Document:

<PAGE>

                                                                    EXHIBIT 10.1

                 AMENDMENT TO FACILITIES CONTRIBUTION AGREEMENT

THIS AMENDMENT TO FACILITIES CONTRIBUTION AGREEMENT ("AMENDMENT") is entered
into and made effective as of August 18, 2004 ("AMENDMENT EFFECTIVE DATE") by
and between DPT Laboratories, Ltd.. ("DPT") and Connetics Corporation
("CONNETICS"). Unless otherwise indicated, a capitalized term within this
Amendment shall have the same meaning as the same capitalized term within the
Facilities Agreement (defined below).

                                   BACKGROUND

A     DPT and Connetics are parties to a Confidentiality and Material Transfer
      Agreement, dated April 12, 2001; a Research & Development Services
      Agreement dated July 20, 2001; a Quality and Technical Agreement, dated
      March 7, 2002; an Amended and Restated Manufacturing and Supply Agreement
      dated August 18, 2004; and a Facilities Contribution Agreement dated
      November 1, 2001 (the "FACILITIES AGREEMENT").

B.    The Facilities Agreement relates to Connetics' contribution of capital
      used to construct an aerosol filling/packaging operation on DPT's leased
      distribution facilities, and DPT's manufacture and filling of Connetics'
      aerosol products.

C.    Connetics desires to make improvements to the aerosol filling/packaging
      operation as well as add new equipment at DPT's facility in connection
      with the manufacture of a new drug product. Connetics will contribute
      capital for the improvements and additions as further set forth in this
      Amendment.

D.    The Parties desire to amend the Facilities Agreement to encompass the
      matters set forth in this Amendment.

NOW, THEREFORE, in consideration of the above premises and the mutual covenants
set forth below, DPT and Connetics agree as follows:

                                    AGREEMENT

1.    A new section is hereby added to the Facilities Agreement as SECTION 2.4
      as follows.

      2.4.  CONNETICS' IMPROVEMENTS AND ADDITIONS CONTRIBUTIONS. Connetics
      agrees to pay the costs associated with construction of certain
      improvements to the aerosol filling/packaging operation and the purchase
      of production scale equipment used in the operation ("2004 IMPROVEMENTS"),
      currently estimated at [**], and to pay for the purchase of new production
      and laboratory scale equipment for use in the production of a new drug
      product ("ADDITIONS"), currently estimated at [**], subject to all of the
      terms, covenants and conditions set forth in this Agreement, provided that
      references to the Architect and General Contractor in the

---------------
** 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.
<PAGE>

            Facilities Agreement shall not be applicable to the 2004
            Improvements or the Additions. The construction of the 2004
            Improvements and adding of the Additions are collectively referred
            to as the "IMPROVEMENTS AND ADDITIONS PROJECT." Connetics' cash
            contributions and contribution of new Equipment are collectively
            referred to as "ADDITIONAL CONTRIBUTIONS." The Additional
            Contributions shall be used to purchase, install, and qualify
            equipment as specified in EXHIBIT D.

The remaining provisions of ARTICLE 2 (SECTIONS 2.1 - 2.3) shall remain the same
and continue in full force and effect.

2.    The Designated Representatives in SECTION 3.7 are hereby updated as
      follows:

      3.7.(a) Connetics' Representative. [**].

      3.7.(b) DPT's Representative. [**].

3.    A new section is hereby added to the Facilities Agreement as SECTION 3.8
      as follows.

      3.8.  TIMING OF IMPROVEMENTS AND ADDITIONS PROJECT. DPT shall use its
      commercially reasonable efforts to complete the Improvements and Additions
      Project promptly, diligently and within the applicable time periods set
      forth in the Estimated Construction Schedule attached hereto as EXHIBIT
      B-1 and incorporated by this reference, as such schedule may be modified
      from time to time, subject to the effects of any delays beyond the
      Parties' reasonable control.

The remaining provisions of ARTICLE 3 (SECTIONS 3.1 - 3.6, and 3.7 as modified
above) shall remain the same and continue in full force and effect.

4.    SECTION 5.2 (b) of the Facilities Agreement is hereby deleted and replaced
with the following.

      5.2.(b) DPT shall be entitled to use the Assets and Additions to
      manufacture cosmetic, over-the-counter and non-dermatological prescription
      drug products for its affiliates or third parties without obtaining
      Connetics' prior written consent, provided that the use does not interfere
      with Connetics' capacity requirements and DPT pays to Connetics [**]. If
      DPT elects to pursue development work on a cosmetic, over-the-counter or
      non-dermatological prescription drug product it shall so notify Connetics
      as soon as is practical providing as much detail as is reasonably
      possible, subject to any applicable obligation of confidentiality.

The remaining provisions of SECTION 5.2 shall remain the same and continue in
full force and effect.

---------------
** 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.

                                                                     Page 2 of 3
<PAGE>

5.    All of the remaining provisions of the Facilities Agreement shall continue
in full force and effect as though fully set forth in this Amendment.

IN WITNESS WHEREOF, the Parties have executed this Amendment as of the Amendment
Effective Date.

CONNETICS CORPORATION                    DPT LABORATORIES, LTD.
"CONNETICS"                              "DPT"

                                         By:  DFB PHARMACEUTICALS, INC.,
                                         Its sole General Partner

Signature: /s/ THOMAS WIGGANS            Signature: /s/ PAUL JOHNSON
           ----------------------                   ---------------------------
Name: Thomas Wiggans                     Name: Paul Johnson
Title: President and CEO                 Title: President

                                                                     Page 3 of 3
<PAGE>
                                  EXHIBIT B-1

                                      [**]

---------------
** 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.
<PAGE>
                                   EXHIBIT D

                                      [**]

---------------
** 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.<PAGE>

                                                                    EXHIBIT 10.2

             AMENDED AND RESTATED MANUFACTURING AND SUPPLY AGREEMENT

                             DPT LABORATORIES, LTD.

                                       AND

                              CONNETICS CORPORATION

      This Amended and Restated Manufacturing and Supply Agreement (the
"Agreement") is made as of this 18th day of August, 2004 ("Effective Date"), 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 Confidentiality and Material
Transfer Agreement, dated April 12, 2001 (the "Confidentiality and Material
Transfer Agreement").

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

      E.    DPT and Connetics are parties to a Facilities Contribution Agreement
dated November 1, 2001 (the "Facilities Agreement"), as amended August 18, 2004,
which relates to Connetics contribution of capital to construct an aerosol
filling/packaging operation on DPT's leased distribution facilities (the
"Connetics' Lines"), and DPT's manufacture and filling of Connetics' aerosol
products.

<PAGE>

      F.    DPT and Connetics are parties to a Quality and Technical Agreement,
dated March 7, 2002 (the "Quality Agreement").

      G.    DPT and Connetics previously entered into a Manufacturing and Supply
Agreement dated March 12, 2002, which was amended by letter agreement on May 6,
2002 (the "Original Agreement"). The Parties desire to amend and restate the
Original Agreement to encompass the matters set forth in this Agreement.

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

                                 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 the number of units per year 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.

                                       2
<PAGE>

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.

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.

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.

                                       3
<PAGE>

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 7, 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.

                                       4
<PAGE>

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

      Pursuant to the Facilities Agreement, DPT designed and built the
Connetics' Lines, consisting of a production line and a laboratory line in San
Antonio, Texas paid for by Connetics. During the first half of 2004, Connetics
will contribute additional capital for Improvements and Additions to the
Connetics' Lines, as those terms are defined in the Amendment to the Facilities
Agreement.

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 Connetics'
            Lines to manufacture any product for its affiliates or third
            parties.

                                       5
<PAGE>

      (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

      (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 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 calendar year 2005, then at the end

---------------
** 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.

                                       6
<PAGE>
            of that 12-month period Connetics shall pay DPT an amount equal to
            [**]. If Connetics does not purchase the minimum requirement during
            any calendar year after 2005, then at the end of that 12-month
            period Connetics shall pay DPT an amount equal to [**].

      (c)   The Contract Minimums for calendar year 2004 shall be [**] units.
            The Contract Minimums will increase to [**] units per calendar year
            for calendar year 2005. The Contract Minimums will increase to [**]
            units per year, beginning January 1, 2006 and remain at [**] units
            per calendar year for the remainder of the term of this Agreement.
            The Contract Minimums can be satisfied by the production of any
            combination of Products, or third party products that are licensed
            by Connetics [**].

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 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

---------------
** 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.

                                       7
<PAGE>

                  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.

      (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.

                                       8
<PAGE>

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 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.

                                       9
<PAGE>

      (e)   When DPT uses the Connetics' Lines to manufacture any product for
            DPT's affiliates or a third party, whether such activities are
            engaged in before or after the effective date of this Agreement, or
            engaged in with or without Connetics' consent, DPT shall protect and
            keep confidential, pursuant to the provisions of the Confidentiality
            & Material Transfer Agreement, all of Connetics' know-how.
            Connetics' know-how pertaining to the Products includes but is not
            limited to:

            -     the manufacturing plan, process and/or instructions;

            -     the Specifications;

            -     testing procedures;

            -     validation, verification, and/or certification protocols,
                  including preliminary data and results;

            -     stability runs and/or testing;

                  excluding equipment qualifications, validations and/or
                  verifications, however DPT agrees to redact any reference to
                  Products contained in those materials before using them on
                  behalf of or for any third party.

      (f)   During the preparation, manufacture, and break down following the
            manufacturing process for the Products, DPT shall not permit any
            third party or unauthorized person to have access to the area in
            which such activities take place, without Connetics' prior written
            consent.

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 production 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 following twelve
      (12) months in order to ensure timely delivery of Product for initial sale
      and marketing.

                                       10
<PAGE>

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 production of a new Product
            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 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

---------------
** 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.

                                       11
<PAGE>

            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 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 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

                                       12
<PAGE>

            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 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.

      (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).

                                       13
<PAGE>

      (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 calendar 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

      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-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

                                       14
<PAGE>

            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 caused by the failure of DPT to follow established
      written procedures.

                         IV - SHIPMENT AND RISK OF LOSS

4.1   SHIPMENT

      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.

                                       15
<PAGE>

                            V - TERM AND TERMINATION

5.1   TERM

      This Agreement shall commence on the Effective Date and will continue for
      a period of seven (7) years. This Agreement shall thereafter automatically
      renew for periods of thirty-six (36) months, unless any Party shall give
      notice to the others to the contrary at least twelve (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:

      (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,

                                       16
<PAGE>

            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 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-breaching 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

      If requested by Connetics, DPT shall perform its standard stability test
      program as defined in DPT's SOP's and the Quality Agreement.

                                       17
<PAGE>

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

      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.

                                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

                                       18
<PAGE>

                  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 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

                                       19
<PAGE>

      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.

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

                                       20
<PAGE>

            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.

                             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 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 within forty-eight
      (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

                                       21
<PAGE>

      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. However, a Party
      affected by a force majeure event shall immediately inform the other Party
      in writing of: (a) the occurrence of the force majeure event, (b) the
      effect the force majeure event has on the Party's Agreement obligations,
      (c) the measures being taken in order to limit and minimize the effect of
      the force majeure event, (d) the probable duration of the force majeure
      event, and (e) promptly update the other Party in writing with respect to
      any changes in (a) through (d). If any such force majeure event continues
      for more than one hundred and twenty (120) days then the Party not
      affected by the force majeure event, or either Party if both are affected
      by the force majeure event, may immediately terminate this Agreement upon
      written notice to the other. If DPT is the Party affected by a force
      majeure event, then the Contract Minimums set forth in SECTION 3.1(c)
      shall be forgiven on a pro-rata basis during such event, for the duration
      of the force majeure event.

                        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

                                       22
<PAGE>

      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.

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

                                       23
<PAGE>

      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 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.

                              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

                                       24
<PAGE>

      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.

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

---------------
** 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.

                                       25
<PAGE>

      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
                                 with a copy to the General Counsel's Office

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 Agreement or the
      Confidentiality and Material Transfer Agreement in effect between the
      Parties.

                                       26
<PAGE>

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.

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.

                                       27
<PAGE>

      (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 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

                                       28
<PAGE>
                   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.

      (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.

                                       29
<PAGE>

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.

      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 CORPORATION                   DPT LABORATORIES, LTD.

                                        By: DFB PHARMACEUTICALS, INC.
                                            Sole General Partner

By: /s/ THOMAS WIGGANS                  By: /s/ PAUL JOHNSON
    ---------------------                   ---------------------------
Its: President & CEO                    Its: President

                                       30
<PAGE>

                               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.

<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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]