Document:

<PAGE>

                                                                Exhibit 10.15

                    DATED THE 8th DAY OF DECEMBER 1997

                                 BETWEEN

                        OCULEX PHARMACEUTICALS, INC

                                   AND

                               DR JERRY GIN
                              DR VERNON WONG

                                   AND

                     TRANSPAC INDUSTRIAL HOLDINGS LIMITED
                          TRANSPAC CAPITAL PTE LTD
                     REGIONAL INVESTMENT COMPANY LIMITED

=============================================================================

                        SECOND SUPPLEMENTAL AGREEMENT

=============================================================================

<PAGE>

     THIS AGREEMENT is made on December 8, 1997.

     BETWEEN: -

(1)  OCULEX PHARMACEUTICALS, INC., a company incorporated in the State of
     California, United States of America, with its place of business at 639
     N. Pastoria Avenue, Sunnyvale, CA 94086-2917, United States of America
     ("Oculex" or the "Company") of the first part;

     AND

(2)  DR JERRY GIN (USA Passport No: 150219028) residing at 1206 Sargent
     Drive, Sunnyvale, Ca 94087, United States of America ("JG"); and

     DR VERNON WONG (USA Passport No: 152527479) residing at 180 Sand Hill
     Circle, Menlo Park, CA 94025, United States of America ("VW")

     collectively the "Major Shareholders", of the second part;

     AND

(3)  TRANSPAC INDUSTRIAL HOLDINGS LIMITED, a company incorporated in the
     Republic of Singapore and having its registered office at 6 Shenton
     Way, #20-09 DBS Tower Two, Singapore 068809 ("Transpac Industrial");

     TRANSPAC CAPITAL PTE LTD, a company incorporated in the Republic of
     Singapore and having its registered office at 6 Shenton Way, #20-09 DBS
     Tower Two, Singapore 068809 ("Transpac Capital"); and

     REGIONAL INVESTMENT COMPANY LIMITED, a company incorporated in the
     Republic of Singapore and having its registered office at 6 Shenton
     Way, #20-09 DBS Tower Two, Singapore 068809 ("Regional Investment")

     collectively the "Investors" of the third part.

     The above parties to collectively be referred to as the "Parties".

                                      2
<PAGE>

     WHEREAS: -

(A)  Oculex is a company limited by shares and has at the date of this
     Agreement an authorised share capital of 20,000,000 Common Stock and
     11,000,000 Preferred Stock. As at the date of this Agreement, there are
     3,865,061 issued and fully paid-up shares of Common Stock, 330,000
     issued and fully paid-up shares of series A Preferred Stock and
     3,667,878 issued and fully paid-up shares of series B Preferred Stock.

(B)  The Major Shareholders hold approximately 40.86% of the issued share
     capital in the Company represented by 3,091,086 shares of Common Stock
     of the Company and 121,918 shares of Preferred B Stock of the Company.

(C)  On 3rd October 1995, Oculex, the Major Shareholders, Transpac Industrial
     and Transpac Capital entered into an Exchangeable Loan Agreement (the
     "Loan Agreement") whereunder Transpac Industrial and Transpac Capital
     agreed to make certain advances to Oculex upon certain conditions being
     fulfilled.

(D)  The Loan Agreement was subsequently amended by way of a Supplemental and
     Accession Agreement dated 12th February 1996 (the "First Supplemental
     Agreement') entered into between the parties to the Loan Agreement and
     Regional Investment.

(E)  The Loan Agreement (as amended by the First Supplemental Agreement) was
     further varied by way of a Subscription Agreement dated 31 December 1996
     entered into by and between the Parties, whereunder the Investors also
     agreed to subscribe for 500,000 shares of Preferred B Stock in the
     capital of Oculex.

(F)  Pursuant to the Loan Agreement (amended as aforesaid, such amended Loan
     Agreement to hereinafter be referred to as the "Amended Loan
     Agreement"), the Investors are obliged to make advances to Oculex on the
     terms and subject to the conditions of the Amended Loan Agreement and in
     particular upon certain conditions being met. Pursuant to the proviso
     set out in Clause 5 of the Amended Loan Agreement, the Investors may in
     their absolute discretion waive any of such conditions in relation to
     any or all of the advances and Oculex shall not be entitled to refuse to
     accept any advance which the Investors have decided to make under the
     Amended Loan Agreement.

(G)  Pursuant to the Amended Loan Agreement, the Investors were obliged,
     subject to the conditions set out-in the Amended Loan Agreement, to make
     available to Oculex the aggregate sum of US$6,400,000. As at the date
     hereof, the Investors have advanced to Oculex US$2,000,000 in total.

                                      3
<PAGE>

(H)  At the request of Oculex and the Major Shareholders, the Investors have
     agreed to advance to Oculex the remaining sum of US$4,400,000 and this
     Agreement sets out the terms and conditions of such advance.

     NOW IT IS HEREBY AGREED AS FOLLOWS: -

1.   DEFINITIONS AND INTERPRETATION

1.1  All terms and references used in the Amended Loan Agreement and which
     are defined or construed in the Amended Loan Agreement but are not
     defined or construed in this Agreement shall have the same meaning and
     construction In this Agreement.

1.2  References to Clauses, Recitals and Appendices are to clauses, recitals
     and appendices of this Agreement.

1.3  Words denoting the singular number only shall include the plural number
     and vice versa. Words denoting the masculine gender only shall include
     the feminine and neuter genders.

1.4  The Recitals to this Agreement shall be and form an integral part of
     this Agreement.

1.5  The headings in this Agreement are inserted for convenience only and
     shall be ignored in construing this Agreement.

2.   ADVANCES

2.1  At the request of Oculex and the Major Shareholders, the Investors have
     agreed to exercise their rights under the Amended Loan Agreement to
     advance the remaining sum of US$4,400,000, being the Second Advance and
     the Third Advance under the Amended Loan Agreement, to Oculex in the
     proportion set out in the Appendix. The terms and conditions governing
     such advances shall be as stated in the Amended Loan Agreement.

2.2  Oculex and the Major Shareholders hereby agree that Oculex will accept
     such advances when made by the Investors on the terms and conditions set
     out in the Amended Loan Agreement.

                                      4
<PAGE>

3.   AMENDMENTS TO THE LOAN AGREEMENT

3.1  The Parties agree that with effect from the date hereof, Article 15(B)
     of the Amended Loan Agreement shall be amended by deleting the words
     "US$2.75 per Preferred B Stock, for the next US$1,000,000 and US$3.00
     per Preferred B Stock thereafter" in the fifth and sixth lines thereof
     and replacing them with the following:

     "AND US$2.75 PER PREFERRED B STOCK THEREAFTER"

3.2  Except to the extent expressly varied or amended by the provisions of
     this Agreement, the terms and conditions of the Amended Loan Agreement
     are hereby confirmed and shall remain in full force and effect.

4.   MISCELLANEOUS

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

4.2  All notices, requests, demands and other communications under this
     Agreement or in connection herewith shall be given to or made upon as
     follows: -

<TABLE>

     <S>                        <C>     <C>
     If to the Investors        :       TRANSPAC INDUSTRIAL HOLDINGS LIMITED
                                        6 Shenton Way, #20-09 DBS Tower Two,
                                        Singapore 068809
                                        Fax No: (065) 225 5538

                                        TRANSPAC CAPITAL PTE LTD
                                        6 Shenton Way, #20-09 DBS Tower Two,
                                        Singapore 068809
                                        Fax No: (065) 225 5538

                                        REGIONAL INVESTMENT COMPANY LIMITED
                                        6 Shenton Way, #20-09 DBS Tower Two,
                                        Singapore 068809
                                        Fax No: (065) 225 5538

     If to the Company          :       OCULEX PHARMACEUTICALS INC.
                                        639 N. Pastoria Avenue
                                        Sunnyvale, CA 94086-2917
                                        Fax No: (408) 481 0662.

                                      5
<PAGE>

     If to JG                   :       DR JERRY GIN
                                        1206 Sargent Drive, Sunnyvale, Ca 94087
                                        United States of America
                                        Fax No: (408) 481 0662

     If to VW                   :       DR VERNON WONG
                                        180 Sand Hill Circle, Menlo Park, CA 94025
                                        United States' of America
                                        Fax No: (408) 481 0662
</TABLE>

     All notices, requests, demands and other communications given or made in
     accordance with the provisions of this Agreement shall be in writing,
     and shall be sent by airmail, return receipt requested, or by telecopy
     (facsimile) with confirmation of receipt, and shall be deemed to be
     given or made when receipt is so confirmed. Any party may, by written
     notice to the other, alter its address or respondent, and such notice
     shall be considered to have been given 10 days after the airmailing or
     telecopying thereof.

5.   COSTS AND EXPENSES

5.1  Oculex shall pay:-

     5.1.1  all costs and expenses (including legal fees and stamp and other
            documentary taxes) incurred by the Investors in connection with
            the preparation, negotiation and entry into of this Agreement
            and/or any amendment of, supplement to or waiver in respect of
            this Agreement, subject to a maximum of US$2,000; and

     5.1.2  on demand, all costs and expenses (including legal fees) incurred
            by the Investors in protecting or enforcing or in contemplation
            of protecting or enforcing any rights under this Agreement and/or
            any such amendment, supplement or waiver.

6.   ENTIRE AGREEMENT

     This Agreement constitutes the entire agreement between the Parties
     pertaining to the subject matter hereof, and any and all other prior
     written or oral agreements existing between the Parties are expressly
     cancelled.

                                      6
<PAGE>

7.   GOVERNING LAW AND JURISDICTION

7.1  This Agreement shall be governed by and construed in accordance with the
     laws of the State of California.

7.2  In relation to any legal action or proceeding arising out of or in
     connection with this Agreement ("Proceedings"), each of the parties
     hereto hereby irrevocably submits to the jurisdiction of the courts of
     the State of California and Singapore and waives any objection to
     Proceedings in any such courts on the grounds of venue or on the grounds
     that the Proceedings have been brought in an inconvenient forum.

7.3  That submission shall not affect the right of the Investors to take
     Proceedings in any other jurisdiction nor shall the taking of
     Proceedings in any jurisdiction preclude the Investors from taking
     Proceedings in any other jurisdiction.

7.4  Each of the Major Shareholders and the Company hereby irrevocably
     appoints Oculex Asia Pharmaceuticals Pte Ltd (of 16 Lynwood Grove,
     Singapore 358660) in Singapore from time to time to receive, for it or
     him and on its or his behalf, service of process in any Proceedings in
     Singapore. Such service shall be deemed completed on delivery to the
     process agent (whether or not it is forwarded to and received by the
     Company or the Major Shareholders). If for any reason the process agent
     ceases to be able to act as such, the Company and the Major Shareholders
     irrevocably agree to appoint a substitute process agent acceptable to
     the Investors, and to deliver to the Investors a copy of the new agent's
     acceptance of that appointment, within 30 days of such acceptance.

7.5  The Company and the Major Shareholders irrevocably consent to any
     process in any Proceedings anywhere being served by the mailing of a
     copy of the process served by prepaid registered post to them in
     accordance with Clause 10. Such service shall become effective 30 days
     after mailing.

7.6  The Company and the Major Shareholders irrevocably and generally consent
     in respect of any Proceedings anywhere to the giving of any relief or
     the issue of any process in connection with those Proceedings including,
     without limitation, the making, enforcement or execution against any
     assets whatsoever (irrespective of their use or intended use) of any
     order or judgment which may be made or given in those Proceedings, and
     agrees that any final order or judgment shall be conclusive.

7.7  The parties may, subject to mutual consent, alternatively submit any and
     all disputes arising out of or in connection with this Agreement
     including its validity, construction and performance to a sole
     arbitrator appointed in California, USA, under the ICC rules of
     Conciliation and Arbitration.

                                      7
<PAGE>

8.   PREVALENCE OF AGREEMENT

     In the event of any inconsistency between the provisions of this
     Agreement and the Articles of Incorporation or the Bye-laws of the
     Company, the provisions of this Agreement shall as between the parties
     hereto prevail. Forthwith upon the entry of this Agreement, the parties
     hereto shall forthwith cause such alterations as the Investors may
     approve to be made to the Articles of Incorporation or the Bye-laws of
     the Company, so as to ensure that the provisions of such documents are
     consistent with the terms of this Agreement.

     IN WITNESS WHEREOF, the parties executed this Agreement as of the date
first above written.

Signed by                              )      /s/ Jerry Gin
                                       )
for and on behalf of                   )
                                       )
OCULEX PHARMACEUTICALS, INC.           )
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

Signed by                              )
                                       )
DR JERRY GIN                           )      /s/ Jerry Gin
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

Signed by                              )
                                       )
DR VERNON WONG                         )      /s/ Vernon Wong
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

                                      8
<PAGE>

Signed by                              )
                                       )
for and on behalf of                   )      /s/ Stanley Cheong
                                       )
TRANSPAC INDUSTRIAL                    )
HOLDINGS LIMITED                       )
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

Signed by                              )
                                       )
for and on behalf of                   )      /s/ Stanley Cheong
                                       )
TRANSPAC CAPITAL PTE LTD               )
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

Signed by                              )
                                       )
for and on behalf of                   )      /s/ Stanley Cheong
                                       )
REGIONAL INVESTMENT                    )
COMPANY LIMITED                        )
                                       )
in the presence of:-                   )      /s/ Samuel A. McMasters

                                      9
<PAGE>

                                    APPENDIX
<TABLE>
<CAPTION>
             INVESTOR                              AMOUNT TO BE ADVANCED
             <S>                                   <C>
             Transpac Capital                      US$2,108,039

             Transpac Industrial                   US$1,796,784

             Regional Investment                   US$495,177

                                                   ---------------------

             TOTAL:                                US$4,400,000

                                                   ---------------------
</TABLE>

                                      10<PAGE>

                                                                  EXHIBIT 10.16

                      INTERNATIONAL DISTRIBUTION AGREEMENT

         THIS AGREEMENT is made and entered into as of April,___ 1997, by and
between OCULEX PHARMACEUTICALS, INC. (hereinafter referred to as
"Manufacturer"), a corporation having its offices in Sunnyvale, California,
USA, existing under the laws of the State of California, and LABORATORIOS
SOPHIA, S.A. BE C.V., a corporation having its offices in Guadalajara, JAL.,
existing under the laws of the United Mexican States (hereinafter referred to
as "Distributor").

                                   WITNESSETH:

         In consideration of the mutual covenants and conditions herein
contained, and intending to be legally bound hereby, the parties mutually
agree as follows:

1.       PRODUCTS AND TERRITORY.

         (a) Manufacturer hereby appoints Distributor on an exclusive basis
as its sole distributor for the sale of the following product during the term
of this Agreement (hereinafter referred to as the "Product"):

         (i)      Surodex-TM- - an anti-inflammatory therapeutic and Drug
                  Delivery System (DDS) to control inflammation after cataract
                  surgery

         Distributor shall use its best efforts to promote and sell the
Product to the maximum number of responsible customers in the Territory (as
defined below).

         (b) Manufacturer is appointing Distributor hereunder with respect to
the resale of Product to any purchasers whose principal place of business is
located in the following described territory (the "Territory"):

                                Country of Mexico

         (c) Distributor shall not solicit orders from any prospective
purchaser with its principal place of business located outside the Territory
without Manufacturer's written consent. If Distributor receives any order
from a prospective purchaser whose principal place of business is located
outside the Territory, Distributor shall immediately refer that order to
Manufacturer. Distributor shall not accept any such orders, and Distributor
may not deliver or tender (or cause to be delivered or tendered) any Product
outside of the Territory without Manufacturer's written consent.

2.       PRICES AND PAYMENT.

         (a) Distributor shall order Product from Manufacturer by submitting
a written purchase order identifying the Product ordered, requested delivery
date(s) and any export/import information required to enable Manufacturer to
fill the order. All orders for Product are subject

* Portions of this exhibit have been omitted and filed separately with the
  Commission pursuant to a request for confidential treatment under
  Rule 406.

                                       1
<PAGE>

to acceptance by Dr. Jerry B. Gin, or a person designated by him, it
Manufacturer's office at 639 N. Pastoria Avenue, Sunnyvale, CA 94086.
Manufacturer shall have no liability to Distributor with respect to purchase
orders which are not accepted; PROVIDED, HOWEVER, that Manufacturer will not
unreasonably reject any purchase order.

         (b) The prices per unit for Product covered by a purchase order
shall be * for the first *, * for the * and * for the *. Thereafter,
Manufacturer may from time to time change those prices, such change being
effective immediately upon Distributor's receipt of notice thereof; PROVIDED,
HOWEVER, THAT no price change shall affect purchase orders offered by
Distributor and accepted by Manufacturer prior to the date such price change
becomes effective.

         (c) Distributor shall be free to establish its own pricing for
Product sold. Distributor shall notify Manufacturer of its pricing, as in
effect from time to time.

         (d) The ultimate shipment of orders to Distributor shall be subject
to the right and ability of Manufacturer to make such sales and obtain
required licenses and permits, under all decrees, statutes, roles and
regulations of the government of Mexico and agencies thereof presently in
effect or which may be in effect hereafter.

         (e) All Product ordered by Distributor shall be packed for shipment
and storage in accordance with Manufacturer's standard commercial practices.
For the purposes of this Agreement, the Product will be supplied to
Distributor in a foil pouch. Final packaging and labeling in Spanish will be
performed by the Distributor. Reasonable final packaging and labeling
expenses, which shall not exceed ____ per unit, will be deducted from the
amount due and payable under the purchase order. It is Distributor's
obligation to notify Manufacturer of any special packaging requirements
(which shall be at Distributor's expense.) All orders will be Shipped freight
collect F.O.B. (as defined by the International Chamber of Commerce's
Incoterms (1990)) Manufacturer's facility, Singapore or Sunnyvale, CA. Risk
of loss and damage to a Product shall pass to Distributor upon the delivery
of such Product to the common carrier designated by Distributor. Insurance
will be paid by the Distributor. All claims for non-conforming shipments must
be made in writing to Manufacturer within ten days of the passing of risk of
loss and damage, as described above. Any claims not made within such period
shah be deemed waived and released.

         (d) Payment shall be made by Distributor to Manufacturer by an
irrevocable, confirmed letter of credit with a thirty (30) day term. All
amounts due and owing to Manufacturer, but not paid by Distributor on the due
date thereof, shall bear interest in U.S. dollars at the rate of one per cent
per annum above the then applicable prime rate as published in the Wall
Street journal, but not to exceed the maximum lawful interest rate permitted
under applicable law. Such interest SHALL accrue on the balance of unpaid
capital amounts from time to time outstanding from the date on which portions
of such amounts become due and owing until payment thereof in full.

         (g) In the event of any discrepancy between any purchase order
accepted by Manufacturer and this Agreement, the terms of this Agreement
shall govern.

* Portions of this exhibit have been omitted and filed separately with the
  Commission pursuant to a request for confidential treatment under
  Rule 406.

                                       2
<PAGE>

3.       OTHER OBLIGATIONS OF DISTRIBUTOR.

         (a) Distributor hereby agrees: (i) to assist Manufacturer in
obtaining any such required licenses or permits by supplying such
documentation or information as may be requested by Manufacturer; (ii) to
comply with such decrees, statutes, rules and regulations of the government
of Mexico and agencies thereof; (iii) to maintain the necessary records to
comply with such decrees, statutes, rules and regulations; (iv) to not
reexport any Product except in compliance with such decrees, statutes, rules
and regulations; (v) to obtain all governmental approvals and licenses
necessary to import the Product into the Territory; (vi)to not sell,
transfer, or otherwise dispose of the Product in violation of the export laws
of Mexico; and (vii) to indemnify and hold harmless Manufacturer from any and
all flues, damages, losses, costs and expenses (including reasonable
attorneys' fees) incurred by Manufacturer as a result of any breach of this
subsection by Distributor or any of Distributor's customers.

         (b) If a clinical trial is necessary to comply with health
registration laws, Distributor will identify appropriate investigators,
coordinate with the Manufacturer to design the clinical trial, monitor the
clinical trial and ensure that the clinical trial is conducted correctly and
according to the design protocol. Distributor shall supply the completed
clinical trial data and clinical trial report to the Manufacturer at the
completion of the clinical trial. Manufacturer will bear the cost of
providing clinical trial samples. All other costs related to the trial will
be borne by the Distributor.

         (c) Distributor shall file an application with the Health
Authorities of the Territory in order to obtain the registration approval of
the Product. Such Product registration application shall be in the name of
the Manufacturer. All expenses related to the registration of Product will be
borne on a * basis by Distributor and Manufacturer. Distributor shall provide
to Manufacturer a copy of all registration documents submitted to the Health
Authorities and the original final registration approval. Upon the
termination for any reason or expiration of this Agreement, Distributor shall
promptly assign or cause to be assigned to Manufacturer at no cost, every
registration or permit obtained that relate to the Product. In the event
assignment is not permitted by law, Distributor will cooperate in the
cancellation of such registrations and/or permits and in the reissuance of
such registrations and/or permits to Manufacturer or its nominee.

         (d) Distributor shall employ competent and experienced personnel to
promote the Product in the Territory.

4.       MANUFACTURER'S OBLIGATIONS.

         (a) Manufacturer shall provide Distributor with such technical and
marketing assistance as appropriate.

* Portions of this exhibit have been omitted and filed separately with the
  Commission pursuant to a request for confidential treatment under
  Rule 406.

                                       3
<PAGE>

5.       RELATIONSHIP OF THE PARTIES.

         Distributor shall be considered to be an independent contractor. The
relationship shall not be construed to be that of employer and employee, nor
to constitute a partnership, joint venture or agency of any kind. Distributor
shall have no right to enter into any contracts or commitments in the name
of, or on behalf of, Manufacturer, or to bind Manufacturer in any respect
whatsoever. Distributor shall not obligate or purport to obligate
Manufacturer by issuing or making any affirmations, representations,
warranties or guaranties with respect to the Product to any third party.

6.       MINIMUM PURCHASE REQUIREMENTS.

         Distributor shall purchase a sufficient amount of Product from
Manufacturer so as to meet or exceed the minimum purchase requirements set
forth below. For the purposes of this provision, a "purchase" of Product
within a specified time period shall mean paying Manufacturer for such
Product on or before the last day of such period. The First Year shall
commence at a date mutually agreed to by each party, but in no event later
than June 1, 1997 unless Manufacturer so agrees in writing.

<TABLE>

                  <S>                                <C>
                  First Year                         * units

                  Second Year                        * units

                  Third Year                         * units
</TABLE>

         Failure to meet such minimum requirements shall constitute a
material breach of this Agreement for the purposes of Section 12 (Termination
and Term) hereof; PROVIDED, HOWEVER, that in lieu of terminating this
Agreement pursuant to Section 12 (Termination and Term) based on such breach,
Manufacturer may instead opt to reduce the exclusive rights granted to
Distributor under Section 1 (Products and Territory) hereof to non-exclusive
rights, which case Manufacturer shall then have the right to appoint
additional non-exclusive distributors in the Territory and the right to sell
the Product itself in the Territory, either directly (including without
limitation with the assistance of sales representatives) or through one of
its affiliates.

7.       REPORTING.

         Distributor shall provide Manufacturer with written quarterly
reports which shall keep Manufacturer fully informed of all governmental,
commercial, and other activities which do or reasonably could affect the
Product in the Territory.

8.       TRADEMARKS, SERVICE MARKS AND TRADE NAMES.

         (a) RIGHT TO USE. Distributor may use Manufacturer's trade names,
trademarks and service marks listed below (hereinafter referred to as the
"Trademarks") on a non-exclusive basis

* Portions of this exhibit have been omitted and filed separately with the
  Commission pursuant to a request for confidential treatment under
  Rule 406.

                                       4
<PAGE>

in the Territory only for the duration of this Agreement and solely for
display or advertising purposes in connection with selling and distributing
the Product in accordance with this Agreement:

                                   Oculex-TM-
                                   Surodex-TM-

Distributor shall not at any time do or permit any act to be done which may
in any way impair the rights of Manufacturer in the Trademarks. Distributor
shall use the Trademarks in compliance with all relevant laws and regulations
and not modify any of the Trademarks in any way and not use any of the
Trademarks on or in connection with any goods or services other than the
Product.

9.       COVENANT NOT TO COMPETE.

         During the term of this Agreement and for one year thereafter,
Distributor shall not market directly or indirectly in the Territory products
which are competitive with the Product.

10.      LIMITED WARRANTY

         (a) Manufacturer warrants that the Product will be free from defects
and will substantially conform to the specifications set forth in Exhibit A,
attached hereto and made a part hereof. Under no circumstances shall the
warranty apply to any Product which has been modified, damaged or misused.

         (b) THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF AN
OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR a PARTICULAR PURPOSE).
MANUFACTURER's LIABILITY ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLYING OF
THE PRODUCT OR THEIR USE OR DISPOSITION, WHETHER BASED UPON WARRANTY,
CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE ACTUAL PURCHASE PRICE PAID
BY DISTRIBUTOR FOR THE PRODUCT. IN NO EVENT SHALL MANUFACTURER BE LIABLE TO
DISTRIBUTOR FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT
NOT LIMITED TO, LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES) ARISING
OUT OF THE MANUFACTURE, SALE OR SUPPLYING OF THE PRODUCT, EVEN IF
MANUFACTURER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
DISTRIBUTOR SHALL OBLIGATE OR PURPORT TO OBLIGATE MANUFACTURER BY ISSUING OR
MAKING ANY WARRANTIES OR GUARANTIES WITH RESPECT TO THE PRODUCT TO ANY THIRD
PARTY INASMUCH THAT DISTRIBUTOR SHALL BE LIABLE TOWARDS ANY THIRD PARTY WITH
RESPECT TO THE PRODUCT.

                                       5
<PAGE>

11.      INDEMNIFICATION.

         Each party hereby agrees to indemnify, defend and hold the other
party harmless from any third party claim, lawsuit, legal proceeding,
settlement or judgment (including attorneys' fees incurred in connection
therewith) resulting from or arising out of any death of or personal injury
to any person due to the negligence, recklessness, or willful misconduct of
the other parry or such other party's officers, employees or agents.

12.      TERMINATION.

         (a) Upon the occurrence of a material breach or default as to any
obligation hereunder by either party and the failure of the breaching party
to promptly pursue (within thirty (30) days after receiving written notice
thereof from the non-breaching party) a reasonable remedy designed to cure
(in the reasonable judgment of the non-breaching party) such material breach
or default, this Agreement may be terminated by the non-breaching party by
giving written notice of termination to the breaching party, such termination
being immediately effective upon the giving of such notice of termination.

         (b) Upon the filing of a petition in bankruptcy, insolvency or
reorganization against or by either party, or either party becoming subject
to a composition for creditors, whether by law or agreement, or either party
going into receivership or otherwise becoming insolvent (such party
hereinafter referred to as the "insolvent party"), this Agreement may be
terminated by the other party by giving written notice of termination to the
insolvent party, such termini immediately effective upon the giving of such
notice of termination.

         (c) The term of this Agreement shall begin on the later of the dates
that (i) Manufacturer executes this Agreement and (ii) Distributor executes
this Agreement (the later of such dates being referred to as the "Effective
Date"). The term of this Agreement shah end following a period of three years
from the Effective Dale, unless terminated earlier pursuant to the terms of
this Section.

         (d) The term of this Agreement shall automatically be extended for
additional periods of one year each unless one of the parties notifies the
other by registered letter with at least three months notice of its decision
to terminate the Agreement prior to the expiration of the initial or any
renewal term hereof.

         (e) In the event of a termination pursuant to any of subsections (a)
or (b) above or upon expiration of this Agreement pursuant to either of
subsections (c) or (d) above, Manufacturer shall not have any obligation to
Distributor, or to any employee of Distributor, for compensation or for
damages of any kind, whether on account of the loss by Distributor or such
employee of present or prospective sales, investments, compensation or
goodwill. Distributor, for itself and on behalf of each of its employees,
hereby waives any rights which may be granted to it or them under the laws
and regulations of the Territory or otherwise which are not granted to it or
them by this Agreement. Distributor hereby indemnifies and holds Manufacturer
harmless from and against any and all claims, costs, damages and liabilities

                                       6
<PAGE>

whatsoever asserted by any employee, agent or representative of Distributor
under any applicable termination, labor, social security or other similar
laws or regulations.

         (f) Termination of this Agreement shall not affect the obligation of
Distributor to pay Manufacturer all amounts owing or to become owing as a
result of Product tendered or delivered to Distributor on or before the date
of such termination, as well as interest thereon to the extent any such
amounts are paid after the date they became or will become due pursuant to
this Agreement.

         (g) Notwithstanding anything else in this Agreement to the contrary,
the parties agree that Sections 1, 2, 3, 4, 8, 9, 11, 19 and 20 shall survive
the termination or expiration of this Agreement, as the case may be, to the
extent required thereby for the full observation and performance by any or
all of the parties hereto.

13.      SELLING OFF OF INVENTORY.

         Distributor shall have the right to sell-off its remaining inventory
of Product after termination or expiration of this Agreement; PROVIDED,
HOWEVER, that Distributor shall comply with all terms and conditions of this
Agreement restricting such reselling activities in effect immediately prior
to such termination or expiration.

14.      MODIFICATION.

         No modification or change may be made in this Agreement except by
written instrument duly signed by Distributor and by a duly authorized
representative of Manufacturer.

15.      ASSIGNMENT.

         This Agreement and the rights and obligations hereunder may not be
assigned, delegated or transferred by either party without the prior written
consent of the other party; PROVIDED, HOWEVER, that Distributor's consent
shall not be required with respect to any assignment, delegation or transfer
by Manufacturer to another division of Manufacturer or to any affiliate of
Manufacturer or any division of such affiliate. This Agreement shall inure to
the benefit of the successors and assigns of Manufacturer.

16.      NOTICE.

         All notices given under this Agreement shall be in writing and shall
be addressed to the parties at their respective addresses set forth below:

                                       7
<PAGE>

         IF TO DISTRIBUTOR:

                  Laboratorios SOPHIA, S.A. DE C.V.
                  Street: Av. Hidalgo 737 S.H.
                  City: Guadalajara
                  State or Province: Jalisco
                  Zip or Postal Code: C.P. 44290
                  Country: Mexico
                  Telecopy Number: (3) 613-22-28
                  Attention: General Director

         IF TO MANUFACTURER:

                  OCULEX PHARMACEUTICALS, INC.
                  Street: 639 N. Pastoria Avenue
                  City: Sunnyvale
                  State or Province: California
                  Zip or Postal Code: 94086
                  Country: USA
                  Telecopy Number: (408) 481-0662 Attention: President

Either party may change its address or its telecopy number for purposes of
this Agreement by giving the other party written notice, by registered or
certified mail, of its new address or telecopy number.

17.      WAIVER.

         None of the conditions or provisions of this Agreement shall be held
to have been waived by any act or knowledge on the part of either party,
except by an instrument in writing signed by a duly authorized officer or
representative of the parties. Further, the waiver by either party of any
right hereunder or the failure to enforce at any time any of the provisions
of this Agreement, or any rights with respect thereto, shall not be deemed to
be a waiver of any other rights hereunder or any breach or failure of
performance of the other party.

18.      VALIDITY.

         Manufacturer warrants that this Agreement is lawful and may be
performed in accordance with its terms under all laws in force in the United
States at the time of execution of this Agreement. Distributor warrants that
this Agreement is lawful and may be performed in accordance with its terms
under all laws in force in Mexico at the time of execution of this Agreement.
Manufacturer and Distributor covenant and warrant that they will each advise
the other of any changes in the respective laws which might or will impair
the validity of all or any part of this Agreement.

                                       8
<PAGE>

19.      CONSTRUCTION OF AGREEMENT AND RESOLUTION OF DISPUTES.

         (a) This Agreement, which is in English, shall be interpreted in
accordance with the commonly understood meaning of the words and phrases
hereof in the United States of America, and it and performance of the parties
hereto shall be construed and governed according to the laws of the State of
California applicable to contracts made and to be fully performed therein,
excluding the United Nations Convention on Contracts for the International
Sale of Goods.

         (b) Any dispute, controversy or claim arising out of or relating to
this Agreement or to a breach hereof, including its interpretation,
performance or termination, shall be finally resolved by arbitration. The
arbitration shall be conducted by three (3) arbitrators, one to be appointed
by Manufacturer, one to be appointed by Distributor and a third being
nominated by the two arbitrators so selected or, if they cannot agree on a
third arbitrator, by the President of the International Chamber of Commerce
("ICE"). In the event any such dispute, controversy or claim involves a claim
of damages for $50,000.00 or less, the arbitration shall be conducted by one
(1) arbitrator appointed by Manufacturer and Distributor or, if they cannot
agree on an arbitrator, by the President of the ICC.

The arbitration shall be conducted in English and in accordance with the
rules of the ICE, which shall administer the arbitration and act as
appointing authority. The arbitration, including the rendering of the award,
shall take place in Santa Clara County, California, and shall be the
exclusive forum for resolving such dispute, controversy or claim. For the
purposes of this arbitration, the provisions of this Agreement and all rights
and obligations thereunder shall be governed and construed in accordance with
the laws of the State of California. The decision of the arbitrators shall be
binding upon the parties hereto, and the expense of the arbitration
(including without limitation the award of attorneys' fees to the prevailing
party) shall be paid as the arbitrators determine. The decision of the
arbitrators shall be executory, and judgment thereon may be entered by any
court of competent jurisdiction.

         (c) Notwithstanding anything contained in Section 19 (b) to the
contrary, each party shall have the right to institute judicial proceedings
against the other party or anyone acting by, through or under such other
party, IN order to enforce the instituting party's rights hereunder through
reformation of contract, specific performance, injunction or similar
equitable relief.

20.      CONFIDENTIALITY MAINTAINED.

         Each party agrees that it will treat all verbal and written
communications from the other party which are designated, or which should
reasonably be regarded from a commercial view, as constituting business
secrets or proprietary information ("Proprietary Information"). Each party
agrees to refrain from disclosing or making available to any third party any
of the other party's Proprietary Information without the other party's
written consent and to impose upon its employees and agents the same
obligations with respect to the other party's Proprietary Information as it
employs with respect to its own confidential information. No such obligation
of confidentiality will extend to information which is (i) publicly
available; (ii) is independently

                                       9
<PAGE>

developed by the receiving party; (iii) is already in the receiving party's
possession; or (iv) is rightfully received from a third party.

21.      ENTIRE AGREEMENT

         This Agreement supersedes and cancels any previous agreements or
understandings, whether oral, written or implied, heretofore in effect and
sets forth the entire agreement between Manufacturer and Distributor with
respect to the subject matter hereof.

22.      NO RIGHTS BY IMPLICATION.

         No rights or licenses with respect to the Product or the Trademarks
are granted or deemed granted hereunder or in connection herewith, other than
those rights expressly granted in this Agreement.

23.      RESPONSIBILITY FOR TAXES.

         Taxes, whether in Mexico or any other country, now or hereafter
imposed with respect to the transactions contemplated hereunder (with the
exception of income taxes or other taxes imposed upon Manufacturer and
measured by the gross or net income of Manufacturer) shall be the
responsibility of Distributor, and if paid or required to be paid by
Manufacturer, the amount thereof shall be added to and become a part of the
amounts payable by Distributor hereunder.

24.      MODIFICATION OF PRODUCT.

         Distributor may not modify or have modified any Product unless it
obtains the prior written consent of Manufacturer, which consent may be
withheld in the sole discretion of Manufacturer. Any unauthorized
modification of any Product by Distributor or any third party shall relieve
Manufacturer from any obligation it would otherwise have had with respect to
such Product under the limited warranty described in Section 10.

25.      FORCE MAJEURE.

         (a) Neither Manufacturer nor Distributor shall be liable in damages,
or shall be subject to termination of this Agreement by the other party, for
any delay or default in performing any obligation hereunder if that delay or
default is due to any cause beyond the reasonable control and without fault
or negligence of that party. For the purposes of this Section, a "cause
beyond the reasonable control" of a party shall include, without limiting the
generality of the phrase, any act of God, act of any government or other
authority or statutory undertaking, industrial dispute, fire, explosion,
accident, power failure, flood, riot or war (declared or undeclared).

26.      COMPLIANCE WITH LAWS.

         Each of Distributor and Manufacturer covenants that all of its
activities under or pursuant to this Agreement shall comply with all
applicable laws, rules and regulations. In particular,

                                       10
<PAGE>

but without limitation, Distributor shall be responsible for obtaining all
licenses, permits and approvals which are necessary or advisable for sales of
the Product in the Territory and for the performance of its duties hereunder.

27.      SEVERABILITY.

         If any provision of this Agreement is declared invalid or
unenforceable by a court having competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court. The parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such invalid or unenforceable provision in light of
the intent of this Agreement.

28.      COUNTERPARTS.

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

29.      DEFINITION OF AFFILIATES.

         For the purposes of this Agreement, "affiliates" shall mean all
companies; natural persons, partnerships and other business entities
controlled by, under common control with or controlling either party to this
Agreement.

                                       11
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have signed this Agreement.

DISTRIBUTOR:                           Laboratorios SOPHIA, S.A. DE C.V.

                                       By:      /s/ Fernando Sanchez
                                          ---------------------------------
                                       Name: Mr. Fernando Sanchez
                                       Title: General Director

MANUFACTURER                           OCULEX PHARMACEUTICALS, INC.

                                       By:      /s/ Jerry B. Gin
                                          ---------------------------------
                                       Name: Dr. Jerry B. Gin
                                       Title: President

                                       12
<PAGE>

                                    EXHIBIT A

                             PRODUCT SPECIFICATIONS

Surodex, a sustained release intraocular dexamethasone for cataract surgery,
shall be supplied as follows:

                  (i)      Packaging: In plastic vial placed in a foil pouch
                  (ii)     Sterile

<PAGE>

                       ADDENDUM TO DISTRIBUTION AGREEMENT
                                DATED APRIL, 1997

Oculex Pharmaceuticals, Inc. and Laboratorios Sophia S.A. de C.V. wish to add
this Addendum to the Distribution Agreement signed in April, 1997.

1.   PRODUCTS

     The Agreement shall be expanded to include Suroquin-TM-, an antibiotic Drug
     Delivery System (DDS-TM-) for use in the anterior segment following
     cataract surgery.

2.   TERRITORY

     The Territory for both Surodex and Suroquin shall be expanded to include:

     Mexico

     CENTRAL AMERICA
     Guatemala
     E1 Salvador
     Honduras
     Nicaragua
     Costa Rica
     Panama
     Dominican Republic
     Belice
     Haiti

     SOUTH AMERICA
     Brazil
     Argentina
     Columbia
     Venezuela
     Uruguay
     Paraguay
     Chile
     Ecuador
     Peru
     Boliva

<PAGE>

3.   PRICES

     Transfer price shall be based on sales price for both Surodex and
     Suroquin. Oculex Pharmaceuticals will receive * and Laboratorios Sophia
     will receive * of sales price. Product would be sold at a minimum
     transfer price of * each for Surodex and Suroquin, with the resulting
     difference between * of selling price and minimum transfer price being
     paid to Oculex on a monthly basis.

4.   MINIMUMS

     Minimum purchase requirements are to be established for each country and
     are to be agreed upon by both parties. For the countries listed, minimums
     for the first, second and third years are as follows:

5.   SALES AND MARKETING PLAN

     Laboratorios Sophia and Oculex Pharmaceuticals will work together and agree
     upon the sales and marketing plan to be executed by Laboratorios Sophia.
     The plans shall include launch schedule, distribution mechanisms, pricing,
     volume of sales, and promotions. If Oculex Pharmaceuticals and Laboratorios
     Sophia cannot agree upon Terms, then Oculex has the right to withdraw from
     the Territory list those countries where questions arise.

6.   PRODUCT REGISTRATION AND APPROVAL

     It is the responsibility of Laboratorios Sophia to obtain registration and
     approval of Surodex and Suroquin in the Territories listed under the name
     of Oculex Pharmaceuticals, Inc.. If registration and approval does not
     occur in a timely manner, Oculex Pharmaceuticals reserves the right to
     terminate the marketing rights in the countries where approval has not been
     obtained. In this context, "timely manner" shall mean "within 1.5 years of
     signing of this Addendum". At such time as termination of marketing rights,
     Laboratorios Sophia shall turn over any registration/clinical trial
     documents to Oculex-

7.   FURTHER DISCUSSION

     It is understood that there will be further discussion of items 3, 4 and 6
     to achieve mutual agreement with both parties.

8.       TRADEMARKS

         Distributor may use the additional trademarks related with the
product and technology listed in Section 1 of this Addendum (Suroquin-TM- and
DDS-TM-) only for the purposed described in Section 8 of the Distribution
Agreement.

* Portions of this exhibit have been omitted and filed separately with the
  Commission pursuant to a request for confidential treatment under
  Rule 406.

<PAGE>

9.       OTHER TERMS

         Other terms shall be as described in the April, 1997 Agreement.

February 18, 1999

/s/ Jerry Gin
---------------------------------
Oculex Pharmaceuticals, Inc.
Jerry Gin, President

/s/ Gregorio Cuevas
---------------------------------
Laboratorios Sophia S.A. de C.V
Gregorio Cuevas

/s/ Arturo Tarnez
---------------------------------
Laboratorios Sophia S.A. de C.V
Arturo Tarnez

/s/ Fernando Sanchez
---------------------------------
Laboratorios Sophia S.A. de C.V
Fernando Sanchez

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