CONNETICS CORPORATION SECURED LOAN AGREEMENT. This Secured Loan Agreement is made as of January 9, 1998 by and between Connetics Corporation, a Delaware corporation (the "Company") and John L. Higgins ("Borrower"). RECITALS Borrower desires to borrow, and the Company desires to lend to Borrower up to an aggregate of $18,000 (the "Borrowed Amount"). The parties desire that such loan shall be secured pursuant to a Security Agreement of even date herewith (the "Security Agreement") by an aggregate of 110,000 shares of the Company's Common Stock (as adjusted for subsequent stock splits, reverse stock splits and recapitalization) (the "Shares") issuable upon the exercise of options to purchase Common Stock held by Borrower (the "Options") while any Borrowed Amount is outstanding on the terms and conditions contained herein and in the Security Agreement. AGREEMENT In consideration of the foregoing, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. AGREEMENT TO LEND. Subject to the terms and conditions contained in this Agreement and upon execution of this Agreement, the Company agrees to issue to Borrower a check or other readily available funds in the Borrowed Amount upon the date of this Agreement.