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                                                                   EXHIBIT 10.56

                       MANUFACTURING AND SUPPLY AGREEMENT

                             DPT LABORATORIES, LTD.

                                       AND

                              CONNETICS CORPORATION

        This Manufacturing and Supply Agreement (the "Agreement") is made as of
this 12 day of March, 2002 by and between Connetics Corporation, a corporation
organized under the laws of the State of Delaware, with its principal place of
business at 3290 West Bayshore Road, Palo Alto, California 94303 ("Connetics")
and DPT Laboratories, Ltd., a Texas Limited Partnership with a place of business
at 307 East Josephine Street, San Antonio, Texas 78215 ("DPT"). Connetics and
DPT are sometimes referred to in this Agreement individually as a "Party" and
collectively as the "Parties."

                                   BACKGROUND

        A. Connetics owns certain patented technologies for the formulation and
filling of aerosol pharmaceutical, over-the-counter and cosmetic products.

        B. DPT owns and has a broad spectrum of technologies for the
development, formulation, testing, control, manufacture, filling and
distribution of pharmaceutical, over-the-counter and cosmetic products.

        C. DPT and Connetics are parties to a Research & Development Services
Agreement dated July 20, 2001, which relates to the development and supply of
research products, and which anticipates a separate manufacturing agreement for
the manufacture and supply of commercial Products.

        D. DPT and Connetics have agreed to enter into a transaction whereby
Connetics will provide the necessary capital to construct an aerosol
filling/packaging operation on DPT's leased distribution facilities, and DPT
will manufacture and fill Connetics aerosol products. That transaction will be
memorialized in a Contribution Agreement between the Parties.

        NOW, THEREFORE, in consideration of the mutual covenants expressed
below, the Parties agree as follows:
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                                 1 - DEFINITIONS

ACT

        "Act" means the Federal Food, Drug and Cosmetic Act, as amended, and
        regulations promulgated thereunder.

AQL

        "AQL" means Acceptable Quality Limits.

BULK PRODUCT

        "Bulk Product" means a drug product that has been manufactured but not
        filled or packaged into a final dosage presentation.

cGMPS

        "cGMPs" means the current Good Manufacturing Practices of the FDA, as
        set forth in Title 21 of the U.S. Code of Federal Regulations.

CONTRACT MINIMUMS

        "Contract Minimums" means either [*] of Connetics Product and/or
        Connetics licensed product, as further described in SECTION 3.1.

FDA

        "FDA" means the United States Food and Drug Administration, or any
        successor entity thereto.

FORECASTED NEEDS

        "Forecasted Needs" means Connetics' estimate of Products to be ordered
        from DPT for each of the twelve (12) months following the month in which
        such estimate is provided.

INITIAL PROJECT

        "Initial Project" means the construction and qualification of the
        production and laboratory aerosol filling facilities referred to in
        ARTICLE II.

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

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LABEL, LABELED, OR LABELING

        "Label", "Labeled", or "Labeling" means all labels and other written,
        printed, or graphic matter upon: (i) Product or any container or wrapper
        utilized with Product or (ii) any written material accompanying Product.

MANUFACTURING FEE

        "Manufacturing Fee" means the fee paid by Connetics to DPT for services
        required to manufacture and package Products. The Manufacturing Fee is
        quoted in single final Product unit increments (i.e., by the bottle, can
        or tube). The Manufacturing Fee shall include services for incoming
        inspection of materials (including costs associated with establishing,
        testing and storing Raw Materials or Components), compounding of bulk,
        packaging Product, testing Product for release, making Product ready for
        shipment, and minimum product documentation (one copy of Certificate of
        Analysis, batch records). The Manufacturing Fee does not include,
        without limitation, any research & development support, package
        engineering studies, validation support, FDA audit support, extensive
        reporting requirements, or additional laboratory testing performed by an
        outside testing laboratory or testing beyond that required in the
        Specifications, warehousing or distribution of Product, any materials
        costs or costs associated with establishing or manufacturing new
        materials such as art charges, die costs, plate costs, or packaging
        equipment change parts.

MARKET YEAR

        "Market Year" means a period of twelve (12) consecutive months
        commencing on the first day of the month following the initial invoicing
        of Product commercially manufactured by DPT in accordance with this
        Agreement and beginning on January 1st of each consecutive year
        thereafter.

MATERIALS FEE

        "Materials Fee" is quoted in single final Product unit increments and is
        defined as DPT's Standard Cost plus mark-up of 8% for administration and
        carrying costs. Materials Fee does not include, without limitation,
        costs associated with establishing, testing or manufacturing components
        or new materials such as reference standards, reagents, art charges, die
        costs, mold or tooling costs, plate costs, or packaging equipment change
        parts. These items will be invoiced to Connetics at DPT's cost net
        thirty (30) days and Connetics agrees to reimburse DPT for any such
        authorized expenditures made on Connetics' behalf.

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MATERIAL SAFETY DATA SHEET

        "Material Safety Data Sheet" ("MSDS") means written or printed material
        concerning a hazardous chemical which is prepared in accordance with the
        regulations promulgated by the Occupational Safety & Health
        Administration, or any successor entity thereto.

PCR

        "PCR" means Product Change Request.

PACKAGING

        "Packaging" means all primary containers, cartons, shipping cases,
        inserts or any other like material used in packaging, or accompanying,
        Product.

PRODUCT(s)

        "Product(s)" means product(s) listed in SCHEDULE A manufactured,
        packaged, labeled and/or finished by DPT pursuant to this Agreement.

QUALITY AGREEMENT

        "Quality Agreement" means the Quality and Technical Agreement between
        DPT and Connetics dated March, 2002, as it may be amended from time to
        time, a copy of which is attached as SCHEDULE B.

RAW MATERIALS AND/OR COMPONENTS

        "Raw Materials and/or Components" means any and all raw materials and
        components (such as chemicals, containers, closures, packaging,
        labeling, etc.) other than the Bulk Product needed by DPT to manufacture
        and supply Product to Connetics according to the terms and conditions of
        this Agreement.

REGULATORY FILINGS

        "Regulatory Filings" means new drug applications (including abbreviated
        or supplemental new drug applications) and other filings with the FDA or
        equivalent international agencies, requesting approval to market and
        sell Product.

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REJECTED PRODUCT

        "Rejected Product" shall have the meaning set forth in SECTION 3.7.

SPECIFICATIONS

        "Specifications" means the (1) raw material specifications (including
        chemical, micro, and packaging specifications); (2) sampling
        requirements (i.e., lab, chemical, and micro); (3) compounding module,
        including compounding process and major equipment; (4) intermediate
        specifications; (5) packaging module (including packaging procedures,
        torque and fill weights); and (6) finished Product specifications
        release criteria including DPT's AQL's. Specifications shall be
        established and/or amended from time to time upon the written agreement
        of both DPT and Connetics via a PCR in accordance with ARTICLE IX below.

STANDARD COST

        "Standard Cost" means the average actual cost to DPT of materials plus
        incoming freight plus yield loss adjustment.

TOTAL PRICE

        "Total Price" is the price per Unit of Product payable by Connetics
        pursuant to SECTION 3.10.

                        II - AEROSOL FILLING FACILITIES

2.1  AEROSOL FILLING FACILITIES

        DPT agrees to design, build, obtain necessary permits and licenses for,
and manage an aerosol filling facility consisting of a production line and a
laboratory line (collectively, the "Initial Project") in San Antonio, Texas. The
Initial Project will support both cGMP research and development work and cGMP
commercial production capable of filling at an approximate rate of [*]. The
design and cost estimates for the facility shall be prepared by DPT and approved
in advance by Connetics. The agreement of the Parties with respect to all
aspects of the construction and use of the aerosol filling facility will be the
subject of a separate agreement between the Parties.

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

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2.2  LINE USE FEE

        (a) During the term of this Agreement (including any extensions), DPT
shall pay Connetics a line use fee any time DPT uses the R&D line previously
funded by Connetics, or the production or laboratory lines of the aerosol
filling facility, to manufacture any product for its affiliates or a third
party.

        (b) The amount of the line use fee shall be calculated as follows (or in
such different manner as the Parties may agree in the future):

               [*]

The line use fee is due and payable to Connetics sixty (60) days after DPT first
invoices the third party for manufacturing the product.

        (c) The line use fee payable pursuant to this SECTION 2.2 shall be over
and above any royalty required to be paid to manufacture under Connetics'
patents. It is understood that the manufacture of any product that infringes any
Connetics patent will require payment of a patent royalty by DPT or the third
party in an amount to be negotiated at the time.

                      III - PRODUCT MANUFACTURE AND SUPPLY

3.1  MANUFACTURE AND PURCHASE; MINIMUMS

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

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        (a)    Subject to the terms and conditions of this Agreement, DPT agrees
               that it will manufacture for and provide to Connetics the
               Products. Connetics shall pay DPT for Products as set forth in
               SECTIONS 3.8 and 3.9. DPT shall manufacture Products in
               accordance with the Specifications and the Quality Agreement, and
               in sufficient quantity to meet Connetics Forecasted Needs for the
               length of this Agreement. The development of new product
               candidates will continue to be governed by the Research &
               Development Services Agreement.

        (b)    Connetics shall be required to purchase a minimum number of units
               from DPT per year ("Contract Minimums"), according to the
               schedule set forth below. If Connetics does not purchase the
               minimum requirement during a given 12-month period, then at the
               end of that 12-month period Connetics shall pay DPT an amount
               equal to [*]

        (c)    The initial Contract Minimum shall be [*] for two years,
               beginning 6 months after the opening of the commercial production
               line (currently estimated to open in [*]. The Contract Minimum
               will increase to [*] beginning 30 months after the commercial
               production line is opened. The Contract Minimum can be satisfied
               by the production of any combination of Products, or third party
               products that are licensed by Connetics (e.g., minoxidil foam).

3.2     SUPPLY OF MATERIALS

        (a)    It shall be the obligation of DPT to obtain, supply and store all
               Raw Materials and Components for the manufacture of the Products.
               DPT shall use commercially reasonable efforts to obtain the best
               price for all Raw Materials and Components.

        (b)    If for any reason Connetics undertakes to supply any Raw
               Materials or Components for manufacture of Products, the
               following requirements shall apply:

               i.     Connetics shall notify DPT, in writing, specifying which
                      materials or components it will supply.

               ii.    Connetics shall provide DPT with said materials at
                      Connetics' expense along with Certificates of Analysis and
                      MSDS sheets relating to same, at a minimum of thirty (30)
                      days prior to DPT's scheduled production of Product
                      requiring said materials and in sufficient amounts for
                      DPT's manufacture of Product but not to exceed quantities

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

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                      necessary to support three (3) months of the most recently
                      supplied Forecasted Needs or the minimum order quantity
                      whichever is greater. Connetics-supplied material in
                      excess of these amounts shall be either subject to storage
                      fees or returned to Connetics.

               iii.   All Connetics supplied material shall be shipped to DPT
                      freight prepaid. If Connetics ships or causes to ship such
                      material freight collect, DPT shall invoice Connetics for
                      the cost of the freight plus a reasonable administrative
                      fee which invoice shall be paid promptly upon receipt.

               iv.    DPT is hereby authorized by Connetics to return any
                      portion of Connetics supplied material for which no future
                      production is planned.

               v.     Connetics shall be responsible for the quality of all
                      Connetics-supplied materials.

               vi.    Connetics shall be responsible for the payment of all
                      personal property and other taxes incident to the storage
                      of Connetics-owned material at DPT.

               vii.   For each lot of materials supplied by Connetics, DPT shall
                      perform the quality control and inspection tests as agreed
                      to in the Specifications and pursuant to DPT's Standard
                      Operating Procedures. DPT shall have the right to reject
                      any pre-approved material which does not meet the
                      Specifications in accordance with SECTION 2.3 below.

               viii.  DPT warrants that it will maintain, for the benefit of
                      Connetics, complete and accurate records of the inventory
                      of all such Connetics-supplied materials.

               ix.    If requested by Connetics, DPT will provide to Connetics a
                      monthly report of ending monthly inventory balance of each
                      Connetics supplied/owned materials stored at DPT. This
                      reporting will be supplied exclusively on DPT forms.

        (c)    DPT shall be responsible for supply, at the expense of Connetics
               pursuant to subsection (d) below, of all other commodities
               necessary for the manufacture of Products.

        (d)    Connetics shall provide DPT with Specifications (including art
               proofs) for packaging and labeling, and DPT shall purchase, at
               the expense of Connetics, packaging and labeling in accordance
               with the Specifications.

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        (e)    DPT shall invoice Connetics for all Raw Materials and Components
               supplied by DPT in connection with the Product into which the Raw
               Materials and Components were converted, as part of the Materials
               Fee, in accordance with the provisions of SECTION 3.8.

3.3     MATERIALS TESTING

        All materials and packaging supplies shall, when received by DPT, be
        submitted to analysis and evaluation in accordance with DPT's SOP's and
        the Quality Agreement. The cost of all such analyses and evaluations
        shall be borne by DPT, except as otherwise provided in SECTION 3.2 of
        this Agreement.

3.4     MATERIAL SAFETY DATA SHEETS

        With respect to any Raw Materials and Components furnished by Connetics
        pursuant to SECTION 3.2(b), before DPT receives and tests such
        Connetics-supplied material, and as a condition precedent of any testing
        or formulation work by DPT pursuant to this Agreement, Connetics shall
        provide MSDS sheets to DPT. Any components or Products requiring
        disposal shall be presumed hazardous unless otherwise provided in the
        MSDS information provided.

3.5     DPT'S DUTIES

        (a)    DPT shall maintain sufficient quantities of the Bulk Product and
               the Raw Materials and Components to manufacture the Product in
               accordance with the terms and conditions of this Agreement. DPT
               shall coordinate with Connetics before qualifying any alternate
               sources of Bulk Product or Raw Materials and Components. Any Bulk
               Product and Raw Materials and Components shall meet the
               applicable Specifications.

        (b)    DPT shall assume all responsibility and risk for the safekeeping,
               storage and handling of all Bulk Product and Raw Materials and
               Components.

        (c)    DPT, agrees, at its sole cost and expense, that it shall maintain
               any and all licenses, permits and consents (including without
               limitation, facility licenses and permits required by applicable
               laws) necessary and/or required for DPT to manufacture the
               Product and otherwise perform its obligations under this
               Agreement.

        (d)    Each shipment of Product under this Agreement shall have been
               manufactured in accordance with cGMPs and the Specifications in

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        a duly licensed facility and in accordance with the provisions of the
        Quality Agreement. DPT shall number each Product shipment with a vendor
        lot number that is traceable to Raw Materials and/or Components used to
        manufacture such Product.

3.6     FAILURE TO SUPPLY

        DPT shall immediately notify Connetics if DPT is unable to fill any
        purchase order placed by Connetics pursuant to SECTION 3.8 for any
        reason, including without limitation force majeure) and advise Connetics
        of the revised delivery date. Connetics shall then have the option of
        terminating any such Purchase Order without obligation of payment or of
        accepting the revised delivery date.

3.7     FORECASTS

        No later than six (6) months prior to the initial Market Year of a new
        Product added to this Agreement, Connetics agrees to notify DPT of its
        delivery requirements, including firm orders for same, for the initial
        three (3) months and shall provide its Forecasted Needs for the first
        Market Year in order to ensure timely delivery of Product for initial
        sale and marketing.

3.8     PURCHASE ORDERS

        (a)    Connetics agrees to purchase from DPT all Products manufactured
               for Connetics by DPT in accordance with cGMP and Connetics'
               purchase orders or Forecasted Needs to the extent such Products
               meet the Specifications or exceptions approved by Connetics.

        (b)    Products shall be ordered by Connetics by the issuance of
               separate, pre-numbered purchase orders in increments of full
               batch quantities.

        (c)    No later than six (6) months prior to the initiation of the first
               Market Year and thereafter at the end of each month, Connetics
               shall provide DPT with specific data as to its Forecasted Needs.
               It is understood and agreed that with respect to all Forecasted
               Needs issued to DPT by Connetics pursuant to the terms of this
               Agreement, the forecast for the first three (3) months thereof
               shall constitute a firm order for Products, regardless of whether
               or not Connetics issues actual purchase orders. DPT may produce
               Product up to thirty (30) days prior to the requested delivery
               date in order to accommodate fluctuations in production demands.
               The second three (3) months of the period addressed in all
               Forecasted Needs shall be utilized by DPT for purposes of
               material acquisition

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               on behalf of Connetics and DPT production planning. DPT shall
               attempt to minimize the material inventory purchased on behalf of
               Connetics. Certain materials, however, may have long lead times
               and/or require a minimum order quantity. Therefore, DPT may order
               the [*] necessary to support up to six (6) months of Connetics'
               Forecasted Needs, or the applicable minimum order quantity,
               whichever is greater. Should Connetics subsequently reduce its
               Forecasted Needs, Connetics will be financially responsible for
               any material purchased by DPT on Connetics' behalf. DPT may
               require a deposit for such materials and such materials may also
               be subject to storage and inventory carrying cost fees.

        (d)    Connetics shall provide at least one hundred twenty (120) days
               lead time prior to the requested delivery dates if the
               requirements for any new forecast exceed the most recent
               Forecasted Needs by more than one hundred twenty-five percent
               (125%).

3.9     REJECTED PRODUCTS

        (a)    Connetics may reject any Product which fails to meet the
               Specifications ("Rejected Product"). Connetics shall, within
               twenty (20) days after its receipt of any shipment of Product and
               related Certificate of Analysis of Product batch (as described in
               SECTION 5.1 of this Agreement), notify DPT in writing of any
               claim relating to rejected Product batch and, failing such
               notification, shall be deemed to have accepted such Product
               batch. Such notice to DPT shall specify why the Product batch
               failed to perform to Specifications. Connetics shall grant to DPT
               the right to inspect or test said Product batch. All Products
               shall be submitted to inspection and evaluation in accordance
               with DPT's SOP's to determine whether or not said Products meet
               the Specifications.

        (b)    As to any Rejected Product pursuant to SECTION 3.7(a) above
               (including phases of or complete batches of bulk product), DPT
               shall replace such Rejected Product (in an agreed upon batch
               order quantity, but in no event less than full batch increments)
               promptly after all materials are available to DPT for the
               manufacture. If requested, DPT shall make arrangements with
               Connetics for the return or disposal of Rejected Product.

        (c)    If a Rejected Product clearly results from DPT's equipment
               failure, damage from DPT's facilities, and/or DPT's misweighing
               of chemicals, DPT shall bear one hundred percent of all costs
               directly related to and invoiced by DPT for Rejected Product,
               including costs of destruction, but excluding the cost of any
               materials supplied by Connetics. Except as provided in the
               preceding

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

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               sentence, for the initial three (3) batches and all validation
               batches of a Product produced by DPT, or in the event a Rejected
               Product is due to Connetics supplied information, formulations or
               materials, Connetics shall bear one hundred percent (100%) of all
               costs directly related to and invoiced by DPT for Rejected
               Product including cost of destruction of the Rejected Product,
               which shall be conducted by Connetics in accordance with all
               applicable laws and regulations.

        (d)    If a validated Product does not meet final Specifications and
               results in a Rejected Product, but such failure is not clearly
               due to either Connetics supplied information or DPT's equipment
               failure, failure to follow written Specifications, damage from
               DPT's facilities and/or DPT's misweighing of chemicals, Connetics
               shall bear all Materials Fees with DPT bearing all Manufacturing
               Fees related to Rejected Product, and with destruction to be paid
               by the Connetics.

        (e)    Destruction of Rejected Product shall be in accordance with all
               applicable laws and regulations and the party conducting the
               destruction shall indemnify the other party hereto for any
               liability, costs or expenses, including attorney's fees and court
               costs, relating to a failure to dispose of such Product in
               accordance with such laws and regulations. The party conducting
               the destruction shall also provide to the other party hereto all
               manifests and other applicable evidence of proper destruction as
               may be requested by applicable law.

        (f)    In the event of a conflict between the test results of DPT and
               the test results of Connetics with respect to any shipment of
               Product batch, a sample of such Product batch shall be submitted
               by DPT to an independent laboratory acceptable to both parties
               for testing against the Specifications utilizing the methods set
               out in the Specifications. The fees and expenses of such
               laboratory testing shall be borne entirely by the party against
               whom such laboratory's findings are made. If results from the
               independent laboratory are inconclusive, final resolution will be
               settled in accordance with SECTION 14.6(b) below.

3.10    PRODUCT PRICE

        (a)    Price for Connetics' Products. Connetics shall pay DPT for
               Products a price per Unit of Product equal to the Manufacturing
               Fee plus the Materials Fee. Any services related to services not
               included in the Manufacturing Fee, such as research & development
               support, package engineering studies, validation support, FDA
               audit support, extensive reporting requirements, or additional
               laboratory testing performed by an outside testing

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               laboratory or testing beyond that required in the Specifications,
               shall be billed by the hour at DPT's then-prevailing R&D hourly
               rate in accordance with the Research & Development Agreement
               between the Parties dated July 20, 2001.

        (b)    Manufacturing Fees. The initial Manufacturing Fees to be paid by
               Connetics to DPT are listed in SCHEDULE C. The Parties agree that
               the Manufacturing Fees set out in SCHEDULE C shall be
               re-negotiated, in good faith, at the beginning of each calendar
               year. If the parties are unable to agree on a re-negotiated price
               at least thirty (30) days prior to the start of a new twelve (12)
               month period, then this Agreement, effective the first day of
               January of the new twelve (12) month period, shall continue in
               force with prices being adjusted to reflect the change in the
               Producer Price Index for the Pharmaceutical Sector ("PPI") during
               the preceding twelve (12) month period until such time as to when
               price negotiation can be completed. Prices for new Products or
               new Product sizes, not initially included in SCHEDULE C, shall be
               negotiated and DPT and Connetics shall arrive at a mutual
               agreement with respect to prices at the time said new Products or
               new Product sizes are added to SCHEDULE A. If a negotiated price
               cannot be agreed upon, final pricing for any of the above will be
               settled in accordance with SECTION 13.6(b).

        (c)    Materials Fees. The Materials Fee to be paid by Connetics to DPT
               shall be listed in SCHEDULE C within ninety (90) days of
               commencement of manufacturing of the initial commercial products
               of the applicable Product. The Materials Fee will be adjusted
               once annually at the beginning of each calendar year and SCHEDULE
               C shall be amended accordingly based on changes in DPT's standard
               costs for materials. In the event, however, the cost of a
               material increases or decreases during any Market Year greater
               than ten percent (10%), DPT may promptly upon the effective date
               of such increase or decrease adjust its invoice price for said
               material to Connetics to compensate for the increase or decrease.

3.11    PAYMENT

        (a)    Invoices. DPT shall submit to Connetics an invoice five (5) days
               after DPT's internal release of Product by DPT's quality
               department, or shipment of Product from DPT, whichever occurs
               first. Total invoice shall be equal to the quantity of Product
               released times the Total Price per unit, effective on the date of
               Product release. Connetics shall make payment of each invoice
               within thirty (30) days after receipt by Connetics. If within
               thirty (30) days after the delivery of Product and the
               accompanying Certificate of Analysis to Connetics, Connetics
               demonstrates non-

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               conformance under SECTION 3.9 and DPT agrees with such finding,
               Connetics shall not be obligated to pay for such non-conforming
               shipment.

3.12    LATE PAYMENT

        (a)    A late fee of one percent (1%) of total invoice can be added each
               month for late payments. DPT, at its sole discretion, has the
               right to discontinue Connetics' credit on future orders and to
               put a hold on any production or shipment of Product if Connetics'
               account is not current. Such hold on production or shipment shall
               not constitute a breach of this Agreement by DPT. In the event
               credit is discontinued, a one hundred percent (100%) material
               deposit paid by Connetics to DPT will be required prior to DPT
               ordering materials. In addition, a fifty percent (50%)
               Manufacturing Fee deposit will be required prior to DPT
               manufacturing any Product and the balance of the invoice must be
               paid in full prior to shipment.

        (b)    As collateral security for Connetics' payment obligations
               contained in this Agreement, Connetics grants to DPT a security
               interest in all Raw Materials and Components, including
               inventory, work-in-progress, and finished goods ordered or
               produced in connection with this Agreement. Chapter 9 of the
               Texas Uniform Commercial Code shall govern the rights and
               obligations of the Parties relative to the security interests
               granted herein.

3.13    DISPOSAL COSTS

        DPT reserves the right to invoice Connetics for all disposal costs,
        related to manufacture of the Products, unless the disposal relates to a
        Rejected Product causes by the failure of DPT to follow established
        written procedures.

                         IV - SHIPMENT AND RISK OF LOSS

4.1     SHIPMENT

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        Shipment of Product shall be in accordance with Connetics instructions,
        provided that shipment is made in accordance with all relevant statutory
        requirements. Product will be shipped to Connetics or its designee
        immediately upon release, freight collect. If Connetics requests DPT to
        make any miscellaneous small shipments of Product, material, or other
        items on Connetics' behalf, Connetics agrees to reimburse DPT for any
        shipping charges incurred.

4.2     DELIVERY TERMS

        The purchase price of Products in SCHEDULE C shall be F.O.B. DPT's plant
        of manufacture, San Antonio, Texas, freight collect. Connetics will bear
        all risk of loss, delay, or damage in transit, as well as cost of
        freight and insurance. Should the parties enter into a Distribution
        Agreement, transfer of title, as well as all risk of loss, shall occur
        upon release of the Product from quarantine.

4.3     CLAIMS

        The weights, tares and tests affixed by DPT's invoice shall govern
        unless established to be incorrect. Claims relating to quantity, weight
        and loss or damage to any Product sold under this Agreement shall be
        waived by Connetics unless made within thirty (30) days of receipt of
        Product by Connetics.

                            V - TERM AND TERMINATION

5.1     TERM

        This Agreement shall commence on the first day of the month following
        the mutual signing of this document and will continue until the
        expiration of the Tenth (10th) Market Year for each Product added to
        SCHEDULE A, unless sooner terminated pursuant to SECTION 5.2 below. This
        Agreement shall thereafter automatically renew for periods of 36 months,
        unless any Party shall give notice to the others to the contrary at
        least 12 months prior to the expiration of the initial term or any
        renewal term of the Agreement.

5.2     TERMINATION

        This Agreement may be terminated at any time upon the occurrence of
        either of the following events:

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        (a)    The failure of either Party to comply with its obligations in
               this Agreement, which failure is not remedied within sixty (60)
               days after written notice thereof.

        (b)    Notice by either Party to the other upon the insolvency or
               bankruptcy of the other Party.

5.3     PAYMENT ON TERMINATION

        In the event of the termination or cancellation of this Agreement for
        any reason, and without prejudice to any other rights and remedies
        available to DPT hereunder, Connetics agrees to reimburse DPT the
        Materials Fee for Raw Materials and Components ordered for the
        manufacture of Products based on Connetics' Forecasted Needs, as well as
        for work-in-process and finished Products.

5.4     SURVIVAL

        Termination of this Agreement under SECTION 5.2 or due to expiration or
        cancellation shall not relieve either party of obligations or liability
        for breaches of this Agreement incurred prior to or in connection with
        termination, expiration or cancellation. Articles VI, VII, IX, X, XI and
        XII of this Agreement shall survive the termination or cancellation of
        this Agreement for any reason.

5.5     EFFECT OF TERMINATION. Upon termination of this Agreement the following
        shall occur:

        (a)    DPT shall have no right to manufacture Product or use any of
               Connetics Confidential Information, and all rights, title or
               interest in, or other incidents of ownership under, Connetics
               Confidential Information, including the right to manufacture
               Product, shall automatically revert to Connetics. In the event
               any such termination relates solely to one or more Products, then
               this Agreement shall only be terminated to the extent it applies
               to such Product(s) and this Agreement shall remain in effect as
               it applies to all other Product(s);

        (b)    except as otherwise provided in this Agreement, expiration or
               termination of this Agreement shall not relieve the Parties of
               any obligation accruing prior to such expiration or termination;

        (c)    within 30 days following the expiration or termination of this
               Agreement, each Party shall return to the other Party, or
               destroy, upon the written request of the other Party, any and all
               Confidential Information of the other Party in its possession and
               upon a Party's

                                       16
<PAGE>

               request, such destruction (or delivery) shall be confirmed in
               writing to such Party by a responsible officer of the other
               Party, except for such Confidential Information which the
               receiving Party is required to keep under Applicable Laws, in
               which event such Confidential Information shall be held subject
               to the terms and conditions of Article XI.

5.5     REMEDIES

        All of the non-breaching Party's remedies shall be cumulative, and the
        exercise of one remedy by the non-defaulting Party shall not be deemed
        to be an election of remedies. These remedies shall include the
        non-breaching Party's right to sue for damages for such breach without
        terminating this Agreement.

            VI- CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE

6.1     CERTIFICATES OF ANALYSIS

        DPT shall test each lot of Product purchased pursuant to this Agreement
        before delivery to Connetics, in accordance with the Quality Agreement.

6.2     STABILITY TESTING

        DPT shall perform its standard stability test program as defined in
        DPT's SOP's and the Quality Agreement.

6.3     VALIDATION WORK OR ADDITIONAL TESTING

        It is understood by the Parties that the responsibility for any
        validation work shall be the sole responsibility of Connetics. The
        parties agree that for any validation work or additional testing in
        connection with the Product, DPT and Connetics shall enter into a
        specific written Project Protocol establishing methodology and pricing
        for such services. It is understood between the Parties that if DPT is
        required by regulatory authority to perform validation studies or
        additional testing in order to legitimately continue to engage in the
        manufacture of the Product for Connetics and DPT and Connetics cannot
        reach an agreement on a written Project Protocol, then DPT shall be
        under no obligation to continue the manufacture of the Product affected
        by said regulation.

6.4     FDA INSPECTION

                                       17
<PAGE>

        DPT shall advise Connetics if an authorized agent of the FDA or other
        governmental agency visits DPT's manufacturing facility and requests or
        requires information or changes which directly pertain to the Products.
        FDA audit time specific to Products will be billed to Connetics from DPT
        at the then-prevailing QA hourly rate. DPT agrees to provide Connetics
        with copies of any written observations made in connection with such
        inspections, and any written responses to those observations.

6.5     REGULATORY FILINGS

        Connetics agrees to provide DPT with copies of any sections of any
        Regulatory Filings applicable to the Products manufactured and/or tested
        by DPT, and copies of any changes in or updates of same as they, from
        time to time, hereafter occur.

                                       18
<PAGE>

                                VII - WARRANTIES

7.1     REPRESENTATIONS AND WARRANTIES.

        (a)    Subject to SECTIONS 7.2 and 7.3, DPT warrants that Product
               delivered to Connetics pursuant to this Agreement shall, at the
               time of release:

               (i)    have been manufactured, filled, packaged and stored in all
                      material respects in accordance with all applicable U.S.
                      laws, rules, regulations or requirements;

               (ii)   have been manufactured, filled, packaged and stored in
                      accordance with, and will conform to, the Product
                      Specifications or pursuant to exceptions approved by
                      Connetics at the time of manufacture and shipment;

               (iii)  be free from defects in material, manufacturing and
                      workmanship for the shelf life of the Product as set forth
                      in the Product Specifications; and

               (iv)   not be (as a result of the actions or omissions of DPT)
                      adulterated or misbranded within the meaning of the
                      Federal Food, Drug and Cosmetic Act (the "Act") as
                      amended, or within the meaning of any applicable state or
                      municipal law in which the definitions of adulteration and
                      misbranding are substantially the same as those contained
                      in the Act, as the Act and such laws are constituted and
                      effective at the time of delivery.

        (b)    Licensing. DPT represents and warrants that it has obtained and
               will maintain on a current basis and will comply with all
               licenses, permits and approvals of applicable governmental
               agencies as may be required to manufacture, test and store the
               Product pursuant to this Agreement and perform its other
               obligations under this Agreement. DPT shall be responsible for
               obtaining and maintaining licenses and permits for manufacture,
               testing and storage of the Product and ensuring that its
               facilities used in the manufacture of the Product meet cGMPs in
               all respects.

        (c)    Compliance with Laws. DPT represents and warrants that it shall
               comply in all material respects with all U.S. federal, state, and
               local laws, regulations and other requirements applicable to the
               manufacture, testing and storage of the Product and the
               performance of DPT's obligations under this Agreement. DPT shall

                                       19
<PAGE>

               have sole responsibility for adopting and enforcing safety
               procedures for the handling and manufacture of the Product at its
               facilities and the proper handling and proper disposal of waste
               relating to the Product.

7.2     COMPLIANCE WITH THE ACT

        Connetics shall bear sole responsibility for the validity of all test
        methods and appropriateness of all Specifications. In addition,
        Connetics shall bear sole responsibility for all regulatory approvals,
        filings, and registrations and adequacy of all validation, stability,
        and preservative efficacy studies. Connetics further warrants that it
        shall have obtained any and all necessary approvals from all applicable
        regulatory agencies necessary to manufacture and distribute all Products
        under this Agreement prior to their introduction into interstate
        commerce.

7.3     COMPLIANCE OF PACKAGING AND LABELING WITH LAWS AND REGULATIONS

        Connetics warrants that all Labeling copy and artwork approved,
        designated or supplied by Connetics shall be in compliance with all
        applicable laws and governmental regulations. Compliance with all
        federal, state, and local laws and regulations concerning Packaging and
        Labeling shall be the sole responsibility of Connetics, provided that
        DPT purchases such Packaging and Labeling as provided in SECTION 3.2(c)
        of this Agreement. Connetics hereby represents and warrants to DPT that
        all Connetics designated formulas, components and artwork related to the
        Product do not violate or infringe any patent, copyright or trademark
        laws, and agrees to indemnify DPT, its employees, officers, directors
        and representatives for any claim, loss or damage including reasonable
        attorney's fees paid or incurred by any of them in connection therewith.

7.4     ACCESS TO DPT'S FACILITIES

        Connetics shall have reasonable access to DPT's facilities for the
        purpose of observing manufacturing of Products under this Agreement.
        Connetics shall have access to DPT's facilities at a mutually agreeable
        time for the sole purpose of auditing DPT's compliance with current Good
        Manufacturing Practices and the Act. Such access shall in no way give
        Connetics the right to any of DPT's confidential or proprietary
        information. Further, audits shall normally be limited to every eighteen
        (18) months and three (3) employees of Connetics who are subject to the
        same requirements of confidentiality as Connetics.

                                       20
<PAGE>

7.5     LIMITATIONS; INDEMNIFICATION

        (a)    Limitations on Warranty. The warranty furnished in SECTION 7.1(b)
               shall not apply to defects caused by accident or willful damage,
               abuse, misuse, neglect, improper testing, handling, storage or
               use after delivery by DPT of the Product in question to
               Connetics.

        (b)    No Implied Representations; Warranties or Conditions. EXCEPT AS
               OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER DPT NOR
               Connetics MAKES ANY REPRESENTATIONS OR WARRANTIES AND THERE ARE
               NO CONDITIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH
               RESPECT TO PRODUCT SUPPLIED UNDER THIS AGREEMENT, INCLUDING,
               WITHOUT LIMITATION, ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS
               WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
               PURPOSE OF SUCH PRODUCT, OR ARISING FROM A COURSE OF DEALING OR
               USAGE OF TRADE PRACTICE.

        (c)    Limitation of Liability. EXCEPT FOR ANY LOSS, LIABILITY, DAMAGE
               OR OBLIGATION ARISING OUT OF OR RELATING TO THE DISCLOSURE OF
               CONFIDENTIAL INFORMATION PURSUANT TO ARTICLE 7 OR AS OTHERWISE
               EXPRESSLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
               PARTY HAVE ANY LIABILITY TO THE OTHER PARTY OR ANY OTHER THIRD
               PARTY FOR ANY LOST OPPORTUNITY, COSTS OF PROCUREMENT OF
               SUBSTITUTE GOODS OR SERVICES, OR FOR ANY SPECIAL, INDIRECT,
               INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF
               THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR THEORY OF LIABILITY
               (INCLUDING NEGLIGENCE), AND WHETHER OR NOT SUCH PARTY TO THIS
               AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
               THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
               ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

                                       21
<PAGE>

                             VIII - PRODUCT RECALLS

        If at any time or from time to time:

               (a)    the FDA or any other government authority requests,
                      directs, or orders a Party to recall or withdraw the
                      Product;

               (b)    a court of competent jurisdiction issues an order or
                      directive for the Product to be recalled or withdrawn; or

               (c)    a voluntary recall or withdrawal of the Product is
                      contemplated by either Party

        (individually or collectively, a "Recall"), then the Party to whom such
        request is made or the Party contemplating such Recall, as the case may
        be, shall immediately notify the other Party. Neither Party shall carry
        out a voluntary Recall in the Territory without the prior written
        approval of the other Party, which approval shall not be unreasonably
        withheld, conditioned or delayed. The Parties acknowledge and understand
        due to the immediacy of any recall situation, such approval should be
        given in 48 hours.

        In addition, the Parties shall take all appropriate corrective actions
        reasonably requested by the other Party hereto or by any government
        agency. In the event that such recall results from the breach of DPT's
        warranties under this Agreement, DPT shall be responsible for the
        expenses of the Recall, in any case not to exceed one hundred thousand
        dollars ($100,000.00) per Recall incident. In the event the Recall
        results from the breach of Connetics' warranties under this Agreement,
        Connetics shall be responsible for the expenses of the Recall. For the
        purposes of this Agreement, the expenses of the Recall shall be the
        expenses of notification and destruction or return of the recalled
        Product, as well as any reasonable out-of-pocket costs incurred by DPT
        and Connetics in connection with any corrective action taken by DPT and
        Connetics.

                               IX - FORCE MAJEURE

        Failure of either party to perform its obligations under this Agreement
        shall not subject such party to any liability to the other if such
        failure is caused by acts such as, but not limited to, acts of God,
        fires, explosion, flood, drought, war, riot, sabotage, embargo, strikes,
        compliance with any court order or regulation of any government entity
        acting with color of right or by any other cause beyond the reasonable
        control of the parties, whether or not foreseeable.

                                       22
<PAGE>

                       X - CHANGES TO PROCESS OR PRODUCT

10.1    CHANGES BY CONNETICS

        If Connetics at any time requests a change to Product and DPT agrees
        such change is reasonable with regard to Product manufacture; (i) such
        change shall be incorporated within the Master Batch Record and/or
        Specifications via a written PCR reviewed and agreed upon by both DPT
        and Connetics; (ii) The parties shall adjust the price of Product, if
        necessary, and SCHEDULE A shall be amended accordingly; and (iii)
        Connetics shall pay DPT for the costs associated with such change
        including, but not limited to, any additional development or validation
        work required, charged at DPT's then-prevailing R&D rates in accordance
        with Article XII contained in this Agreement.

10.2    CHANGES BY DPT

        DPT agrees that any changes developed by DPT which may be incorporated
        into the Product shall require the written approval of Connetics via a
        PCR prior to implementation of the change. At the time of such
        incorporation, such changes shall become part of the Specifications. No
        such change may be instituted except in compliance with this Agreement
        and the Quality Agreement. It is also agreed that any regulatory filings
        incident to any such change shall be the sole responsibility of
        Connetics. Connetics shall have the option of obtaining, or having DPT
        obtain, any required FDA approval or other regulatory approval prior to
        implementation of such a change.

10.3    CHANGES BY REGULATORY AUTHORITIES

        The parties agree that any changes required by regulatory authority,
        shall be incorporated into the Product as evidenced by the written
        approval of Connetics via a PCR prior to such incorporation. At the time
        of such incorporation, such changes shall become part of the
        Specifications. If DPT is required by regulatory authority to perform
        validation studies for purposes of validating new manufacturing process
        or cleaning procedures or new material and finished Product assay
        procedures with respect to Product in order to continue to engage in the
        manufacture of said Product for Connetics, such studies shall be
        conducted in accordance with SECTION 6.3 in this Agreement. Any costs to
        DPT resulting from the operation of this Section shall be reimbursed by
        Connetics.

                                       23
<PAGE>

10.4    OBSOLETE INVENTORY

        Any Connetics-specific inventory including, but not limited to,
        materials, work-in-process, and Products rendered obsolete as a result
        of formula, artwork or packaging changes requested by Connetics or by
        changes required by regulatory authority shall be reimbursed to DPT by
        Connetics at DPT's Materials Fee. At such time and unless otherwise
        agreed by DPT, DPT will ship the obsolete inventory to Connetics for
        destruction by Connetics. Connetics shall bear one hundred percent
        (100%) of all shipping and destruction costs related to said obsolete
        inventory. The destruction shall be in accordance with all applicable
        laws and regulations and Connetics shall indemnify DPT for any
        liability, costs or expenses, including attorney's fees and court costs,
        relating to Connetics' failure to dispose of such inventory in
        accordance with such laws and regulations. Connetics shall also provide
        DPT with all manifests and other applicable evidence of proper
        destruction as may be requested by DPT or required by applicable law. If
        DPT does not receive disposition instructions from Connetics within
        ninety (90) days from date of obsolescence, obsolete inventory remaining
        at DPT's facilities shall be subject to storage fees.

           XI - CONFIDENTIAL INFORMATION: INTELLECTUAL PROPERTY RIGHTS

11.1    CONFIDENTIAL INFORMATION

        The Confidentiality and Material Transfer Agreement between DPT and
        Connetics dated April 12, 2001 is hereby incorporated in its entirety by
        this reference, and shall remain in effect until the later of (a)
        expiration according to its terms, or (b) five years following the
        expiration or termination of this Agreement. The terms of the
        Confidentiality and Material Transfer Agreement shall be deemed amended
        to the extent necessary to cover Products under this Agreement. For
        convenient reference, a copy of the Confidentiality Agreement is
        attached as SCHEDULE D.

11.2    TRADEMARKS AND TRADE NAMES

        (a)    Each Party hereby acknowledges that it does not have, and shall
               not acquire, any interest in any of the other Party's trademarks
               or trade names unless otherwise expressly agreed.

        (b)    Each Party agrees not to use any trade names or trademarks of the
               other Party, except as specifically authorized by the other Party
               in writing both as to the names or marks which may be used and as
               to the manner and prominence of use.

                                       24
<PAGE>

                              XII - INDEMNIFICATION

12.1    INDEMNIFICATION BY DPT

        Subject to SECTION 7.6 above, DPT will indemnify and hold Connetics
        harmless against any and all liability, damage, loss, cost, or expense
        (including reasonable attorney's fees) resulting from any third party
        claims made or suits brought against Connetics which arise from DPT's
        breach of its warranties set forth in Article VII of this Agreement,
        provided such sum does not exceed available insurance coverage.

12.2    INDEMNIFICATION BY CONNETICS

        Connetics will indemnify and hold DPT harmless against any and all
        liability, damage, loss, cost or expense (including reasonable
        attorney's fees) resulting from any third party claims made or suits
        brought against DPT which are related to the breach of any of Connetics'
        warranties provided for in this Agreement or which arise out of the
        promotion, distribution, use, testing or sales of Products, including,
        without limitation, any claims, express, implied or statutory, made as
        to the efficacy, safety, or use to be made of Products, and claims made
        by reason of any Product Labeling or any Packaging containing Product
        (provided such packaging and Labeling was purchased by DPT as provided
        in SECTION 3.2(c) of this Agreement), unless such liability, damage,
        loss or expense is caused by the breach of DPT's warranties under
        Article VII of this Agreement.

12.3    PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS

        (a)    Connetics further warrants that use of Products or sales of
               Products will not infringe any patent or other proprietary rights
               and that Connetics will indemnify, defend and hold DPT harmless
               from any damage, judgment, loss, cost or other reasonable expense
               (including reasonable attorney's fees) arising from claims that
               Products or the use of the Product names and any other
               trademarks, trade names, or trade dress used by Connetics in
               connection with Products infringes patent or other proprietary
               rights of a third party.

        (b)    DPT shall indemnify and hold Connetics harmless from all costs,
               damages and expense (including reasonable attorney's fees)
               arising out of any suit or action brought against Connetics based
               upon a claim that any process or technical data furnished or
               utilized by DPT infringes any patent or other proprietary rights.

                                       25
<PAGE>

12.4    CONDITIONS OF INDEMNIFICATION

        If either Party expects to seek indemnification from the other under
        SECTIONS 12.1, 12.2, or 12.3 of this Agreement, it shall promptly give
        notice to the other party of any such claim or suit threatened, made or
        filed against it which forms the basis for such claim of indemnification
        and shall cooperate fully with the other party in the defense of all
        such claims or suits. No settlement or compromise shall be binding on a
        party hereto without its prior written consent.

12.5    EVIDENCE OF LIABILITY INSURANCE

        It is further agreed that each Party shall furnish to the other evidence
        of products and contractual liability insurance coverage affording not
        less than [*] each occurrence combined single limit, bodily
        injury/property damage and [*] aggregate liability limits. Each insurer
        shall name the other as an additional insured. Such evidence of
        insurance coverage can be in the form of the original policy or
        Certificate of Insurance which shall provide that the insurer has
        assumed the liability as provided for in this Agreement. In addition,
        such insurers shall warrant that such insurance will not be changed or
        canceled without at least thirty (30) days prior written notice to the
        respective indemnities.

                            XIII - GENERAL PROVISIONS

13.1    NOTICES

        Any notices permitted or required by this Agreement shall be sent by
        certified or registered mail with a copy by fax and shall be effective
        the earlier of the date received or three (3) days after deposit in the
        U.S. mail, if sent and addressed as follows or to such other address as
        may be designated by either party in writing:

        If to DPT:             DPT Laboratories, Ltd.
                               Attention: President
                               P.O. Box 1659
                               San Antonio, Texas 78296
                               Fax: (210) 227-6132
                               with a copy to the General Counsel's Office

        If to Connetics:       Connetics Corporation
                               Attention: President
                               3290 West Bayshore Road
                               Palo Alto, California 94303

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

                                       26
<PAGE>

13.2    ENTIRE AGREEMENT; AMENDMENT

        The Parties acknowledge that this document sets forth the entire
        agreement and understanding of the parties and supersedes all prior
        written or oral agreements or understandings with respect to the subject
        matter of this Agreement, and shall supersede any conflicting portions
        of DPT's quotation, acknowledgment and invoice forms and Connetics'
        Purchase Order and other written forms. No modification of any of the
        terms of this Agreement, or any amendments thereto, shall be deemed to
        be valid unless in writing and signed by the party against whom
        enforcement is sought. No course of dealing or usage of trade shall be
        used to modify the terms and conditions in this Agreement. Nothing in
        this Agreement is intended to alter the status of the Research &
        Development Services Agreement or the Confidentiality and Material
        Transfer Agreement already in effect between the parties.

13.3    WAIVER

        No waiver by either party of any default shall be effective unless in
        writing, nor shall any such waiver operate as a waiver of any other
        default or of the same default on a future occasion.

13.4    OBLIGATIONS TO THIRD PARTIES

        Each party warrants and represents that proceeding in this Agreement is
        not inconsistent with any contractual obligations, express or implied,
        undertaken with any third party.

13.5    ASSIGNMENT

        This Agreement shall be binding upon and inure to the benefit of the
        successors or permitted assigns of each of the parties and may not be
        assigned or transferred by either party without the prior written
        consent of the other, which consent will not be unreasonably withheld,
        except that such consent shall not be required in connection with a
        merger or acquisition of a substantial portion of the assets of either
        party by a third party and provided that the successor or assignee
        assumes all obligations imposed in this Agreement. Any assignments,
        including but not limited to, sale, transfer, or license of brand or
        Products, shall not release the original party hereto from their duties
        and obligations under this Agreement.

                                       27
<PAGE>

13.6    GOVERNING LAW AND DISPUTE RESOLUTION

        (a)    Governing Law

               The validity, interpretation and effect of this Agreement shall
               be governed by and construed under the laws of the State of
               Texas, U.S.A.

        (b)    Mediation

               The Parties agree to attempt to settle any disputes that arise in
               connection with this Agreement through good faith non-binding
               mediation efforts. The Parties agree that any dispute that arises
               in connection with this Agreement which is not settled through
               good faith mediation efforts and which does not involve a claim
               for equitable relief shall be settled by arbitration according to
               the provisions of SECTION 13.6(c) below.

        (c)    Arbitration

               (i)    Any dispute, claim or controversy arising from or related
                      in any way to this Agreement or the interpretation,
                      application, breach, termination or validity of this
                      Agreement, including any claim of inducement of this
                      Agreement by fraud or otherwise, which is not resolved by
                      good faith mediation efforts, will be submitted for
                      resolution to arbitration pursuant to the commercial
                      arbitration rules then pertaining of the Center for Public
                      Resources ("CPR"), except where those rules conflict with
                      these provisions, in which case these provisions control.
                      Such arbitration shall be held in (A) Santa Clara County,
                      California, if the demand for arbitration is initiated by
                      DPT or (B) Bexar County, Texas, if the demand for
                      arbitration is initiated by Connetics.

               (ii)   A single arbitrator shall be chosen from the CPR Panels of
                      Distinguished Neutrals and shall be a lawyer specializing
                      in business litigation with at least 15 years experience
                      with a law firm of over 25 lawyers or who was a judge of a
                      court of general jurisdiction.

               (iii)  The parties agree to cooperate (A) to obtain selection of
                      the arbitrator within 30 days of initiation of the
                      arbitration, (B) to meet with the arbitrator within 30
                      days of selection and (C) to agree at that meeting or
                      before upon procedures for discovery and as to the conduct
                      of the hearing which will result in the hearing being
                      concluded within no more than 9 months after selection of
                      the arbitrator and in the award being rendered

                                       28
<PAGE>

                      within 60 days of the conclusion of the hearings, or of
                      any post-hearing briefing, which briefing will be
                      completed by both sides within 20 days after the
                      conclusion of the hearings. In the event no such agreement
                      is reached, the CPR will select the arbitrator, allowing
                      appropriate strikes for reasons of conflict or other cause
                      and three peremptory challenges for each side. The
                      arbitrator shall set a date for the hearing, commit to the
                      rendering of the award within 60 days of the conclusion of
                      the evidence at the hearing, or of any post-hearing
                      briefing (which briefing will be completed by both sides
                      in no more than 20 days after the conclusion of the
                      hearings), and provide for discovery according to these
                      time limits, giving recognition to the understanding of
                      the Parties that they contemplate reasonable discovery,
                      including document demands and depositions, but that such
                      discovery be limited so that the time limits specified in
                      this Agreement may be met without undue difficulty. In no
                      event will the arbitrator allow either side to obtain more
                      than a total of 40 hours of deposition testimony from all
                      witnesses, including both fact and expert witnesses. In
                      the event multiple hearing days are required, they will be
                      scheduled consecutively to the greatest extent possible.

               (iv)   The arbitrator shall render an opinion setting forth
                      findings of fact and conclusions of law with the reasons
                      therefor stated. A transcript of the evidence adduced at
                      the hearing shall be made and shall, upon request, be made
                      available to either Party.

               (v)    To the extent possible, the arbitration hearings and award
                      will be maintained in confidence.

               (vi)   Any court of competent jurisdiction may enter judgment
                      upon any award.

               (vii)  Each party has the right before or during the arbitration
                      to seek and obtain from the appropriate court provisional
                      remedies such as attachment, preliminary injunction,
                      replevin, etc. to avoid irreparable harm, maintain the
                      status quo, or preserve the subject matter of the
                      arbitration.

               (viii) EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO TRIAL OF
                      ANY ISSUE BY JURY.

               (ix)   The decision of the arbitrator shall be final and binding
                      upon all Parties and their respective successors and
                      assigns.

                                       29
<PAGE>

        (d)    Costs

               The costs of mediation and/or arbitration, including reasonable
               attorneys' fees, shall be borne by the losing Party, as allocated
               by the arbitration award.

13.7    SEVERABILITY

        In the event that any term or provision of this Agreement shall violate
        any applicable statute, ordinance, or rule of law in any jurisdiction in
        which it is used, or otherwise be unenforceable, such provision shall be
        ineffective to the extent of such violation without invalidating any
        other provision of this Agreement.

13.8    HEADINGS, INTERPRETATION

        The headings used in this Agreement are for convenience only and are not
        a part of this Agreement.

13.9    NO HIRING

        During the term of this Agreement, neither Party shall take any
        affirmative action to hire away any employees of the other Party.

13.10  INDEPENDENT CONTRACTOR

        In performing its services under this Agreement, DPT shall act as an
        independent contractor.

13.11   COUNTERPARTS

        This Agreement may be executed in counterparts, each of which shall be
        deemed an original, but all of which together shall constitute one and
        the same original.

                                       30
<PAGE>

        IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
executed by their duly authorized officers as of the date first above written.

CONNETICS                                      DPT LABORATORIES, LTD.

                                               By:  DFB PHARMACEUTICALS, INC.
                                                    Sole General Partner

By: /s/ THOMAS WIGGINS                         By:  /s/
   --------------------------------               ------------------------------

Its: President/CFO                             Its: President
    -------------------------------                -----------------------------

                               INDEX TO SCHEDULES

SCHEDULE A      PRODUCTS
SCHEDULE B      QUALITY AGREEMENT
SCHEDULE C      MANUFACTURING FEES
SCHEDULE D      CONFIDENTIALITY AND MATERIAL TRANSFER AGREEMENT BETWEEN
                DPT AND CONNETICS DATED APRIL 12, 2001

                                     31
<PAGE>

                                   SCHEDULE A
                                    PRODUCTS

                                      [*]

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

                                       32
<PAGE>

                                   SCHEDULE B
                                QUALITY AGREEMENT

                                      [*]

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

                                       33
<PAGE>

                                   SCHEDULE C
                               MANUFACTURING FEES

                                      [*]

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

                                       34
<PAGE>

                                   SCHEDULE D
                 CONFIDENTIALITY AND MATERIAL TRANSFER AGREEMENT
                 BETWEEN DPT AND CONNETICS DATED APRIL 12, 2001

                                      [*]

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

                                       35<PAGE>
                                                                   EXHIBIT 10.11

                          COHESION TECHNOLOGIES, INC.

                                    RESTATED

                             1998 STOCK OPTION PLAN

          (ORIGINALLY ADOPTED APRIL 30, 1998; AMENDED OCTOBER 14, 1999
                             AND OCTOBER 27, 2000)

         1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.

               Options granted hereunder may be either Incentive Stock Options
(as defined under Section 422 of the Code) or Nonstatutory Stock Options, at the
discretion of the Board and as reflected in the terms of the written option
agreement.

        2. DEFINITIONS. As used herein, the following definitions shall apply:

               (a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

               (b) "Applicable Laws" shall have the meaning set forth in Section
4(b) below.

               (c) "Board" shall mean the Board of Directors of the Company.

               (d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

               (e) "Committee" shall mean the Committee appointed by the Board
of Directors in accordance with Section 4(b) of the Plan, if one is appointed.

               (f) "Common Stock" shall mean the Common Stock of the Company.

               (g) "Company" shall mean Cohesion Technologies, Inc., a Delaware
corporation.

               (h) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

               (i) "Continuous Status as an Employee or Consultant" shall mean
the absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute. For purposes of this Plan, a change
in status from an Employee

<PAGE>

to a Consultant or from a Consultant to an Employee will not constitute a
termination of employment.

               (j) "Director" shall mean a member of the Board.

               (k) "Employee" shall mean any person (including any Named
Executive, Officer or Director) employed by the Company or any Parent or
Subsidiary of the Company. The payment by the Company of a director's fee to a
Director shall not be sufficient to constitute "employment" of such Director by
the Company.

               (l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               (m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                      (i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system on the date of determination (if
for a given day no sales were reported, the closing bid on that day shall be
used), as such price is reported in The Wall Street Journal or such other source
as the Administrator deems reliable;

                      (ii) If the Common Stock is quoted on the Nasdaq System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock or;

                      (iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

               (n) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable written option agreement.

               (o) "Named Executive" shall mean any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the four highest compensated officers
of the Company (other than the chief executive officer). Such officer status
shall be determined pursuant to the executive compensation disclosure rules
under the Exchange Act and shall apply only after the date upon which the
Company becomes subject to the Exchange Act.

               (p) "Nonstatutory Stock Option" shall mean an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

<PAGE>

               (q) "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

               (r) "Option" shall mean a stock option granted pursuant to the
Plan.

               (s) "Optioned Stock" shall mean the Common Stock subject to an
Option.

               (t) "Optionee" shall mean an Employee or Consultant who receives
an Option.

               (u) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

               (v) "Plan" shall mean this 1998 Stock Option Plan.

               (w) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to time, or any successor
provision.

               (x) "Share" shall mean a share of the Common Stock, as adjusted
in accordance with Section 14 of the Plan.

               (y) "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.

        3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 3,007,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

        If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares that were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall not
become available for future grant under the Plan.

        4. ADMINISTRATION OF THE PLAN.

               (a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.

               (b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT .

                      (i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, and by the legal requirements relating to the administration of incentive
stock option plans, if any, of

<PAGE>

applicable securities laws and the Code (collectively, the "Applicable Laws"),
grants under the Plan may (but need not) be made by different administrative
bodies with respect to Directors, Officers who are not directors and Employees
who are neither Directors nor Officers.

                      (ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Options to Employees or Consultants who are
also Officers or Directors of the Company, grants under the Plan shall be made
by (A) the Board, if the Board may make grants under the Plan in compliance with
Rule 16b-3 and Section 162(m) of the Code as it applies so as to qualify grants
of Options to Named Executives as performance-based compensation, or (B) a
Committee designated by the Board to make grants under the Plan, which Committee
shall be constituted in such a manner as to permit grants under the Plan to
comply with Rule 16b-3, to qualify grants of Options to Named Executives as
performance-based compensation under Section 162(m) of the Code and otherwise so
as to satisfy the Applicable Laws.

                      (iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to grants of Options to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.

                      (iv) GENERAL. If a Committee has been appointed pursuant
to subsection (ii) or (iii) of this Section 4(b), such Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.

               (c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

                      (i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(m) of the Plan;

                      (ii) to select the Employees and Consultants to whom
Options may from time to time be granted hereunder;

                      (iii) to determine whether and to what extent Options are
granted hereunder;

                      (iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;

<PAGE>

                      (v) to approve forms of agreement for use under the Plan;

                      (vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall determine, in its sole
discretion);

                      (vii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted.

               (d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

        5. ELIGIBILITY.

               (a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options may be
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option may,
if he or she is otherwise eligible, be granted an additional Option or Options.

               (b) TYPE OF OPTION. Each Option shall be designated in the
written option agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.

               (c) NO EMPLOYMENT RIGHTS. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.

        6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 20 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 16 of the Plan.

        7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee

<PAGE>

who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement.

        8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 250,000. This Section 8 shall not apply prior to the date upon which
the Company becomes subject to the Exchange Act and following such date, shall
not apply until the (i) earliest of: (A) the first material modification of the
Plan (including any increase to the number of shares reserved for issuance under
the Plan in accordance with Section 3); (B) the issuance of all of the shares of
common stock reserved for issuance under the Plan; (C) the expiration of the
Plan; or (D) the first meeting of shareholders at which directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which occurred the first registration of any equity security
under Section 12 of the Exchange Act; or (ii) such other date required by
Section 162(m) of the Code and the rules and regulations promulgated thereunder.

        9. OPTION EXERCISE PRICE AND CONSIDERATION.

               (a) EXERCISE PRICE. The per Share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:

                      (i) In the case of an Incentive Stock Option

                             (A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant; or

                             (B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                      (ii) In the case of a Nonstatutory Stock Option

                             (A) granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant;

                             (B) granted to a person who, at the time of the
grant of such Option, is a Named Executive of the Company, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on the date
of grant; or

<PAGE>

                             (C) granted to any person other than a Named
Executive, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant.

                      (iii) Notwithstanding anything to the contrary in
subsections 9(a)(i) or 9(a)(ii) above, in the case of an Option granted on or
after the effective date of registration of any class of equity security of the
Company pursuant to Section 12 of the Exchange Act and prior to six months after
the termination of such registration, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

               (b) PERMISSIBLE CONSIDERATION. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash, (2) check, (3) other Shares that (x) in the case
of Shares acquired upon exercise of an Option either have been owned by the
Optionee for more than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (4) authorization from the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (5) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the exercise price, (6) a
combination of any of the foregoing methods of payment, (7) a combination of any
of the foregoing methods of payment at least equal in value to the stated
capital represented by the Shares to be issued, plus a promissory note for the
balance of the exercise price, or (8) such other consideration and method of
payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

        10. EXERCISE OF OPTION.

               (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan. Until the date upon which the Company becomes subject to the
Exchange Act, each such Option shall become exercisable at the rate of at least
twenty percent (20%) per year over five (5) years from the date the Option is
granted. In the event that any of the Shares issued upon exercise of any Option
should be subject to a right of repurchase in the Company's favor, such
repurchase right shall lapse at the rate of at least twenty percent (20%) per
year over five (5) years from the date the Option is granted. Notwithstanding
the above, in the case of an option granted to an officer, director or
Consultant of the Company or any Parent or Subsidiary of the Company, the option
may become fully exercisable, or a repurchase right, if any, in favor of the
Company shall lapse, at any time or during any period established by the
Administrator.

<PAGE>

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

               (b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within three (3) months (or such other
period of time, not exceeding six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of such termination, or if the
optionee does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

               (c) DISABILITY OF OPTIONEE. Notwithstanding Section 10(b) above,
in the event of termination of an Optionee's Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) from the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such
termination. To the extent that he or she was not entitled to exercise the
Option at the date of termination, or if he does not exercise such Option (which
he was entitled to exercise) within the time specified herein, the Option shall
terminate.

               (d) DEATH OF OPTIONEE. In the event of the death of an Optionee:

<PAGE>

                      (i) during the term of the Option who is at the time of
his death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding twelve (12) months, as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that had accrued at the date of termination;
or

                      (ii) within three (3) months after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.

               (e) EXTENSION OF EXERCISE PERIOD. The Administrator shall have
full power and authority to extend the period of time for which an option is to
remain exercisable following termination of an Optionee's Continuous Status as
an Employee or Consultant from the periods set forth in Sections 10(b), 10(c)
and 10(d) above or in the Option Agreement to such greater time as the Board
shall deem appropriate, provided, that in no event shall such option be
exercisable later than the date of expiration of the term of such Option as set
forth in the Option Agreement.

               (f) TERMINATION FOR MISCONDUCT. Notwithstanding Sections 10(b),
(c), (d) and (e) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant for Misconduct, all outstanding Options held
by the Optionee shall terminate immediately and cease to be outstanding. For
purposes of this Section 10(f), Misconduct shall mean the commission of any act
of fraud, embezzlement or dishonesty by the Optionee, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Company or any Parent or Subsidiary, or any other intentional misconduct by such
person adversely affecting the business or affairs of the Company or any Parent
or Subsidiary in a material manner.

               (g) RULE 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

        11. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.

<PAGE>

        12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, or (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than the applicable taxes on the ordinary income
recognized, or (d) by electing to have the Company withhold from the Shares to
be issued upon exercise of the Option that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").

               Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3.

               All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

               (a) the election must be made on or prior to the applicable Tax
Date;

               (b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made; and

               (c) all elections shall be subject to the consent or disapproval
of the Administrator.

               In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

        13. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a beneficiary
by an Optionee will not constitute a transfer. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or a transferee
permitted by this Section 13.

<PAGE>

        14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

               (a) ADJUSTMENT. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, the maximum number of shares of Common Stock for which Options may
be granted to any employee under Section 8 of the Plan, and the price per share
of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.

               (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company other than in an Acquisition (as defined below), then
each outstanding Option shall be terminated if not exercised prior to such
event, unless such outstanding Options are assumed by a subsequent purchaser.

               (c) CHANGE IN CONTROL.

                      (i) For the purposes of this Section 14, "Acquisition"
shall mean (1) any consolidation or merger of the Company with or into any other
corporation or other entity or person in which the stockholders of the Company
prior to such consolidation or merger own less than fifty percent (50%) of the
Company's voting power immediately after such consolidation or merger, excluding
any consolidation or merger effected exclusively to change the domicile of the
Company; or (2) a sale of all or substantially all of the assets of the Company.

                      (ii) In the event the Company undergoes an Acquisition,
any surviving corporation or entity or acquiring corporation or entity, or
affiliate of such corporation or entity may assume any Options outstanding under
the Plan or substitute similar options (including an option to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 14(c)) for those outstanding under the Plan.

                      (iii) In the event any surviving corporation or acquiring
corporation in an Acquisition refuses to assume such Options or to substitute
similar options for those outstanding under the Plan, then with respect to (1)
Options held by Optionees whose Continuous Status as an Employee or Consultant
has not terminated prior to such event, the vesting of such Options (and, if
applicable, the time during which such Options may be

<PAGE>

exercised) shall be accelerated and made fully exercisable at least thirty (30)
days prior to the closing of the Acquisition (and the Options terminated if not
exercised prior to the closing of such Acquisition); and (2) any other Options
outstanding under the Plan, such Options shall be terminated if not exercised
prior to the closing of the Acquisition.

                      (iv) In the event the Company undergoes an Acquisition and
the surviving corporation or entity or acquiring corporation or entity does
assume such Options (or substitutes similar options for those outstanding under
the Plan), then, with respect to Options held by persons then performing
services as Employees or Consultants, the vesting of each such Option (and, if
applicable, the time during which such Options may be exercised) shall be
accelerated and such Options shall become fully vested and exercisable, if any
of the following events occurs within twelve (12) months after the effective
date of the Acquisition: (1) the service to the Company or an affiliate of the
Company by such Optionee is terminated without Cause (as defined below); (2) the
Optionee holding such Option terminates his or her service to the Company or an
affiliate of the Company due to the fact that the principal place of the
performance of the responsibilities and duties of the Optionee is changed to a
location more than fifty (50) miles from such Optionee's existing work location
without the Optionee's express consent; or (3) the Optionee terminates his or
her service to the Company or affiliate of the Company due to the fact that
there is a material reduction in such Optionee's responsibilities and duties
without the Optionee's express consent.

                      (v) For the purposes of this subsection 14(c), "Cause"
means an individual's misconduct, including but not limited to: (1) conviction
of any felony or any crime involving moral turpitude or dishonesty, (2)
participation in a fraud or act of dishonesty against the Company, (3) conduct
that, based upon a good faith and reasonable factual investigation and
determination by the Board, demonstrates gross unfitness to serve, or (4)
intentional, material violation of any contract with the Company or any
statutory duty to the Company that is not corrected within thirty (30) days
after written notice thereof. Physical or mental disability shall not constitute
"Cause."

        15. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator;
provided however that in the case of any Incentive Stock Option, the grant date
shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

        16. AMENDMENT AND TERMINATION OF THE PLAN.

               (a) AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the stockholders of the Company in the manner described in Section 20 of the
Plan:

<PAGE>

                      (i) any increase in the number of Shares subject to the
Plan, other than an adjustment under Section 14 of the Plan;

                      (ii) any change in the designation of the class of persons
eligible to be granted Options; or

                      (iii) any change in the limitation on grants to employees
as described in Section 8 of the Plan or other changes which would require
stockholder approval to qualify options granted hereunder as performance-based
compensation under Section 162(m) of the Code.

               (b) STOCKHOLDER APPROVAL. If any amendment requiring stockholder
approval under Section 16(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such stockholder approval shall be solicited as described
in Section 20 of the Plan.

               (c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

        17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

               As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

        18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

        19. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

<PAGE>

        20. STOCKHOLDER APPROVAL.

               (a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such stockholder approval shall be obtained in the manner
and to the degree required under applicable federal and state law and the rules
of any stock exchange upon which the Shares are listed.

               (b) In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.

               (c) If any required approval by the stockholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than in
the manner described in Section 20(b) hereof, then the Company shall, at or
prior to the first annual meeting of stockholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:

                      (i) furnish in writing to the holders entitled to vote for
the Plan substantially the same information that would be required (if proxies
to be voted with respect to approval or disapproval of the Plan or amendment
were then being solicited) by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished; and

                      (ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to stockholders.

        21. INFORMATION AND DOCUMENTS TO OPTIONEES. The Company shall provide
financial statements at least annually to each Optionee during the period such
Optionee has one or more Options outstanding, and in the case of an individual
who acquired Shares pursuant to the Plan, during the period such individual owns
such Shares. The Company shall not be required to provide such information if
the issuance of Options under the Plan is limited to key employees whose duties
in connection with the Company assure their access to equivalent information. In
addition, at the time of issuance of any securities under the Plan, the Company
shall provide to the Optionee a copy of the Plan and a copy of any agreement(s)
pursuant to which securities granted under the Plan are issued.

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