LEASE AGREEMENT

Exhibit 10.47

LEASE AGREEMENT

THIS INDENTURE OF LEASE (hereinafter referred to as the "Lease"), made and entered into this 1st day of June, 2006 , is by and between THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ALABAMA , a body corporate for its division the University of Alabama at Birmingham (hereinafter referred to as "LANDLORD" ) and DURECT CORPORATION (hereafter referred to as "TENANT").

WHEREAS , the LANDLORD is participating in a program of The Office for the Advancement of Developing Industries sponsored by the University of Alabama at Birmingham whereby financial assistance is provided to developing industries in advanced technology; and

WHEREAS , as part of the Program, LANDLORD is leasing commercial rental property and is providing administrative services and management support to such developing industries; and

WHEREAS , developing industries participating in the Program will become candidates for "graduation" from the Program upon their achievement of any of one of the benchmarks for graduation set forth herein; and

WHEREAS , as a participant in the above described program, the LANDLORD desires to lease to TENANT certain space in a 68,495 square foot facility located at 2800 Milan Court, Birmingham, Alabama and known as the "OADI Technology Center"; and

WHEREAS , the TENANT desires to lease certain space in the above described building on the terms and conditions set forth herein;

NOW THEREFORE , for the consideration hereinafter set forth, the parties do hereby agree as follows:

PREMISES

1. The LANDLORD hereby leases unto TENANT the following described premises (hereinafter called "Premises"), identified as Suites 259 & 274 located on the 2nd floor of the OADI Technology Center (hereinafter called "Building"). Attached hereto as a part hereof is a building floor plan of the Premises marked " Exhibit A ," which has been approved by LANDLORD and TENANT. LANDLORD agrees to provide for TENANT the space, arrangement, and facilities shown and specified in " Exhibit A ," but LANDLORD reserves the right at any time to make alterations or additions to, and to build additional stories on the Building and to build adjoining the same.

RENT

2. TENANT shall pay monthly rent to LANDLORD in accordance with the following rent schedule:

(A) Rent due hereunder shall be payable in advance on or before the fifth (5th) day of each month during the term hereof to the following address:

• The OADI Technology Center

  UAB Research Park at Oxmoor

  2800 Milan Court # 100

  Birmingham, Alabama 35211

or at such other place as LANDLORD may in writing designate from time to time, without any prior demand therefore, and without any deduction or setoff whatsoever. All rent checks shall be made payable to The OADI Technology Center. TENANT agrees that a service and bookkeeping charge equal to eight percent (8%) of the monthly rental payment shall become due and payable each and every month that the rent has not been received in the office of the LANDLORD by the TENTH (10th) day of the month.

(B) If the term commences other than on the first day of a calendar month, then TENANT shall pay pro-rata rent, in advance, for the period from such commencement date to the first day of the next following calendar month. Rent for such period shall be determined by multiplying the monthly rent under the preceding paragraph by a fraction, the numerator of which shall be the number of days in such period, the denominator of which shall be the number of days in such calendar month. TENANT shall also pay the rent as otherwise provided in this Lease.

(C) If this Lease is executed before the Premises herein become ready for occupancy and LANDLORD cannot acquire and/or deliver possession of the herein Leased Premises by the time the Term of this Lease is fixed herein to begin, TENANT waives the payment of any rental until LANDLORD delivers possession to TENANT.

(D) In addition to the above monthly rent, TENANT shall pay to LANDLORD the sums set forth in the TENANT MANUAL for any receptionist, telephone, photocopy, mail, etc., services, if any, used by TENANT in the operation of its business at the Premises. With the exception of the minimum plan for receptionist charges, no such charge shall be due unless TENANT elects to use the services offered by LANDLORD as listed in the TENANT MANUAL. Failure by TENANT to pay for any services used by TENANT shall constitute an Event of Default hereunder, and shall entitle LANDLORD to exercise all rights and remedies provided to it hereunder.

TERM

3. The term of this Lease shall be for a period commencing on June 1, 2006 (the "Commencement Date"), and ending on February 28, 2007 (the "Termination Date");

Provided that (i) TENANT is not then in default under this Lease, and (ii) TENANT may terminate this Lease at its discretion upon ninety (90) days prior written notice to the LANDLORD.

GRADUATION BENCHMARKS

4. [INTENTIONALLY OMITTED]

TENANT PROGRESS MEETINGS

5. As a public company, TENANT files quarterly (Form 10Q) and annual (Form 10-K) filings with the Security and Exchange Commission. On a quarterly basis, TENANT will send to LANDLORD by e-mail TENANT’s press release summarizing TENANT’s financial results of operations for each calendar quarter and fiscal year promptly after such results are publicly available. If after review of these, LANDLORD has additional questions or concerns, LANDLORD shall notify TENANT and the parties shall discuss in good faith LANDLORD’s questions and concerns.

SERVICES

6.(A) Between the hours of 7:00 A.M. and 6:00 P.M., Monday through Sunday (exclusive of national holidays observed by the University of Alabama at Birmingham, " Exhibit B "), LANDLORD agrees to furnish to the Premises hot and cold water at points of supply provided for general use, heated and refrigerated air conditioning in season at reasonable temperatures and in reasonable amounts, and electrical, and elevator services in the manner and to the extent deemed standard by LANDLORD. LANDLORD reserves the right to furnish all such facilities and services, at its option, on such holidays as LANDLORD chooses. LANDLORD agrees to provide janitorial service Monday through Friday (exclusive of legal holidays).

(B) If TENANT desires to have installed in the Premises any special facilities or equipment requiring other than normal electric service for ordinary lighting and minor electric appliances such as typewriters, small business and accounting machines, and other than the normal and regular service mentioned in Paragraph (A) LANDLORD will, if reasonably possible, furnish such additional special facilities or equipment provided that TENANT will pay LANDLORD in advance for the cost of providing and installing any additional wiring, equipment, meters and safety devices, and the cost of any repairs, alternations, additions to, and refinishing of the Premises or Building so necessitated, and provided TENANT shall pay all additional utility charges incurred by use of said special facilities or equipment.

(C) LANDLORD shall not be liable to TENANT in damages or otherwise for failure to perform any of the covenants on its part under this paragraph 6, nor shall temporary stoppages, temporary failures or interruptions of any of the services to be supplied by LANDLORD unto TENANT under this paragraph be construed as an eviction of TENANT, work an abatement of rent, or relieve TENANT from any covenant or agreement, but LANDLORD agrees diligently to restore any services obliged to be provided by it hereunder when temporary failures, stoppages, or interruptions occur.

SECURITY

7. LANDLORD agrees to provide such security as LANDLORD deems necessary or desirable, but LANDLORD shall in no event be liable for any theft or other loss of property occurring in or about the Premises or Building.

ADDITIONAL EXPENDITURES

8. TENANT agrees to pay to LANDLORD as additional rent all sums provided for in this Lease at the times and in the manner provided. If LANDLORD shall make any expenditure for which TENANT is responsible or which TENANT should make, then, at LANDLORD’S election, the amount thereof may be added to the installment of rent next falling due or constitute any item of account payable on demand.

GOOD ORDER AND REPAIR

9. TENANT agrees to take good care, as determined by the LANDLORD, of the Premises and not to allow or commit any waste with respect to the Premises or Building. Upon termination of this Lease, by lapse of time or otherwise, TENANT will surrender the Premises to LANDLORD in as good condition as at the date of initial possession hereunder by TENANT, ordinary wear and tear and damage by unavoidable casualty excepted. Any damage to the Premises or Building resulting from acts or neglect of TENANT or TENANT’S agents, employees, patrons, or invitees, shall be repaired or replaced at TENANT’S expense. The Premises shall not be altered, changed, nor any additions or improvements made, without the prior written consent of LANDLORD and unless otherwise provided in writing, all work shall be done by or under the direction of LANDLORD at TENANT’S expense, and any alterations, physical additions or improvements, except movable office furniture, shall at once become the property of LANDLORD upon termination of this Lease.

ASSIGNMENT

10. TENANT shall not, without the express prior written consent of LANDLORD, assign, mortgage, or otherwise encumber or transfer this Lease, or sublease, or permit any other person to use or occupy, all or any part of the Premises. The parties expressly agree that: (a) LANDLORD’S consent may be withheld for any reason whatsoever and regardless of whether such withholding is contrary to any prevailing commercial standards; and (b) LANDLORD’S decision regarding such consent shall be binding on the parties, regardless of the reason or basis of the decision. If the TENANT desires to assign or encumber this Lease or sublet the Premises or any part thereof, the TENANT will give the LANDLORD written notice of such desire specifying the name of the proposed assignee, mortgagee, or sublessee and all of the terms of the proposed assignment, mortgage, or sublease at least sixty (60) days prior to the date such assignment, encumbrance, or sublease is proposed to be effective. The LANDLORD will have the option for a period of thirty (30) days after receipt of such notice to: (a) terminate this Lease as of the date specified by the TENANT as to the portion of the Premises affected; or (b) permit the TENANT to assign, encumber, or sublet such portion of the Premises; or (c) refuse to consent to the proposed assignment, encumbrance, or subletting and continue this Lease in effect as to the entire Premises. The failure by the LANDLORD to exercise any of the foregoing options within the time provided will be deemed an exercise of option (c) above. Notwithstanding any consent granted by the LANDLORD, the TENANT, and each assignee, mortgagee, and sublessee will at all times remain fully liable for the payment of Rent and for the performance of the TENANT’S obligations hereunder. No consent granted by the LANDLORD will constitute a waiver of the provisions of this Lease except as to the specific instance covered thereby. In the event LANDLORD consents to such assignment, sublease, or other transfer of all or any portion of this Lease, TENANT shall remit to LANDLORD that portion of any payment TENANT receives from its sub-lessee, assignees, etc., which exceeds the rent due and payable as is set forth in Paragraph 3 herein or any amendments hereto.

COMPLIANCE

11. TENANT agrees to maintain the Premises in a clean, orderly, healthful condition and to comply with all laws, ordinances, rules, and regulations of all governmental agencies having jurisdiction over the Premises. TENANT will not use, occupy, or permit the use or occupancy of

the Premises for any unlawful, disreputable, or hazardous purpose, maintain or permit the maintenance of any public or private nuisance, or do or permit any act or thing that may disturb the quiet enjoyment of any other tenant of the Building, or permit anything to be done that would increase the fire insurance rate on Building or its contents.

RIGHT OF ENTRY

• (B) TENANT agrees to complete on an annual basis the attached questionnaire specified as" Exhibit C ", regarding the use of chemicals, radioactive material, biological agents, and other substances that may pose a hazard to the occupants of the facility. TENANT shall within seven (7) working days after the mailing of the questionnaire by the LANDLORD return to the LANDLORD the completed questionnaire, and in the event the TENANT does not complete the questionnaire, the LANDLORD shall have the rights to terminate this Lease Agreement immediately. Depending on the responses of the TENANT, a more detailed questionnaire may need to be completed, as well as, a review by committee may be necessary before LANDLORD can accept the TENANT. The UAB Office of Occupational Health and Safety may also conduct onsite audits from time to time to assure itself that all operations are being conducted in a safe manner.

SURRENDER OF PREMISES

13. At the expiration of the tenancy hereby created, TENANT shall surrender the Premises in the same condition as the Premises were in upon delivery of possession thereto under this Lease, reasonable wear and tear excepted and damage by unavoidable casualty excepted, and shall surrender all keys for the Premises to LANDLORD at the place then fixed for the payment of rent and shall inform LANDLORD of all combinations on locks, safes, and vaults, if any, in the Premises. TENANT shall remove all its trade fixtures and any alterations or improvements which LANDLORD requests to be removed before surrendering the Premises as aforesaid and shall repair any damage to the Premises caused thereby. TENANT’S obligation to observe or perform this covenant shall survive the expiration or other termination of the term of this Lease.

INDEMNITY OF LANDLORD

14. By taking possession of the Premises, the TENANT will be deemed to have accepted the Premises as suitable for the purposes for which the same are leased, to have accepted the Building, and, except for any matters specified in writing to the LANDLORD, TENANT agrees to indemnify and hold LANDLORD harmless from and against any and all liability, claims, demands, loss, or damage for injury to, or death of, any person or persons or damage to property in any way arising from or in connection with the occupancy or use by tenant of the Premises or any part thereof or occasioned wholly or in part by any act of omission of TENANT, its agents, employees, or invitees. TENANT further agrees to indemnify and hold LANDLORD harmless from all fines, suits, claims, demands, and actions resulting from any breach, violation, or nonperformance of any covenant or condition hereof by TENANT or TENANT’S agents, employees, or invitees.

TAKING BY EMINENT DOMAIN

• If the whole of the Premises hereby leased shall be taken by any authority under the power of eminent domain, then this Lease shall terminate as of the day possession shall be taken by such authority, and all rent shall be paid up to that date, with a proportionate refund by LANDLORD of such rent as may have been paid in advance.

  (B) Partial Taking of Premises

  If less than 20 percent of the floor area of the Premises be so taken by eminent domain, then this Lease shall terminate only as to the part so taken from the day possession shall be taken by such authority, and all rent shall be paid up to that day and thereafter the rent due hereunder shall be adjusted accordingly.

  (C) Substantial Taking of Premises

  If more than 20 percent, but not all, of the floor area of the Premises be so taken, then this Lease shall terminate only as to the part so taken from the day possession shall be taken by such authority, and all rent shall be paid up to that day; provided, however, that TENANT and LANDLORD shall each have the right to terminate this Lease by giving written notice thereof within ten (10) days from the date such possession is taken by said authority. In the event TENANT elects to remain in possession, and LANDLORD does not so terminate, all of the terms herein provided shall continue in effect except that the fixed minimum rent shall be adjusted proportionately.

  (D) Substantial Taking of Building

  If more than 50 percent of the floor area of the Building be taken under the power of eminent domain, whether or not the Premises or any part thereof be taken, LANDLORD may, by notice in writing to TENANT delivered within thirty (30) days after the day of surrendering possession to the authority, terminate this Lease, and rent shall be paid or refunded, as of the date of termination.

• (E) Damages

  All damages awarded for such taking under the power of eminent domain, whether for the whole or a part of the Premises, shall be the property of LANDLORD, including but not limited to such damages as shall be awarded as compensation for diminution in value of the leasehold and to the fee of the Premises; provided, however, that LANDLORD shall not be entitled to any award made to TENANT for loss of business, depreciation to and cost of removal of stock and fixtures. The term "eminent domain" shall include the exercise of any similar governmental power and any purchase or other disposition in lieu of, or under threat of, condemnation.

PROPERTY DAMAGE

16. LANDLORD shall not be liable to TENANT for any loss or damage to any person or property, including the person and property of TENANT occasioned by theft, the acts of any co-tenant, casualty, rain, water, condensation, fire, acts of God, public enemy, injunction, riot, strike, picketing, mob action, bombing, explosion, war, court order, latent defects, requisition or order of governmental authority, the construction, repair, maintenance or alteration of any part of the Premises or Building as a whole; all personal and business property in the Leased Premises shall be and remain at TENANT’s personal risk, and LANDLORD shall not be liable for any damages to nor loss of such personal or business property arising from acts of negligence of any other persons; not from the leaking of the roof, nor from the bursting, leaking, or overflowing of water, sewer, or steam pipes, nor from the heating or plumbing fixtures; nor from electric wires for fixtures; nor from any other cause whatsoever.

PERFORMANCE

17. Anything in this Lease to the contrary notwithstanding, LANDLORD shall not be deemed in default with respect to the performance of any of the terms, covenants, and conditions of this Lease to be performed by it. If any failure of its performance shall be due to any strike, lockout, civil commotion, war, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material or service, act of God, or any other cause whatever (including failure of TENANT to supply necessary data or instructions) beyond the reasonable control of LANDLORD, or inability of LANDLORD to obtain financing satisfactory to LANDLORD, the time for performance by LANDLORD shall be extended by the period of delay resulting from or due to any of said causes.

OCCUPANCY OF PREMISES

• In the event the Premises shall be destroyed or so damaged by fire, explosion, earthquake, or any other cause so as to become wholly unfit for occupancy, then the LANDLORD may, if it so elects, rebuild and put the Premises in good condition and fit for occupancy within a reasonable time after such Premises have become wholly unfit for occupancy, or it may give notice in writing to TENANT terminating this Lease. If LANDLORD elects to repair or rebuild the Premises, it shall give the TENANT notice thereof within thirty (30) days after such injury or damage of its intention to repair or rebuild, and then LANDLORD shall proceed with reasonable speed to repair or rebuild the Premises. TENANT shall not be obligated to pay any rent from the time that such Premises were rendered wholly unfit for occupancy until such Premises are again fit and ready for occupancy.

  (B) Premises Rendered Partially Unfit for Occupancy

  In the event the Premises shall be destroyed or so damaged by fire, explosion, earthquake, or any other cause so as to become partially unfit for occupancy, LANDLORD shall forthwith cause the same to be repaired as soon as is reasonably possible and, only while such damage is being repaired, TENANT shall be entitled to a proportionate abatement of the monthly rent.

  (C) Building Rendered Totally or Partially Unfit for Occupancy

  In the event that the Building in which the Premises are situated is destroyed or damaged from any cause to the extent (in LANDLORD’S sole judgment) of one-third or more of the replacement cost of such Building, LANDLORD shall have an option to terminate this Lease, whether the Premises be damaged or not; such option to be exercised within thirty (30) days after such occurrence so damaging the Building. Anything in this Lease to the contrary notwithstanding, a total or substantially total destruction of the Building shall terminate this Lease.

  (D) General

  LANDLORD shall not be liable or responsible to TENANT for any inconvenience or loss due to making repairs or reconstruction as aforesaid nor for any delays in repairing or rebuilding due to strikes, acts of God, governmental regulations, or any other causes beyond its control. Nothing herein shall be deemed to waive or relieve TENANT from any liability for any loss or damage to LANDLORD, or LANDLORD’S property due to negligence or willful acts of TENANT, its agents, servants, employees, or invitees; provided, however, if LANDLORD’S fire and extended coverage insurance policy permits, without penalty, the release of others from liability for loss from insured casualties, such release from liability is hereby granted to the extent that LANDLORD actually