refer to this
Agreement in its entirety and not solely to the particular portion of this Agreement in which any
such word is used;

     (c) All definitions set forth herein shall be deemed applicable whether the words defined are
used herein in the singular or the plural;

     (d) Wherever used herein, any pronoun or pronouns shall be deemed to include both the singular
and plural and to cover all genders;

     (e) The recitals set forth at the start of this Agreement, along with the Schedules to this
Agreement, and the terms and conditions incorporated in such recital and Schedules shall be deemed
integral parts of this Agreement and all references in this Agreement to this Agreement shall
encompass such recitals and Schedules and the terms and conditions incorporated in such recitals
and Schedules, provided, that in the event of any conflict between the terms and conditions of this
Agreement and any terms and conditions set forth in the Schedules, the terms of this Agreement
shall control;

     (f) In the event of any conflict between the terms and conditions of this Agreement and any
terms and conditions that may be set forth on any order, invoice, verbal agreement or otherwise,
the terms and conditions of this Agreement shall govern;

     (g) The Agreement shall be construed as if both Parties drafted it jointly, and shall not be
construed against either Party as principal drafter;

     (h) Unless otherwise provided, all references to Sections and Schedules in this Agreement are
to Sections and Schedules of and to this Agreement;

     (i) All references to days, months, quarters or years are references to calendar days,
calendar months, calendar quarters or calendar years unless otherwise expressly provided;

     (j) Any reference to any federal, national, state, local or foreign statute or law shall be
deemed to also refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise;

     (k) Any requirements of notice or notification by one Party to another shall be construed to
mean written notice in accordance with Section 12.5; and

     (l) Wherever used, the word “shall” and the word “will” are each understood to be imperative
or mandatory in nature and are interchangeable with one another.

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2. GRANT OF LICENSES AND EXCLUSIVITY

2.1 License Grant: Subject to the terms and conditions hereof, EpiCept hereby grants to
Durect, and Durect hereby accepts, an exclusive (even as to EpiCept and its Affiliates),
royalty-bearing right and license, with the right to grant sublicenses (pursuant to Sections 2.2
and 2.3 below) under the EpiCept Licensed Patents and Patents within the EpiCept Improvements to
make, have made, develop, use, sell, offer for sale, have sold, and import Licensed Products in and
for the Field throughout the Territory.

2.2 Subcontracting: Durect shall have the right to subcontract its responsibilities under
this Agreement (and grant any necessary sublicenses in connection therewith) without obtaining the
written consent of EpiCept, provided however that Durect shall at all times remain primarily
responsible and liable for all such responsibilities.

2.3 Sublicenses:****

3. DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCT

3.1 Development of Licensed Product: As between the Parties, Durect shall be solely
responsible, at its own cost, expense and discretion, for designing, creating and finalizing a
commercially reasonable plan for the development of Licensed Product sufficient to obtain
Regulatory Approval of such product within the Territory, and then implementing and carrying out
all activities contemplated under such development plan such as all research, development,
scientific, medical, regulatory and other activities including, but limited to the design,
production and/or implementation of all clinical studies, non-clinical studies, manufacturing
process development, scale-up and validation, CMC activities, ICH registration batches,
pre-approval inspection preparation, pharmaceutical development including quality control and
stability, manufacturing, qualification and regulatory tasks. Notwithstanding the foregoing,
Durect shall

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use Commercially Reasonable Efforts to develop and commercialize Licensed Product throughout the
Territory.

3.2 Regulatory Matters: All Regulatory Approvals for Licensed Product in the Territory
shall be filed, held, owned and maintained solely in Durect’s or Durect’s designee’s name. In this
regard, Durect shall have the sole and exclusive control over, and all authority and responsibility
for any and all development activities contemplated herein, as well as any and all regulatory
strategies relating to development and commercialization of Licensed Product in the Territory
including, without limitation, the preparation of any and all documents submitted to a Regulatory
Authority in the Territory and the filing of all submissions relating to Regulatory Approval for
Licensed Product, and all regulatory actions, communications and meetings with any Regulatory
Authority with respect to Licensed Product, in each and every case, at Durect’s sole cost and
expense.

3.3 Reports: Durect shall provide to EpiCept semi-annual written progress reports
summarizing Durect’s activities toward achieving Regulatory Approval of Licensed Product. Such
reports shall be provided until the Launch of the first Licensed Product by or for Durect.

3.4 Reversion of Rights: Durect shall be solely responsible, at its own cost and expense,
to ensure its own diligence and conduct any and all commercialization activities with the intent of
bringing Licensed Product to market in jurisdictions within the Territory and shall thus maintain
sole discretion and responsibility with regard to all such matters, with the single proviso that
the performance of such activities shall be subject to the following reversion rights (“Reversion
of Rights”):

     (a) If, within **** then the
license rights granted under Section 2.1 of this Agreement shall terminate only with respect to the
European jurisdictions covered by a Valid Claim in the EpiCept Licensed Patents (the “Reverted
European Rights”) and thus allow EpiCept itself, or with the assistance of any third party, to
pursue development and commercialization of Licensed Products under such Reverted European Rights;

     (b) If, **** then the license rights granted under Section 2.1 of this Agreement shall terminate
only with respect to the Asian/Pacific jurisdictions covered by a Valid Claim in the EpiCept
Licensed Patents (the “Reverted Asian/Pacific Rights”) and thus allow EpiCept itself, or with the
assistance of any third party, to pursue development and commercialization of Licensed Products
under such Reverted Asian/Pacific Rights; and

     (c) If, ****

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then the license rights granted under Section 2.1 of this Agreement shall
terminate only with respect to the Latin American jurisdictions covered by a Valid Claim in the
EpiCept Licensed Patents (the “Reverted Latin American Rights”) and thus allow EpiCept itself, or
with the assistance of any third party, to pursue development and commercialization of Licensed
Products under such Reverted Latin American Rights.

4. PAYMENT OBLIGATIONS

4.1 Signing Fee: Within three (3) business days of the Effective Date and upon receipt of
an invoice from EpiCept, Durect shall pay a one-time signing fee of one million U.S. Dollars
(US$1,000,000), by wire transfer to an account designated in writing by EpiCept.

4.2 Milestone Payments: Durect shall provide EpiCept written notification identifying the
relevant timing/condition and pay to EpiCept within three (3) business days the following one-time
milestone payments upon satisfaction of the following specified timing and/or condition precedent
by Durect, its Affiliates and/or sublicensees.

     * * * * * * * * *

4.3 Royalties: In respect of the license rights granted under Section 2.1 of this
Agreement, Durect shall pay EpiCept a royalty on sales of Licensed Product in the Territory as
follows. The aggregate of all royalty obligations that are due to EpiCept in any Annual Net Sales
Period (as defined below) shall be referred to herein as “Royalties.” Royalties shall begin to
accrue, on a jurisdiction-by-jurisdiction basis, on Net Sales within the Territory on the date of
the First Commercial Sale of Licensed Product in a jurisdiction and shall be payable in respect to
such jurisdiction until the expiration of the last-to expire of the EpiCept Licensed Patents or
Patents under the EpiCept Improvements containing one or more Valid Claims that cover such Licensed
Product in such jurisdiction (a “Royalty Term”). Subject to Section 4.4 below, if a Royalty Term
is in effect, Durect shall pay EpiCept Royalties equal to the following percentages of the
aggregate annual Net Sales in all jurisdictions within the Territory:

     * * * * * * * * * *

     (a) The Royalty rates set forth above shall apply only to that portion of Net Sales within the
applicable tier of annual Net Sales.

     (b) * * * * * * * * *

     (c) The periods by which annual Net Sales are measured for purposes of this Section 4.3 shall
be a calendar year (each, an “Annual Net Sales Period”) except that the first Annual Net Sales
Period shall begin on the first day of the calendar quarter preceding the First Commercial Sale of
Licensed Product and continue to the end of the calendar quarter ending on December 31st
of that calendar year.

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4.4 Generic Competition: During a Royalty Term, in the event that a Generic Product is
Launched in a jurisdiction within the Territory, the Royalties otherwise payable to EpiCept under
Section 4.3 shall be reduced by fifty percent (50%) with respect to that jurisdiction only.

4.5 Competition by Competing Products: *****

5. REPORTS AND PAYMENTS

5.1 Payments: Beginning forty-five (45) days after the end of the calendar quarter in
which the first Launch of Licensed Product in the Territory is made, and for each calendar quarter
thereafter (no later than forty-five (45) days after the end of such calendar quarter), Durect
shall submit a statement to EpiCept that shall set forth the amount of Net Sales in the Territory
during such quarter and the calculation of Royalties due on such Net Sales for such quarter. Each
such statement shall be accompanied by the payment, if any, due to EpiCept.

5.2 Currency Exchange: With respect to Net Sales invoiced in U.S. Dollars, the Net Sales
and the amount of Royalties due to EpiCept hereunder shall be expressed in U.S. Dollars. With
respect to Net Sales invoiced in a currency other than U.S. Dollars, the Net Sales shall be
expressed in the local currency of the entity making the sale, together with the U.S. Dollar
equivalent, calculated using the rate of exchange that is the commercial rate of exchange for the
conversion of local currency to U.S. Dollars as published by The Wall Street Journal on the
last business day immediately prior to the date of payment (or if such journal shall cease to
publish currency exchange rates, then the commercial rate of exchange published by another leading
U.S. financial publication or bank as mutually agreed to in writing by the Parties).

5.3 Taxes and Withholding: Any payments made by Durect to EpiCept under this Agreement
shall be reduced by the amount required to be paid or withheld pursuant to any Applicable Law
including, but not limited to, United States federal, state or local tax law (“Withholding Taxes”).
Any such Withholding Taxes required by law to be paid or withheld shall be an expense of, and
borne solely by, EpiCept. Upon written request, Durect shall submit

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to EpiCept reasonable proof of payment of Withholding Taxes, together with an accounting of the
calculations of such taxes after such Withholding Taxes have been remitted to the proper tax
authority. The Parties will cooperate reasonably in completing and filing documents required under
the provisions of any applicable tax laws or any other Applicable Law in connection with the making
of any required tax payment or withholding payment, or in connection with any claim to a refund of
or credit for any such payment.

5.4 Mode of Payment: Durect shall make all payments required under this Agreement by wire
transfer to any account specified by EpiCept or as otherwise directed by EpiCept from time to time
in U.S. Dollars.

5.5 Records Retention: Durect and its Affiliates and sublicensees, as applicable, shall
keep complete and accurate books and records pertaining to the sale of Licensed Product and the
calculation of Net Sales in the Territory for a period of three (3) calendar years after the year
in which such sales occurred. Such records and books shall contain sufficient detail to permit the
accurate calculation consistent with GAAP of the Royalties due to EpiCept and any one-time
milestone payments due to EpiCept pursuant to Section 4.2 above, including any records required to
calculate any Royalty adjustments hereunder.

5.6 Audit Request: During the term of this Agreement and not more than once per calendar
year, EpiCept shall have the right, at its sole expense, to engage an independent accounting firm
reasonably acceptable to Durect, which shall have the right to examine in confidence the relevant
Durect records as may be reasonably necessary to determine and/or verify the amount of Royalties
and/or one-time milestone payments due under this Agreement. Such audit examination shall be
conducted, and Durect shall make its records available, during normal business hours, after at
least fifteen (15) days from receipt of prior written notice to Durect, and shall take place at the
Durect facility where such records are normally maintained. Each such audit examination shall be
limited to pertinent books and records for any year ending not more than twenty-four (24) months
prior to the date of the request; provided that, unless an error is uncovered, EpiCept shall not be
permitted to audit the same period of time more than once. Prior to permitting EpiCept’s
independent accounting firm to have access to such books and records, Durect may require such
accounting firm and its personnel involved in the audit examination to sign a reasonable
confidentiality agreement pertaining to any confidential information that is to be provided to such
accounting firm or to which such accounting firm shall have access while conducting its audit
examination. EpiCept’s independent accounting firm shall prepare and provide to each Party a
written report stating whether the Royalties and Net Sales reports submitted and the amounts paid
by Durect to EpiCept are correct or incorrect and the details concerning any discrepancies. Such
accounting firm shall not reveal to EpiCept any information learned in the course of such audit
examination other than the amount of any such discrepancies. EpiCept hereby agrees to hold in
strict confidence all information disclosed to it by the accounting firm, except to the extent
necessary for EpiCept to enforce its rights under this Agreement, or if such disclosure is required
by law.

5.7 Cost of Audit: Unless expressly provided for herein below, EpiCept shall bear the full
cost of the performance of any audit examination requested pursuant to Section 5.6 of this
Agreement. If, as a result of any audit examination of the books and records of Durect, it is
shown that payments made by Durect to EpiCept under this Agreement were less than the

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amount that should have been paid, then, subject to Section 5.8, below, Durect shall make all
payments required to be made to eliminate any discrepancy revealed by said inspection within 30
days after EpiCept’s demand therefor. In addition, if, as a result of any such audit examination,
it is shown that payments made by Durect to EpiCept under this Agreement were less than the amount
that should have been paid, and such deficiency is greater than 5 percent (5%) of the total
aggregate amount Royalties due to EpiCept under this Agreement, then, subject to Section 5.8 below,
Durect shall further reimburse EpiCept for reasonable costs actually incurred by EpiCept for
performance of the subject audit examination. In the event that the audit examination shows that
an overpayment has been made by Durect then, subject to Section 5.8, such amounts shall be deducted
from Royalties owed to EpiCept and/or any other payment owing to EpiCept under Section 4 of this
Agreement. If such overpayment amounts have not been settled by such deductions from Royalties
and/or any other payment owing to EpiCept under this Agreement within one year from the date
originally overpaid, then EpiCept shall promptly make all payments required to be made to Durect to
eliminate any such overpayment.

5.8 Resolution of Dispute as to Audit: Notwithstanding anything in Section 5.7 to the
contrary, in the event that the Parties do not agree within thirty (30) days on the amount of
overpayment or underpayment revealed by the audit examination report, each Party shall select an
independent public accounting firm (and each Party shall pay the costs of its own accounting firm),
which shall meet and discuss the amount in dispute and other related matters within thirty (30)
days thereafter. If such independent public accounting firms cannot agree on a resolution mutually
agreeable to the Parties, such independent public accounting firms shall, within thirty (30) days
after such selection, appoint a third independent public accounting firm which shall resolve the
issue within thirty (30) days after its selection, and the Parties shall equally share the costs of
such accounting firm. The recommendation of the third independent public accounting firm shall be
final and binding upon the Parties. A judgment on such firm’s disposition may be entered in any
court having jurisdiction over the Parties. Notwithstanding anything to the contrary herein, the
resolution of any dispute under this Section 5.8 shall be made under this Section 5.8 instead and
in lieu of Section 12.13. The preceding sentence shall not preclude the application of Section
12.13 to any contract interpretation issue (as compared to an accounting issue which would be
precluded from determination under Section 12.13).

5.9 Interest on Late Payments: Any failure by a Party to make a payment of any undisputed
amount when due shall obligate that Party to pay interest to the other Party at a rate equal to 1%
per month (or the maximum interest allowable by an Applicable Law, whichever is greater),
calculated on a basis of a three-hundred sixty (360) day year, the interest period commencing on
the due date of the late payment and ending on the payment date. The payment of interest as
required by this Section 5.9 shall not foreclose a Party from exercising any other rights or
remedies it may enjoy as a consequence of the lateness of any such payment.

6. RIGHTS OF FIRST REFUSAL

6.1 Third Party Offers: EpiCept hereby grants to Durect, and Durect hereby accepts the
following rights of first refusal:

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     (a) If, at any time during the term of this Agreement, EpiCept considers and/or receives an
offer by any third party seeking rights under the EpiCept Licensed Patents and/or Patents under the
EpiCept Improvements to develop, manufacture, use or sell **** then EpiCept shall provide written notice to Durect of receipt of the Third
Party Offer and offer to Durect a license to develop, manufacture, use or sell such *** in such jurisdiction or jurisdictions on the same terms as the
Third Party Offer. Such written notice (an “ROFR Notice”) shall specify the *** subject to such Third Party Offer, ***. Within thirty (30) days after Durect receives an ROFR Notice, if Durect or its Affiliate
desires to negotiate a definitive agreement related to such Third Party Offer, Durect shall then
send a written reply to EpiCept notifying EpiCept of such desire (an “ROFR Reply”). Upon receipt
by EpiCept of an ROFR Reply, the Parties shall negotiate the terms of the proffered offer contained
in the ROFR Notice in good faith for a period not to exceed *** (the “Negotiation
Period”), which period may be extended by mutual written agreement between the Parties.

     (b) EpiCept shall not discuss, offer, negotiate, enter into, or agree to enter into an
agreement for the manufacture, use, development and/or sale of *** with any third party during the pendency of the *** after an ROFR
Notice is received by Durect and during any Negotiation Period. Accordingly, EpiCept shall not
discuss, offer, negotiate, enter into or agree to enter into such a *** unless (i) Durect fails to send an ROFR Reply within the *** after an ROFR Notice is received by Durect, or (ii) Durect fails to agree to enter into a
definitive agreement with EpiCept with respect to any such ROFR Notice on the terms of the Third
Party Offer within the Negotiation Period. In the event that the provisions of Sections 6.1(b)(i)
or (ii) above have been met, EpiCept may enter into a definitive agreement with the third party
with respect to the subject Third Party Offer; provided, however, that if any terms of such
agreement with such third party when taken as a whole would be less favorable to EpiCept than as
specified in the ROFR Notice therefore, EpiCept shall deliver a new ROFR Notice to Durect
specifying such variations from the initial ROFR Notice, whereupon the receipt of which by Durect
shall trigger a *** for Durect to send a new ROFR Reply to EpiCept and, if
it Durect provides such new ROFR Reply, another Negotiation Period therefore. The Parties hereby
acknowledge and agree that neither Party shall have an obligation to enter into a definitive
agreement with respect to any ROFR Notice arising under this Agreement.

7. REPRESENTATIONS AND WARRANTIES

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7.1 Mutual Representations and Warranties: Each Party hereby represents, warrants and
covenants to the other Party that:

     (a) Such Party is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof;

     (b) Such Party has taken all corporate action necessary to authorize the execution and
delivery of this Agreement and the performance of its obligations under this Agreement and has full
power and authority to enter into this Agreement and perform its obligations under this Agreement;

     (c) This Agreement has been duly executed by such Party and constitutes a valid and legally
binding obligation of such Party, enforceable in accordance with its terms, subject to and limited
by: (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws generally
applicable to creditors’ rights; and (ii) judicial discretion in the availability of equitable
relief;

     (d) With the exception of Regulatory Approvals, such Party has obtained, or is not required to
obtain, the consent, waiver, approval, order or authorization of any third party, or has completed,
or is not required to complete, any registration, qualification, designation, declaration or filing
with, any governmental entity, in connection with the execution and delivery of this Agreement and
the performance by such Party of its obligations under this Agreement, including any grant of
rights to the other Party pursuant to this Agreement;

     (e) The execution and delivery of this Agreement, and the performance by such Party of its
obligations under this Agreement, including the grant of rights to the other Party pursuant to this
Agreement, does not and will not: (i) conflict with, nor result in any violation of or default
under any instrument, judgment, order, writ, decree, contract or provision to which such Party is
otherwise bound; (ii) give rise to any lien, charge or encumbrance upon any assets of such Party or
the suspension, revocation, impairment, forfeiture or non-renewal of any material permit, license,
authorization or approval that applies to such Party, its business or operations or any of its
assets or properties; or (iii) conflict with any rights granted by such Party to any third party or
breach any obligation that such Party has to any third party; and

     (f) Such Party shall comply in all material respects with all laws, rules and regulations
applicable to its performance under this Agreement, including all export laws and regulations.

7.2 Additional EpiCept Representations, Warranties and Covenants: EpiCept additionally
represents, warrants and covenants to Durect that:

     (a) As of the Effective Date, neither EpiCept nor any of its Affiliates is developing a
pharmaceutical patch product containing bupivacaine in the Territory;

     (b) EpiCept has the full right, power and authority to grant, and is not prohibited by the
terms of any agreement to which it is a party from granting, the license rights granted to Durect
under Section 2.1 of this Agreement, and in particular, this Agreement is a “permitted transfer” in
accordance with the terms of the Hercules Loan;

     (c) Subject to the Hercules Loan, EpiCept has not previously granted and will not grant any
rights or licenses inconsistent with the rights and licenses granted herein;

     (d) The EpiCept Licensed Patents include all of the exclusionary intellectual property rights
Controlled by EpiCept as of the Effective Date that cover the making, development, marketing, use,
distribution and/or sale of Licensed Product;

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     (e) To the Knowledge of EpiCept and as of the Effective Date, all of the EpiCept Licensed
Patents are valid, in full force and effect and have been maintained to date, and are not the
subject of any interference or opposition proceedings, and further no legal action or proceeding,
other than routine patent prosecution of pending applications, relating to the EpiCept Licensed
Patents has been instituted and is pending, or to the Knowledge of EpiCept, is imminent or
threatened;

     (f) To the Knowledge of EpiCept and as of the Effective Date, practice of the technology
disclosed and claimed in the EpiCept Licensed Patents does not infringe upon or otherwise violate
the intellectual property rights of any Person or third party;

     (g) As of the Effective Date, EpiCept has not received written notice from any third party,
nor does EpiCept have Knowledge that any third party has infringed or misappropriated or is
infringing or misappropriating any of the EpiCept Licensed Patents;

     (h) Subject to the Hercules Loan, EpiCept owns all rights, title and interest in and to all of
the EpiCept Licensed Patents, and except as disclosed in Schedule 7.2(h) of this Agreement, there
are no encumbrances, liens or security interests currently existing on or to the EpiCept Licensed
Patents (including any liens or security interest on or to rights underlying the EpiCept Licensed
Patents) that could reasonably be expected to adversely affect Durect’s benefits and rights under
this Agreement;

     (i) EpiCept has provided Durect with a true and complete copy of the senior secured term loan
agreement between EpiCept and Hercules Technology Growth Capital, Inc., dated 30 August 2006 (the
“Hercules Loan”); and

     (j) EpiCept represents and warrants that all material rights are present in the following
redacted license agreement copies available from the EDGAR service on 30 August 2006: the license
agreement with Endo Pharmaceuticals Inc., dated 18 December 2003; and the license agreement with
Adolor Corporation, dated 23 July 2003 (the “EDGAR Licenses”); and EpiCept further represents and
warrants that the EDGAR Licenses have not been amended or restated in any material way as of the
Effective Date of this Agreement.

7.3 Additional Durect Representations, Warranties and Covenants: Durect additionally
represents, warrants and covenants to EpiCept that:

     (a) As of the Effective Date, Durect has not been debarred, made the subject of any debarment
proceedings by any Regulatory Authority. Durect further covenants that it will not knowingly use
in connection with its performance under this Agreement any employee, consultant or investigator
that has been debarred or is the subject of debarment proceedings by a Regulatory Authority; and

     (b) As of the Effective Date, Durect has not received any notice of any pending or threatened
inquiry, action or other proceeding (and to its Knowledge there are no ongoing investigations) by
any Regulatory Authority with respect to any Durect manufacturing facility where Licensed Product
will be manufactured, and to its Knowledge, there are no such pending or threatened inquiries,
actions or other proceedings. Durect further covenants that during the Term of this Agreement,
Durect shall notify EpiCept promptly in writing upon its Knowledge of any such inquiry, action or
other proceeding.

     (c) Durect has had a full and fair opportunity to review the Hercules Loan and any impact it
may have on this Agreement.

     (d) Durect has reviewed and considered the EDGAR Licenses and their impact, if any, on the
terms and conditions hereof.

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     (e) As of the Effective Date, Durect has not obtained nor agreed to obtain any third party
rights necessary to practice the EpiCept Licensed Patents. In addition, to the Knowledge of Durect
and as of the Effective Date, there are no third party Patents that dominate the EpiCept Licensed
Patents.

7.4 Disclaimer of Warranties: EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT,
THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OF THE DEVELOPMENT,
COMMERCIALIZATION, MARKETING OR SALE OF ANY LICENSED PRODUCT. EXCEPT AS OTHERWISE SPECIFICALLY
SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.

8. CONFIDENTIALITY

8.1 Confidentiality: Except to the extent expressly authorized by this Agreement or
otherwise agreed in writing, the Parties agree that, during the term of this Agreement and for five
(5) years thereafter, the receiving Party, its Affiliates and its designees shall, and shall ensure
that their respective employees, officers, directors and other representatives shall, keep
completely confidential and not publish or otherwise disclose and not use for any purpose any
information including all Know-How furnished to it or them by the disclosing Party, its Affiliates
or its designees, except to the extent that it can be established by the receiving Party by
competent proof that such information: (i) was already known to the receiving Party, other than
under an obligation of confidentiality, at the time of disclosure by the disclosing Party; (ii) was
generally available to the public or otherwise part of the public domain at the time of its
disclosure to the receiving Party; (iii) became generally available to the public or was otherwise
part of the public domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement; or (iv) was disclosed to the receiving Party, other
than under an obligation of confidentiality, by a Third Party who had, to the receiving Party’s
knowledge, no obligation to the disclosing Party not to disclose such information to others (all
such information to which none of the foregoing exceptions applies, and the terms of this
Agreement, shall be deemed “Confidential Information”). Any and all information and materials,
including any and all intellectual property rights therein and thereto, owned by a Party shall
constitute Confidential Information of such Party that shall be deemed the disclosing Party with
respect to such Confidential Information. Notwithstanding the foregoing, the obligations of
confidentiality under this Section 8.1 regarding any Confidential Information relating to or
containing a Party’s trade secret that has been suitably identified to the other Party as such
shall continue indefinitely so long as the subject trade secret remains as Confidential
Information.

8.2 Exceptions to Obligation: The restrictions contained in Section 8.1 above shall not
apply to Confidential Information that: (i) is submitted by the receiving Party to a governmental
authority to obtain Regulatory Approval for the Product, provided that reasonable measures shall be
taken to assure confidential treatment of such information; (ii) is provided by the receiving

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Party to third parties under confidentiality provisions at least as stringent as those in this
Agreement, in connection with consulting, development, manufacturing, external testing, or
marketing trials under this Agreement or in connection with a proposed change of control of a Party
or sale of all or substantially all of the assets of a Party; (iii) is provided to potential
sublicensees, investors and/or lenders; (iv) is necessary in seeking, defending and enforcing
Patent rights; or (v) is otherwise required to be disclosed in compliance with applicable laws or
regulations or order by a court or other regulatory body having competent jurisdiction; provided
that if a receiving Party is required to make any such disclosure of the disclosing Party’s
Confidential Information such receiving Party will, except where impracticable for necessary
disclosures (for example, to physicians conducting studies or to health authorities), give
reasonable advance notice to the disclosing Party of such disclosure requirement, and will use all
reasonable efforts to secure confidential treatment of such Confidential Information required to be
disclosed.

8.3 Limitations on Use: Each receiving Party shall use, and cause each of its Affiliates
and its licensees to use, any Confidential Information obtained by such Party from the disclosing
Party, its Affiliates or its licensees, pursuant to this Agreement or otherwise, solely in
connection with the activities or transactions contemplated by this Agreement.

8.4 Unauthorized Use: If either Party becomes aware or has knowledge of any unauthorized
use or disclosure of the other Party’s Confidential Information, it shall promptly notify the
disclosing Party of such unauthorized use or disclosure.

8.5 Remedies: Each Party shall be entitled, in addition to any other right or remedy it
may have, at law or in equity, to seek an injunction, without the posting of any bond or other
security, enjoining or restraining the disclosing Party, its Affiliates and/or its licensees from
any violation or threatened violation of this Section 8.

9. INDEMNIFICATION

9.1 Durect Indemnities: Durect shall defend EpiCept and its Affiliates at Durect’s cost
and expense, and will indemnify and hold EpiCept and its Affiliates and their respective directors,
officers, employees and agents (collectively, the “EpiCept Indemnified Parties”) harmless from and
against any and all losses, costs, damages, fees or expenses (including reasonable attorney’s fees
and expenses), (“Losses”) incurred by any EpiCept Indemnified Party to the extent arising out of or
resulting from (i) any material breach by Durect of any of its representations, warranties or
obligations pursuant to this Agreement; (ii) any gross negligence or willful misconduct of Durect
or its Affiliates, as applicable, in the exercise of any of their rights and/or the performance of
any of their obligations under this Agreement; (iii) Durect’s exercise of its rights hereunder or
(iv) any liability, including product liability, or other claims for bodily injury or property
damage arising from the manufacture, handling, packaging, storage, sale or other disposition of
Licensed Product by Durect or any of its Affiliates or sublicensees.

9.2 EpiCept Indemnities: EpiCept shall defend Durect and its Affiliates at EpiCept’s cost
and expense, and will indemnify and hold Durect and its Affiliates and their respective directors,
officers, employees and agents (collectively, the “Durect Indemnified Parties”) harmless from

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and against any and all Losses incurred by any Durect Indemnified Party to the extent arising out
of or resulting from (i) any material breach by EpiCept of any of its representations, warranties
or obligations pursuant to this Agreement; or (ii) any gross negligence or willful misconduct of
EpiCept or its Affiliates, as applicable, in the exercise of any of their rights and/or the
performance of any of their obligations under this Agreement.

9.3 Indemnification Procedure: Upon receipt by a Party seeking indemnification hereunder
(an “Indemnified Party”) of notice of any action, suit, proceeding, claim, demand or assessment
against such Indemnified Party that might give rise to Losses, the Indemnified Party shall give
prompt written notice thereof to the Party from which indemnification is sought (the “Indemnifying
Party”) indicating the nature of claim and the basis therefor, provided that the failure to give
such prompt notice shall not relieve the Indemnifying Party of its obligations hereunder except to
the extent the Indemnifying Party or the defense of any such claim is materially prejudiced
thereby. The Indemnifying Party shall have the right, at its option, to assume the defense of, at
its own expense and by its own counsel, any such claim involving the asserted liability of the
Indemnified Party. If any Indemnifying Party shall undertake to compromise or defend any such
asserted liability, it shall promptly notify the Indemnified Party of its intention to do so, and
the Indemnified Party shall agree to cooperate fully with the Indemnifying Party and its counsel in
the compromise of, or defense against, any such asserted liability; provided, however, that the
Indemnifying Party shall not, as part of any settlement or other compromise, admit to liability or
agree to an injunction without the written consent of the Indemnified Party. Notwithstanding an
election by the Indemnifying Party to assume the defense of any claim as set forth above, such
Indemnified Party shall have the right (at its own expense if the Indemnifying Party has elected to
assume such defense) to employ separate counsel and to participate in the defense of any claim.

9.4 Insurance Proceeds: Any indemnification hereunder shall be made net of any insurance
proceeds recovered by the Indemnified Party (it being understood that an Indemnified Party may
simultaneously pursue an insurance claim and a claim for indemnification hereunder); provided,
however, that if, following the payment to the Indemnified Party of any amount under this Section
9, such Indemnified Party recovers any insurance proceeds in respect of the claim for which such
indemnification payment was made, the Indemnified Party shall promptly pay an amount equal to the
amount of such proceeds (but not exceeding the amount of such indemnification payment) to the
Indemnifying Party.

9.5 Insurance: Durect agrees to obtain and maintain commercial general liability
insurance, including clinical trials and products liability insurance, with reputable and
financially secure insurance carriers, or to be self-insured, in either case, in such amounts and
subject to such deductibles as are reasonable and customary in the pharmaceutical industry for
companies of comparable size and activities. Durect shall maintain such insurance for so long as
Licensed Product continues to be manufactured or sold in the Territory pursuant to this Agreement,
and thereafter for so long as is necessary to cover any and all third party claims that may arise
from the development, manufacture or sale of Licensed Product in the Territory. Upon reasonable
request by a Party, the other Party shall produce evidence that such insurance policies are valid,
kept up to date and in full force and effect.

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9.6 LIMITATION ON DAMAGES: IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, OR
PUNITIVE DAMAGES; PROVIDED, HOWEVER, THIS EXCLUSION IS NOT INTENDED TO, NOR SHALL, EXCLUDE
ACTUAL OR COMPENSATORY DAMAGES OF THE AFFECTED PARTY, INCLUDING SPECIAL, EXEMPLARY OR CONSEQUENTIAL
DAMAGES OWED TO THIRD PARTIES AS A RESULT OF A THIRD PARTY CLAIM UNDER SECTIONS 9.1-9.3 OF THIS
AGREEMENT.

10. TERM AND TERMINATION

10.1 Term of Agreement:

     (a) This Agreement shall become effective as of the Effective Date and, unless earlier
terminated pursuant to other provisions of this Section 10, shall continue in full force and effect
until the later of (i) the conclusion of the Royalty Term on a jurisdiction-by-jurisdiction basis;
and (ii) the expiration of the last EpiCept Licensed Patent containing a Valid Claim covering
Licensed Product in the Territory (the “Term”).

     (b) On a jurisdiction-by-jurisdiction basis, at the conclusion of the Royalty Term, the
licenses granted under Section 2.1 with respect to Licensed Product shall become non-exclusive,
fully paid up, royalty-free, perpetual and irrevocable.

10.2 Termination by Durect: Durect may terminate this Agreement under this Section 10.2:

     (a) Without Cause. Durect may terminate this Agreement without cause upon ninety (90)
days prior written notice at any time.

     (b) Safety. If, during the development or commercialization of Licensed Product, such
product becomes subject to a pattern of Serious Adverse Drug Experiences or if Durect receives
notice from a regulatory authority, independent review committee, data safety monitoring board or
another similar Clinical Trial or post-marketing monitoring body alleging significant concern
regarding a patient safety issue, in each case which Durect, in good faith, reasonably believes
would seriously impact the long-term viability of Licensed Product, Durect shall have the right,
upon written notice to EpiCept, to terminate its rights and obligations under this Agreement.

     (c) Legal Impediment. If Durect, in good faith, reasonably believes that the
application of any law or regulation, or the obtaining of approval of any governmental body with
respect to Licensed Product, would seriously impact the long-term commercial viability of such
product, Durect shall have the right to terminate this Agreement upon ninety (90) days’ prior
written notice to EpiCept setting forth the reasons therefor. In such event, during the ninety
(90) day notice period, Durect shall not be obligated to make payment of any one-time milestone
payment to EpiCept as contemplated by Section 4.2 that otherwise would be payable during such
90-day notice period.

10.3 Termination for Material Breach: Upon the material breach by one Party under this
Agreement, the other Party shall notify the breaching Party of such breach, and require that the
breaching Party cure such breach within ninety (90) days (except with respect to payments due
hereunder, thirty (30) days) or, in the case of a breach that cannot be cured within ninety (90)

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days (thirty (30) days for nonpayment), within a reasonable period not exceeding one-hundred eighty
(180) days so long as the breaching Party is diligently proceeding to cure such default.

     (a) In the event that a material breach by Durect is not cured within the applicable cure
period and without limiting other available remedies, EpiCept shall have the right to terminate
this Agreement upon written notice and all licenses granted by EpiCept to Durect hereunder shall
terminate and all amounts that have accrued to EpiCept under this Agreement shall be immediately
due and payable, subject to the terms of Section 12.13(c); provided that if a material breach by
Durect that has not been cured is with respect to any individual jurisdiction in the Territory,
EpiCept may at its sole discretion and upon written notice to Durect terminate this Agreement only
with respect to such jurisdiction and, in such case, only the license granted by EpiCept to Durect
with respect to such jurisdiction shall terminate.

     (b) In the event that a material breach by EpiCept is not cured within the applicable cure
period and without limiting other available remedies, Durect shall have the right to terminate this
Agreement upon written notice.

10.4 Termination in Connection with Bankruptcy. Either Party may terminate this Agreement
effective immediately in the event that the other Party: (i) has become insolvent or has been
dissolved or liquidated, filed or has filed against it, a petition, case or other proceeding under
Title 11 of the United Stated Code, as it may be amended from time to time, any successor statute
or any applicable state or foreign laws relating to bankruptcy, dissolution, liquidation, winding
up or reorganization, and such petition, case or proceeding if filed against it is not dismissed
within sixty (60) days of the filing; (ii) makes a general assignment for the benefit of creditors;
or (iii) has a receiver, custodian, trustee or other Person exercising similar functions appointed
for all or substantially all of its assets. Should EpiCept become a party to a bankruptcy
proceeding and such proceeding is not dismissed within sixty (60) days then, to the extent
permitted by law, this Agreement and the licenses granted by EpiCept hereunder shall be adopted by
the bankruptcy trustee or relevant third party charged with the disposition of same, and shall not
be rejected by same, it being the Parties’ intent that, in such event, Durect and its Affiliates
and sublicensees shall be entitled to retain the rights granted to and obligations undertaken by
them hereunder.

10.5 Nature of Licenses. All rights and licenses granted pursuant to this Agreement are,
and shall otherwise be deemed to be, for purposes of 11 U.S.C. § 365(n), licenses of rights to
“intellectual property” as defined under 11 U.S.C. § 101(35A). The Parties agree that Durect, as a
licensee of such rights under this Agreement, shall retain and may fully exercise all of its
rights, including any right to enforce any exclusivity provision of this Agreement, remedies, and
elections under any bankruptcy law. To the fullest extent permitted by law, the Parties further
agree that, in the event of the commencement of a bankruptcy proceeding by or against EpiCept,
Durect shall be entitled to all applicable rights under 11 U.S.C. § 365(n) or similar provision of
any other bankruptcy law, including copies and access to, as appropriate, any such intellectual
property and all embodiments of such intellectual property upon written request therefor by Durect,
and such, if not already in its possession, shall be promptly delivered to Durect.

10.6 Consequences of Termination/Expiration:

     (a) Termination or Expiration. Unless expressly otherwise set forth herein, upon
termination or expiration of this Agreement pursuant to Section 10.2, 10.3 or 10.4, all rights

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granted hereunder to Durect shall revert to EpiCept and Durect shall cease practicing under the
EpiCept Licensed Patents. In addition, nothing in this Agreement shall be construed to release
either Party from any obligation that occurred prior to the effective date of any termination or
expiration of this Agreement.

     (b) Inventory. Upon termination or expiration of this Agreement pursuant to Section
10.2, 10.3 (except for Durect’s uncured breach) or 10.4, Durect may, after the effective date of
such termination, sell all Licensed Products that are in inventory as of the date of written notice
of termination, and complete and sell Licensed Products that Durect can clearly demonstrate were in
the process of manufacture as of the date of written notice of termination, provided that Durect
shall pay to EpiCept the Royalties thereon pursuant to Sections 4.3 and 5 of this Agreement and
Durect shall further submit the statement reports of Royalties pursuant to Section 5 of this
Agreement.

10.7 Surviving Provisions. Expiration or any termination of this Agreement shall not
release a Party from the obligations to make any payments that were due or had accrued immediately
prior the effective date of such termination, nor result in the waiver of any right or remedy by a
Party hereto accruing to such Party prior to such termination. In addition, the following Sections
of this Agreement shall survive any expiration or termination of this Agreement for any reason:
Sections 1, 3.2, 7, 8, 9, 10.5, 10.6, 10.7, 11.1, 11.7 (solely with respect to events occurring
during the Term of this Agreement), and 12 (only to the extent that such Section 12 provisions are
relevant and necessary to execute post-termination activities).

11. INTELLECTUAL PROPERTY

11.1 Ownership of Know-How and Patents: As between EpiCept and Durect, (i) Durect shall
own any and all Durect Know-How, Durect Improvements, and any patent rights claiming such Durect
Know-How, relating in any way to Licensed Products and invented, developed, conceived, or
discovered by Durect’s or its Affiliates employees, contractors, consultants or agents acting in
their capacity pursuant to this Agreement; and (ii) EpiCept owns and shall retain ownership of the
EpiCept Licensed Patents, EpiCept Know-How and any EpiCept Improvements. In addition, unless
specifically provided for in this Agreement, nothing shall in any way affect, change, alter,
license or otherwise transfer any ownership interest enjoyed by: (i) EpiCept of the EpiCept
Licensed Patents and EpiCept Know-How existing as of the Effective Date; or (ii) Durect of the
Durect Know-How existing as of the Effective Date.

11.2 Prosecution of EpiCept Licensed Patents: EpiCept shall have the obligation to
diligently prepare, prosecute and maintain all EpiCept Licensed Patents (including their issuance,
reissuance, reexamination and the defense of any interference, revocation or opposition
proceedings) at EpiCept’s sole expense and discretion subject to the provisions of this Section
11.2. EpiCept shall furnish Durect with copies of all substantive correspondence relating to the
EpiCept Licensed Patents to and from patent offices in any jurisdiction within the Territory and
provide Durect a reasonable time to offer its comments thereon before EpiCept makes a submission to
the relevant patent office, provided that in the event that delay would jeopardize any potential
patent right, EpiCept shall have the right to proceed without awaiting Durect’s comments on any
patent application or correspondence. Durect shall offer its comments

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promptly, and EpiCept shall consider in good faith any such comments and requests of Durect. If
EpiCept determines in its reasonably exercised discretion not to file, prosecute, defend or
maintain any patent application (including failing to defend any interference, revocation or
opposition proceedings) or maintain any Patent within the EpiCept Licensed Patents in any
jurisdiction in the Territory, then EpiCept shall provide Durect with sixty (60) days’ prior
written notice (or such shorter time period that would permit Durect a reasonable opportunity to
respond in a timely manner) of such determination, and subject to the rights existing in the EDGAR
Licenses, Durect shall have the right and opportunity to file, prosecute, defend and/or maintain
such patent application, at Durect’s sole cost and expense.

11.3 Patent Term Extensions: EpiCept shall promptly notify Durect of the issuance of each
new patent included within the EpiCept Licensed Patents where a patent term extension, adjustment
or restoration, or supplementary protection certificate (an “SPC,” and together with patent term
extensions, adjustments and restorations, “Patent Term Extension”) is possible in the Territory,
giving the date of issue and patent number for each such patent. Durect shall use Commercially
Reasonable Efforts to obtain all available Patent Term Extensions of such EpiCept Licensed Patents
(including those available under the Hatch-Waxman Act). EpiCept shall execute such authorizations
and other documents and take such other actions as may be reasonably requested by Durect to obtain
such Patent Term Extensions. The Parties shall cooperate with each other in obtaining Patent Term
Extensions wherever applicable to such EpiCept Licensed Patents. If, in any jurisdiction in the
Territory, Durect has an option to extend the patent term for only one of several patents, Durect
will consult with EpiCept before making the election. If more than one EpiCept Licensed Patents is
eligible for Patent Term Extension, the Parties shall agree upon a strategy that will maximize
patent protection for Licensed Product in the relevant jurisdiction. All filings for such Patent
Term Extensions shall be made by Durect at its sole cost and expense; provided, that in the event
that Durect elects not to file for a Patent Term Extension, Durect shall (a) promptly inform
EpiCept of its intention not to file and (b) grant EpiCept the right to file for such Patent Term
Extension. Durect acknowledges that pursuant to the EDGAR Licenses, Endo Pharmaceuticals, Inc.,
and/or Adolor Corporation may independently seek Patent Term Extensions of one or more of the
EpiCept Licensed Patents.

11.4 Patent Certifications:

     (a) To the extent required or permitted by law, Durect shall use its Commercially Reasonable
Efforts to maintain with the applicable regulatory authorities during the term of this Agreement
correct and complete listings of applicable patents relating to Licensed Product, including all so
called “Orange Book” listings required under the Hatch-Waxman Act.

     (b) In the event either Party receives notice that a third party has filed a paragraph IV
certification relating to Licensed Product pursuant to 21 U.S.C. 355(j)(2)(A)(vii)(IV) of the
Hatch/Waxman Act (or any successor statute), such Party shall immediately notify the other Party in
writing of such notice. Upon EpiCept’s written consent, not unreasonably withheld, Durect shall
have the first right, but not the obligation, to institute a patent infringement action against
such third party. In such instance, Durect may, if necessary, institute such an action in
EpiCept’s name. Durect shall consider in good faith all comments provided by EpiCept within the
five (5) day period following EpiCept’s receipt of such notice from Durect; provided that
Durect shall have the sole discretion and authority to exercise its first right to institute such a
patent infringement action; however, Durect may not enter into any settlement, consent judgment

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or other voluntary final disposition of such action that adversely affects any EpiCept
Licensed Patent without the prior written consent of EpiCept.

11.5 Third Party Infringements: If either Party becomes aware of infringement of any
Patent included in the EpiCept Licensed Patents by a third party in the Territory, such Party shall
promptly notify the other Party in writing to that effect and provide a summary of the relevant
facts and circumstances known to such Party relating to such infringement. Upon Durect’s written
request, EpiCept and Durect shall consult with EpiCept’s licensees under the EDGAR Licenses to
determine how best to proceed. If not contrary to the EDGAR Licenses, as between EpiCept and
Durect, EpiCept shall have the right, at its sole discretion, on its own behalf to institute,
prosecute and control any action or proceeding to restrain infringement of any EpiCept Licensed
Patents licensed to Durect under this Agreement. Durect agrees, at the sole cost and expense of
EpiCept, to be joined as a Party plaintiff if necessary to prosecute the action or proceeding by
EpiCept and shall provide all reasonable cooperation, including any necessary use of its name,
required to prosecute such litigation. EpiCept shall have sole control of any such suit and all
negotiations for its settlement or compromise, provided that EpiCept shall not settle or compromise
any such suit or enter into any consent order for the settlement or compromise thereof without the
prior written consent of Durect, such consent not unreasonably withheld, conditioned or delayed.

11.6 Durect Step-In Rights: If, after three (3) months from proper notice of a third party
infringement under Section 11.5 above, EpiCept has not obtained a discontinuance of an alleged
infringement by such third party or brought an infringement action or proceeding or otherwise taken
appropriate action to abate such infringement, or if EpiCept shall notify Durect at any time of its
intention not to bring suit against an alleged infringer or EpiCept at any time ceases to actively
prosecute such ongoing infringement action or proceeding, and such alleged infringement is relevant
to a Licensed Product in the Territory, then Durect shall have the right, but not the obligation,
to institute, prosecute and control any action or proceeding to restrain or abate such
infringement. EpiCept agrees, at the sole cost and expense of Durect, to be joined as a Party
plaintiff if necessary to prosecute the action or proceeding by Durect and shall provide all
reasonable cooperation, including any necessary use of its name, required to prosecute such
litigation. Durect shall have sole control of any such suit and all negotiations for its
settlement or compromise, provided that Durect shall not settle or compromise any such suit or
enter into any consent order for the settlement or compromise thereof without the prior written
consent of EpiCept, such consent not unreasonably withheld, conditioned or delayed. For clarity,
Durect’s rights under this Section 11.6 are subject to the rights existing in the EDGAR Licenses as
of the Effective Date of this Agreement.

11.7 Costs and Recoveries from Infringement Actions: Any recovery obtained as a result of
an infringement action brought under this Section 11, whether by judgment, award, decree or
settlement, will first be applied to reimbursement of each Party’s out-of-pocket costs and expenses
in bringing such suit or proceeding, and any remaining balance will be distributed as follows:

     (a) if Durect has instituted and maintained such action alone, Durect shall be entitled to
retain such remaining funds less the Deemed Royalty Obligation, which Deemed Royalty Obligation
shall be paid to EpiCept. The “Deemed Royalty Obligation” shall mean the amount

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of Royalty that would be paid to EpiCept under Section 4.3 in the Annual Net Sales Period in
which such remaining funds are received on such remaining funds assuming such remaining funds were
deemed to be Net Sales in such Annual Net Sales Period;

     (b) if EpiCept has instituted and maintained such action alone, EpiCept shall be entitled to
retain such remaining funds less the Deemed Royalty Obligation, which Deemed Royalty Obligation
shall be paid to Durect; or

     (c) if the Parties and, if relevant, EpiCept’s licensees under the EDGAR Licenses have
cooperated in instituting and maintaining such action, the Parties shall allocate such remaining
funds among themselves in the following order of priority: (i) first, to reimburse each Party and
any participating licensee under the EDGAR Licenses for all litigation costs incurred in connection
with such proceeding paid by that Party/participating licensee and not otherwise recovered (on a
pro rata basis based upon each Party’s respective litigations costs, to the extent the recovery was
less than all such litigation costs); and (ii) second, the remainder of the recovery shall be
shared equally.

11.8 Infringement of Third Party Rights: With respect to any and all claims brought by a
third party for patent infringement stemming from the manufacture, use, offer for sale or sale of a
Licensed Product covered by the EpiCept Licensed Patents in the Territory during the Term, Durect
shall promptly notify EpiCept of such claim and Durect shall have the right, at its sole
discretion, to defend and control any action or proceeding with respect to such claim. EpiCept
agrees to be joined as a Party plaintiff, at Durect’s expense, if necessary to defend the action or
proceeding and shall provide all reasonable cooperation, including any necessary use of its name,
required to defend such litigation. Durect shall have sole control of any such action or
proceeding and all negotiations for its settlement or compromise, provided that Durect shall not
settle or compromise any such action or proceeding or enter into any consent order for the
settlement or compromise thereof without the prior written consent of EpiCept, such consent not
unreasonably withheld, conditioned or delayed.

11.9 Third Party Licenses: In the event that either Party becomes aware of a third party
Patent under which, in the good faith reasonable judgment of such Party, it would be advisable to
obtain a license to avoid infringement by the manufacture, use or sale of Licensed Product in any
country in the Territory, such Party shall promptly notify the other Party. The Parties shall then
confer in good faith with respect to the appropriate course of action, and if the Parties agree
that the procurement of an ancillary license is warranted to commercialize Licensed Product in the
Territory, then Durect shall have the right to negotiate such license rights on its own behalf.
Durect shall consult with EpiCept prior to entering into any ancillary license agreement and
provide EpiCept a reasonable opportunity to provide its views on the need or benefit to obtain such
license and the financial and other terms thereof. In the event that Durect enters into such an
ancillary license agreement, Durect shall provide EpiCept with complete copies of such license
agreement and other material information in its possession in respect of such technology subject to
any confidentiality provisions imposed by the third party proprietor. If EpiCept agrees, not
unreasonably withheld, that such ancillary license agreement is beneficial in order for Durect to
manufacture, use or sell Licensed Product in the relevant jurisdiction(s) in the Territory, or if
Durect is unable within a reasonable period of time to identify a commercially reasonable
alternative to avoid the third party Patent in order to manufacture, use or sell Licensed Product
in the relevant jurisdiction(s) in the Territory, then Durect shall have the right to offset

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**** of royalties incurred in connection with the ancillary license agreement
against Royalties due under Section 4.3 of this Agreement in the calendar year in which such third
party royalty was paid, provided that any such set-off may not reduce Royalties to EpiCept by more
than **** in any calendar quarter.

11.10 Marking: Durect, its Affiliates and its sublicensees, including any wholesalers and
distributors, as applicable, shall mark all Licensed Products made, used, offered for sale or sold
under this Agreement with a notice in accordance with 35 U.S.C. §287 and equivalent or similar
marking provisions in foreign countries.

12. MISCELLANEOUS PROVISIONS

12.1 Relationship of Parties: Nothing in this Agreement is intended or shall be deemed to
constitute a partnership, agency, employer-employee or joint venture relationship between the
Parties. No Party shall incur any debts or make any commitments for the other, except to the
extent, if at all, specifically provided herein.

12.2 Assignment: Neither Party shall assign this Agreement or its rights or obligations
hereunder without the express written consent of the other Party hereto not unreasonably withheld,
except that either Party may assign or transfer this Agreement and its rights or obligations
hereunder without the consent of the other Party to (i) an Affiliate, (ii) any assignee of all or
substantially all of its business, or (iii) its successor in the event of its merger, consolidation
or involvement in a similar transaction. An assignment or transfer by a Party pursuant to this
Section 12.2 shall be binding on its successors or assigns. No such assignment or transfer shall
be valid or effective unless done in accordance with this Section 12.2.

12.3 Books and Records: Any books and records to be maintained under this Agreement by a
Party or its Affiliates shall be maintained in accordance with GAAP consistently applied.

12.4 Further Actions: Each Party shall execute, acknowledge and deliver such further
instruments, and do all such other acts, as may be reasonably necessary or appropriate in order to
carry out the purposes and intent of this Agreement.

12.5 Notice: Any notice, request or other communication required or permitted to be given
under or in connection with this Agreement shall be deemed to have been sufficiently given if in
writing and personally delivered or sent by certified mail (return receipt requested), facsimile
transmission (receipt verified), or overnight express courier service (signature required),
prepaid, to the Party for which such notice is intended, at the address set forth for such Party
below:

     (a) In the case of Durect, to:

Durect Corporation

2 Results Way

Cupertino, CA 95014

Attention: General Counsel

Facsimile No:    (408) 777-3577

Telephone No.: (408) 777-1417

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     (b) In the case of EpiCept, to:

EpiCept Corporation

777 Old Saw Mill River Road

Tarrytown, NY 10591

Attention: Chief Executive Officer

Facsimile No:    (914) 606-3501

Telephone No.: (914) 606-3500

or to such other address for such Party as it shall have specified by like notice to the other
Party, provided that notices of a change of address shall be effective only upon receipt thereof.
If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be
the date on which such notice or request was given. If sent by overnight express courier service,
the date of delivery shall be deemed to be the next business day after such notice or request was
deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be
the fifth business day after such notice or request was deposited with the U.S. Postal Service.

12.6 Use of Name: Except as otherwise expressly provided herein, Durect, on the one hand,
and EpiCept on the other hand, shall not have any right, express or implied, to use in any manner
the name or other designation of the other or any other trade name, trademark or logos of the other
for any purpose.

12.7 Public Announcements; Disclosures: Except as expressly permitted by Section 8 of this
Agreement, neither Party will make any public announcement concerning the existence of or the terms
of this Agreement or regarding the status, development or commercialization of Licensed Product in
the Territory, without the prior written approval of the other Party with regard to the form,
content and precise timing of such announcement, except such as may be required to be made by
either Party in order to comply with applicable law, regulations, court order, or tax or securities
filings. In addition, the Parties shall agree upon a single redacted version of this Agreement to
accompany each Party’s respective securities filing disclosure requirements concerning having
entered into such an agreement. Such consents will not be unreasonably withheld or delayed by such
other Party. Each Party hereby agrees that any such public announcements (whether written or oral)
shall acknowledge Durect as the developer and proprietor of Licensed Product. Prior to any such
public announcement, the Party wishing to make the announcement shall submit a draft of the
proposed announcement to the other Party not less than three (3) business days in advance to enable
the other Party to consider and comment thereon. Failure to respond with comments in writing prior
to twenty-four (24) hours before scheduled publication shall be deemed approval of such release.
Notwithstanding anything to the contrary in this Agreement, nothing in this Section 12.7 is
intended to prohibit either Party from republishing or restating information relating to this
Agreement that has already been approved by the other Party for use in a prior press release or
public announcement.

12.8 Waiver: A waiver by any Party of any of the terms and conditions of this Agreement in
any instance shall not be deemed or construed to be a waiver of such term or condition for the
future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and
agreements contained in this Agreement shall be cumulative and except as specifically provided

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herein none of them shall be in limitation of any other remedy, right, undertaking, obligation or
agreement of either Party.

12.9 Counterparts: This Agreement may be executed simultaneously in any number of
counterparts, any one of which need not contain the signature of more than one Party but all such
counterparts taken together shall constitute one and the same agreement. This Agreement, to the
extent signed and delivered by means of a facsimile machine, shall be treated in all manner and
respects and for all purposes as an original agreement or instrument and shall be considered to
have the same binding legal effect as if it were the original signed version thereof delivered in
person.

12.10 Severability: When possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under Applicable Law, but if any provision of this
Agreement is held to be prohibited by or invalid under any Applicable Law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.

12.11 Amendment: No amendment, modification or supplement of any provisions of this
Agreement shall be valid or effective unless made in writing and signed by a duly authorized
officer of each Party.

12.12 Governing Law: This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware without regard to conflicts of law principles.

12.13 Dispute Resolution:

     (a) The Parties recognize that a bona fide dispute as to certain matters may from time to time
arise during the term of this Agreement that relate to any Party’s rights or obligations hereunder.
Unless a Party reasonably determines that it must seek a preliminary injunction, temporary
restraining order or other provisional relief to address a threatened or imminent breach of any
obligations under this Agreement, in the event of the occurrence of any dispute arising out of or
relating to this Agreement, including any question regarding its existence, validity or
termination, either Party shall, by written notice to the other, have such dispute referred to its
respective officer designated below or their successors, for attempted resolution by good faith
negotiations within sixty (60) days after such notice is received. If either Party desires to
pursue arbitration under Section 12.13(b) below to resolve any such dispute, a referral to such
executives under this Section 12.13(a) shall be a mandatory condition precedent. Said designated
officers are as follows:

     For Durect: President and CEO

     For EpiCept: President and CEO

     (b) In the event that the designated officers shall be unable to resolve the dispute by
executive mediation within such sixty (60) day period, then the dispute shall be finally settled by
binding arbitration as provided below.

     (c) Except as expressly otherwise provided in this Agreement, any dispute arising out of or
relating to the interpretation of any provisions of this Agreement or the failure of either Party
to perform or comply with any obligation of such Party pursuant to this Agreement or the breach,
termination or validity hereof (a “Dispute”), shall be exclusively and finally settled by

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arbitration under the Commercial Arbitration rules of the American Arbitration Association
(“AAA”) then in effect (the “Rules”), as modified by the terms set forth in this Section 12.13(c):

     (i) The place of arbitration of any Dispute shall be in Chicago, Illinois. Such
arbitration shall be conducted by three arbitrators, one appointed by each of EpiCept and
Durect and the third selected by the party-appointed arbitrators. Each arbitrator shall be
neutral and impartial and shall have relevant experience in the pharmaceutical industry.
EpiCept and Durect shall make their respective appointments within 20 business days of
receipt by the respondent of a copy of the demand for arbitration. Such party-appointed
arbitrators shall select the third arbitrator within 20 business days of the appointment of
the second arbitrator. If any arbitrator is not timely appointed, on the request of any
Party such arbitrator shall be appointed by the AAA in accordance with the listing, striking
and ranking provisions in the Rules. The arbitrators shall render an award as expeditiously
as possible; if practicable, within six months after the appointment of the third
arbitrator.

     (ii) Any award rendered by the arbitrators shall be final and binding upon the Parties.
Judgment upon any award rendered may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. Except as provided in Section 11.5, each Party shall pay
its own expenses of arbitration, and the fees and expenses of the arbitrators shall be
equally shared between EpiCept and Durect. Any costs or fees (including attorney’s fees and
expenses) incident to enforcing the award shall be charged against the Party resisting such
enforcement.

     (iii) This Section 12.13(c) shall not prohibit a Party from seeking preliminary
injunctive relief in aid of arbitration from a court of competent jurisdiction in the event
of a breach or prospective breach of this Agreement by any other Party which would cause
irreparable harm to the Party seeking such relief. Without prejudice to such provisional
remedies as may be available under the jurisdiction of a court, the arbitrators shall have
full authority to grant provisional remedies and to direct the Parties to request that any
court modify or vacate any temporary or preliminary relief issued by such court, and to
award damages for the failure of any Party to respect the arbitrators’ orders to that
effect.

12.14 Compliance with Laws: Each Party shall review in good faith and cooperate in taking
actions to ensure compliance of this Agreement and the Parties’ activities hereunder with all
Applicable Laws, rules, ordinances, regulations and guidelines. Each Party shall provide the other
Party such reasonable assistance as may be required for the Party requesting such assistance to
comply with all such laws, rules, ordinances, regulations and guidelines of all governmental
entities, bureaus, and agencies having jurisdiction pertaining to this Agreement, including
obtaining all import, export and other permits, certificates, licenses or the like required by such
laws, rules, ordinances, regulations and guidelines necessary to permit the Parties to perform
hereunder and to exercise their respective rights hereunder.

12.15 Force Majeure: Except where expressly provided for herein, neither Party shall be
held liable or responsible to the other Party nor be deemed to be in default under, or in breach of
any provision of, this Agreement for failure or delay in fulfilling or performing any obligation of
this Agreement to the extent that such failure or delay is due to Force Majeure, and without the
willful wrongdoing, recklessness or gross negligence of the Party so failing or delaying. In the
event that the ability of Durect or EpiCept to perform its obligations under this Agreement, as the

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case may be, shall be affected by a Force Majeure, the affected Party shall immediately notify the
other Party of such inability and of the period for which such inability is expected to continue.
The Party giving such notice shall thereupon be excused from such of its obligations under this
Agreement as it is thereby disabled from performing for so long as it is so disabled and the thirty
(30) days thereafter. To the extent possible, each Party shall use Commercially Reasonable Efforts
to minimize the duration of any Force Majeure.

12.16 Entire Agreement: This Agreement including schedules and exhibits thereto,
constitute the entire agreement between the Parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and written, between the
Parties with respect to the subject matter of this Agreement.

12.17 Parties in Interest: All of the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective
permitted successors and assigns.

12.18 No Third Party Beneficiaries: Except for rights and obligations specifically
referred to herein that apply to Affiliates, sublicenses or licensees of the Parties, nothing in
this Agreement is intended to confer on any Person other than Durect or EpiCept any rights or
obligations under this Agreement, and there are no intended third party beneficiaries to this
Agreement.

12.19 Descriptive Headings; Certain Terms: The descriptive headings of this Agreement are
for convenience only, and shall be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

12.20 Fees and Payments: All fees and payments made by one Party to the other under this
Agreement shall be deemed non-refundable unless expressly provided to the contrary herein.

[Remainder of Page Intentionally Left Blank — Signature Pages to Follow]

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

	 	 	 	 	 
	 

	 	 	 	 
	DURECT Corporation	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name: James E. Brown, D.V.M.	 	 
	 

	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	EPICEPT Corporation	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name: Jack V. Talley	 	 
	 

	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 	 	 

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