Document:

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                                                                   EXHIBIT 10.51

                             DISTRIBUTION AGREEMENT

      This Distribution Agreement ("Agreement") is made as of January 1, 2001
(the "Effective Date"), between Connetics Corporation, a Delaware corporation,
having its principal place of business at 3400 West Bayshore Road, Palo Alto, CA
94303 ("Connetics"), and CORD Logistics, Inc., an Ohio corporation, having its
principal place of business at 15 Ingram Blvd., Suite #100, LaVergne, TN 37086
("CORD").

      A. Connetics is, among other things, in the business of developing and
marketing pharmaceutical products in the United States, the District of Columbia
and Puerto Rico (the "Territory").

      B. CORD is, among other things, in the business of distributing
pharmaceutical products to wholesalers, specialty distributors, physicians,
clinics, hospitals, pharmacies, and other health care providers in the
Territory, and of providing Information Systems and other services that support
its customers' use of its distribution capabilities.

      C. CORD and Connetics are parties to a Distribution Services Agreement
dated December 31, 1997 (the "Original Agreement") and a System Access Agreement
dated May 18, 1998, both of which are intended to be superceded by this
Agreement and its exhibits.

      D. Connetics desires to engage CORD as its exclusive distribution agent
for commercial sales of the products described on EXHIBIT A to this Agreement in
all formulations (each a "Product" and collectively the "Products") and such
other pharmaceutical products agreed to by the parties in the Territory and to
perform certain other services described in this Agreement, all upon the terms
and conditions set forth in this Agreement.

      THEREFORE, in consideration of the mutual conditions and covenants set
forth in this Agreement, CORD and Connetics (collectively referred to as "Party"
or "Parties") agree as follows:

      1. APPOINTMENT/AUTHORIZATION.

      1.1 Upon the terms and conditions set forth in this Agreement, Connetics
appoints CORD as its exclusive distribution agent of Products in the Territory
to Connetics' customers, including, but not limited to, wholesalers, specialty
distributors, physicians, clinics, hospitals, pharmacies and other health care
providers in the Territory (collectively, "Customers").

      1.2 Subject to the terms and conditions set forth in this Agreement, CORD
accepts the appointment to represent Connetics as its authorized exclusive
distribution agent of Product to Customers in the Territory.

      1.3 Right of First Negotiation.

            Connetics shall provide CORD with a right of first negotiation with
respect to the distribution of new pharmaceutical products acquired or promoted
by Connetics in the Territory after the Effective Date. Connetics shall grant
CORD an exclusive right of negotiation with respect to the distribution of such
new product for a period of thirty (30) days after Connetics' notice to CORD
that such new product will be available for distribution. If the parties have
not reached an agreement with respect to the distribution of the new product
within thirty (30) days from the date of Connetics' notice, and entered into a
definitive agreement within thirty (30) days thereafter, or if Cord notifies
Connetics in
<PAGE>
writing at any point during such negotiation period that it is not interested or
unable to distribute such new product(s), then Connetics shall have no further
obligation with respect to that new product under this Section 1.3.

      2. SERVICES.

      2.1 CORD shall provide the services set forth in the Operating Guidelines,
which include, without limitation, storage, distribution, returns, customer
support, financial support, EDI and system access support ("Services"). A copy
of the Operating Guidelines is attached to this Agreement as EXHIBIT B and
incorporated by this reference. In particular, and without limiting the general
nature of the foregoing statements, CORD shall store Product in the CORD
facility, comply with the storage and handling requirements applicable to each
Product, take Customer orders and process each order, and ship Product in
accordance with such orders, all as further described in the Operating
Guidelines.

      2.2 The Operating Guidelines may be amended from time to time upon the
mutual written agreement of the Parties; provided, however, that any change,
modification or amendment to the Operating Guidelines may result in an increase
in the fees charged by CORD in Section 5.

      2.3 CORD's services shall comply with the Operating Guidelines, provided
Connetics' shipments of Product to CORD are within twenty-five percent (25%) of
its Forecast (as defined below); provided, however, that if CORD elects not to
comply with the Operating Guidelines in reliance on this Section 2.3, CORD shall
promptly notify Connetics that it is invoking this provision.

      2.4 All Product Returns shall be processed and handled by CORD in
accordance with the Operating Guidelines. Any customization or additional return
services requested by Connetics shall be performed at an additional fee as
agreed by the Parties.

      2.5 Connetics is solely responsible for all Product recalls. If a Product
is subject to recall, or Connetics recalls any Product on its own initiative,
CORD shall provide assistance to Connetics as set forth in the Operating
Guidelines, provided that Connetics shall pay to CORD an amount equal to CORD's
actual costs incurred with any such recall services. Such cost shall be in
addition to the Service Fees described in Section 5 below.

      3. PRODUCT SUPPLY/CONNETICS RESPONSIBILITIES.

      3.1 Connetics shall deliver (or cause to be delivered) Product to CORD at
CORD's facility located at 15 Ingram Boulevard, Suite 100, LaVergne, TN 37086,
or to such other distribution facility as may be designated by CORD to Connetics
in writing ("Facility").

      3.2 Connetics shall be responsible for delivery of Product to the
Facility, including all costs, expenses and risk of loss associated with such
delivery. Title to Product shall remain with Connetics at all times, even when
Product is stored or warehoused at the Facility. Connetics shall at all times
insure the Product for damage, loss, destruction, theft or any such other
property damage ("Loss") as further set forth in Section 15 below. Except for
Loss resulting solely from the gross negligence or willful misconduct of CORD,
Connetics shall bear all risk of loss or damage with respect to the Product
stored or warehoused at the Facility.

      3.3 Connetics shall provide CORD with a forecast of the volume of Product
to be handled by CORD under this Agreement, not less often than semi-annually
("Forecast"). CORD shall ensure that

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<PAGE>
there is adequate storage capacity to meet Connetics' forecast demands. Upon
execution of this Agreement, Connetics shall deliver to CORD, upon request an
updated customer list which sets forth the Product prices (the "Customer Price
List"). Connetics shall use its best efforts to notify CORD of any change in the
Customer Price List not less than seventy-two (72) hours prior to the effective
date of any such change. Price change notices to CORD of less than seventy-two
(72) hours shall not represent a breach of this Agreement. CORD shall use
commercially reasonably efforts to implement such price change in accordance
with Connetics' instruction.

      3.4 CORD shall visually inspect each shipment of Product for external
damage or loss in transit and notify Connetics of any such damage or loss within
a commercially reasonable period of time following discovery.

      4. INFORMATION SYSTEM ACCESS.

      4.1 CORD shall continue to provide Connetics access to an Operating System
Base, which consists of the software used by CORD to support the services
provided to Connetics, including the server and other components needed to
execute the software and certain support services associated therewith, as
further set forth in the System Access Agreement, on the terms and conditions
set forth in the System Access Agreement. A copy of the System Access Agreement
is attached as EXHIBIT D and incorporated into this Agreement by this reference.
As of the Effective Date of this Agreement, the software releases are (i)
EliteSeries 6.1.2, as modified by CORD, supplied by Tecsys, Inc., a Montreal,
Quebec, Canadian company, and any upgrades, maintenance releases or
modifications implemented by CORD to support distribution services provided by
CORD and (ii) BACCS 3.0 as modified by CORD and any upgrades implemented by CORD
to support financial services provided by CORD. In addition, CORD shall provide
the software release "Impromptu" no later than April 30, 2001, and on an ongoing
basis CORD will provide to Connetics any upgrades, maintenance releases or
modifications that CORD implements to support CORD's distribution services.

      4.2 The System (as defined in the System Access Agreement) shall be made
available to Connetics at the fees set forth in the Fee Schedule, except that
any custom enhancements requested by Connetics shall be billed separately based
on an hourly rate set forth in the Fee Schedule (as defined in Section 5).

      4.3 In addition to the terms set forth in the System Access Agreement,
Connetics shall maintain (i) a local area network sufficient to support
Connetics' terminals and personal computers that have access to the System, all
such personal computers shall meet the minimum specifications necessary to
support software needed to access system (ii) a centralized server sufficient
for data storage related to such access and (iii) the communication and
electronic information lines at its facility. Connetics shall also assign
knowledgeable and qualified employees or representatives to facilitate access to
the System.

      5. FEES.

      5.1 As compensation for the Services, Connetics shall pay to CORD the fees
(the "Fees") set forth on EXHIBIT C (the "Fee Schedule").

      5.2 CORD shall issue an invoice to Connetics for the Services rendered
under this Agreement on a monthly basis. The monthly invoice may include, as
applicable, Fees or other amounts due to CORD pursuant to this Agreement.
Payment is due within twenty (20) days of the invoice date. If the Invoice is
not paid within such twenty (20) day period, a service charge on the unpaid
amount

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calculated at the rate of 1.5% per month (or the maximum rate permitted by law
if such rate is less than 1.5% per month) shall be imposed until such amount is
paid in full.

      5.3 The Fees shall be held firm for the first contract year. Thereafter,
CORD may adjust the price not more often than once per contract year by the
lesser of (i) the increase in the Producer Price Index - All Commodities
published by the United States Department of Labor, Bureau of Statistics, as
amended from time to time, or (ii) five percent (5%). For purposes of
sub-Section (i), the base point shall be the index level on the first day of the
contract year.

      5.4 Notwithstanding the terms set forth above in Section 5.3, if CORD can
reasonably demonstrate that the costs for providing the Services have materially
increased, or are likely to materially increase in the coming year due to the
adoption of any applicable law or regulation (or any material change in the
interpretation or administration thereof), or due to unforeseen circumstances
beyond CORD's reasonable control, then upon notice from CORD, the Parties agree
to meet in good faith for the purpose of negotiating a mutually acceptable
adjustment to the Fees.

      6. TERM AND TERMINATION.

      6.1 The initial term of this Agreement shall begin on the Effective Date
and shall continue for a period of three (3) years (the "Initial Term"), unless
terminated earlier pursuant to this Agreement. Thereafter, this Agreement shall
automatically renew for additional terms of one (1) year each, unless written
notice of termination is given by either Party at least ninety (90) days prior
to the end of the Initial Term, or such other term, in which case this Agreement
shall terminate at the end of the then current term.

      6.2 Either Party shall have the right to terminate this Agreement:

            (a) upon ninety (90) days prior written notice to the other Party,
provided that in the event Connetics terminates this Agreement, without cause,
prior to the end of the Initial Term, such termination shall be effective only
upon payment to CORD of all remaining fixed Fees set forth on the Fee Schedule
through the end of the 90-day notice period;

            (b) upon the breach by the other Party of a material provision of
this Agreement and that Party's failure to cure such breach within thirty (30)
days following written notice thereof from the non-breaching Party; or

            (c) immediately upon notice to the other Party following the
commencement of any bankruptcy or insolvency proceeding (whether voluntary or
involuntary) with respect to such other Party or its assets, which in the event
of an involuntary proceeding, is not dismissed within sixty (60) days, the
general assignment for the benefit of creditors by such other Party, or the
appointment of a receiver, trustee or liquidator by or for such other Party.

      6.3 Termination or expiration of this Agreement shall not relieve either
Party from any liability or obligation that accrued prior to such termination or
expiration. Upon termination or expiration of this Agreement, all Product shall
be returned to Connetics or a designee of Connetics, at Connetics' instructions
and at Connetics' sole cost and expense.

      6.4 Sections 11, 12, 13, 14 and 15 shall survive the expiration or earlier
termination of this Agreement.

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<PAGE>
      7. AUDITS. No more than once per calendar year, Connetics or its designee
shall have the right during normal business hours (i.e., 8:00 a.m. to 5:00 p.m.
local time), upon fifteen (15) business days prior written notice to CORD, to:
(a) conduct a physical audit of such parties of the Facility that relate solely
to Product stored and warehoused at the Facility under this Agreement; and (b)
review and audit records that relate solely to the storage and distribution of
the Product.

      8. COMPLIANCE WITH LAWS. Each Party shall conduct its activities in
connection with this Agreement in compliance with all applicable laws, rules,
regulations, and orders of governmental entities. CORD shall notify Connetics if
at any time CORD ceases to be licensed to distribute pharmaceutical products in
any state or territory of the USA.

      9. REPRESENTATIONS AND WARRANTIES.

      9.1 Each Party represents and warrants to the other that:

            (a) it has full power and authority to enter into this Agreement and
perform all obligations and conditions to be performed by it under this
Agreement without any restriction by any other Agreement or otherwise;

            (b) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action of that Party; and

            (c) this Agreement constitutes the legal, valid and binding
obligation of that Party.

      9.2 Connetics further represents and warrants to CORD that the Products:

            (a) are and shall be manufactured in conformity with the Food, Drug
and Cosmetic Act, as amended from time to time, and all other applicable laws,
rules, regulations and orders of governmental entities relating to the
manufacture, promotion, sale or distribution of the Products;

            (b) do not violate or infringe any patent, trademark, trade name or
other interest of any person or entity.

      10. TAXES. Connetics shall pay when due all sales, use, gross receipts,
excise, personal property taxes associated with the Product (excluding any
personal property tax associated with CORD's equipment used in connection with
the Services), and other taxes now or hereafter imposed as a result of the
transactions contemplated by this Agreement, none of which have been included in
the fees payable to CORD under this Agreement; provided that the amounts payable
by Connetics under this section shall not include taxes based on the net income
of CORD.

      11. TRADEMARKS. Neither Party shall have the right to use the name of the
other Party or any Affiliate of the other Party, or the other Party's or such
Affiliates' trademarks, service marks, logos, or other similar marks in any
manner except with the prior written approval of that Party or as otherwise set
forth in the Operating Guidelines; provided that the foregoing shall not
prohibit CORD's use of Connetics' names or marks in connection with the
performance of the Services in a manner consistent with this Agreement.
"Affiliate," as used in this Agreement, means any legal entity which, during the
Term hereof, controls, is controlled by, or is under common control with, such
Party. For purposes of this definition, an entity shall be deemed to control
another entity if it owns or controls, directly or

                                                                               5
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indirectly, at least fifty percent (50%) of the voting interest of all equity
interests of the other entity (or other such comparable ownership interest for
an entity other than a corporation).

      12. CONFIDENTIALITY.

      12.1 Each Party acknowledges that as a result of this Agreement it may
learn and have access to trade secrets and other confidential and proprietary
information of the other Party through employees, representatives and/or agents
acting on behalf of or subcontracted to either Party (collectively the
"Representatives"), including without limitation, financial information,
information regarding business practices and techniques, and systems and
technology information, or any information identified as confidential in writing
by either Party (the "Confidential Information"). For purposes of this
Agreement, Confidential Information shall not include information disclosed by
one Party to the other Party to the extent that such information can be proven
by written evidence: (a) to be in the public domain or generally available in
the industry in which the disclosing Party engages in business without any
violation of this Agreement by the other Party; (b) is already legally known to
the other Party or any of its Affiliates at the time of its disclosure by the
disclosing Party other than through this Agreement; (c) becomes known to the
other Party or any of its Affiliates from a third party without any obligation
of confidentiality or limitation on use; or (d) is independently developed by
the other Party or any of its Affiliates prior to the date of its disclosure.
The specific material terms of this Agreement shall be deemed to be the
Confidential Information of each Party. Confidential Information shall not be
deemed to be in the public domain or publicly known or in the receiving Party's
possession because it is embraced by more general information in the receiving
Party's possession or because it is embraced in general terms in publications.

      12.2 Neither Party shall, directly or indirectly, at any time: (a)
disclose to any third person or entity any Confidential Information of the other
Party, or (b) use, or permit or assist any third person or entity to use, any
such Confidential Information, excepting only: (i) disclosures required by law,
rule, regulation or order, as reasonably determined by the disclosing Party or
its legal counsel, and (ii) disclosures on a confidential basis to directors,
officers, employees, and agents of that Party or its Affiliates who have a
reasonable need to know such Confidential Information in the normal course of
business of that Party or any of that Party's Affiliates.

      12.3 The obligations of confidentiality hereunder shall survive the
termination of this Agreement for a period of three (3) years. Upon termination
of this Agreement (for any reason) each Party shall promptly: (i) return to the
other Party all documentation and other materials (including copies of original
documentation or other materials) containing any Confidential Information of the
other Party; or (ii) with the other Party's consent, certify to the other Party,
pursuant to a certificate in form and substance reasonably satisfactory to the
other Party that all such documentation and other materials have been destroyed.

      12.4 CORD acknowledges that certain Confidential Information relating to
Connetics, such as sales data and pricing, may constitute material inside
information of Connetics under federal securities laws. CORD shall take steps to
ensure that its employees who have access to such data regarding Connetics shall
take sufficient precautions to reduce the risk of disclosing or trading on such
material inside information.

      13. INDEMNIFICATION. Each Party shall indemnify and hold harmless the
other Party and its parent and Affiliates, and each of their directors,
officers, employees, agents, and representatives from and against all claims,
liabilities, losses, damages, costs, and expenses, including, without
limitation,

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reasonable attorneys' fees ("Liability") to a third party or property arising
directly or indirectly out of any failure of that Party to perform fully all
obligations and conditions to be performed by that Party pursuant to this
Agreement or any breach of any warranty made by that Party in this Agreement.
Connetics further agrees to indemnify and hold harmless CORD, its parent and
Affiliates and each of their directors, officers, employees, agents and
representatives from any and all Liability arising directly or indirectly out of
injury or death to person or property alleged to have been caused by Connetics'
Product(s), except to the extent such injury or death was caused by the gross
negligence or willful misconduct of CORD or its parent or Affiliates in handling
the Product(s).

      14. LIMITATION OF LIABILITY. NOTWITHSTANDING THE FOREGOING PROVISIONS OF
SECTION 13, OR ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.

      15. INSURANCE. During the term of this Agreement and for as long
thereafter as necessary to cover claims arising from this Agreement, or from
Products shipped in accordance with this Agreement; Connetics shall maintain:
(i) product liability and commercial general liability insurance having a limit
of not less than $5 million; and (ii) property damage insurance at replacement
value for the Product located at the CORD Facility or in transit to or from the
CORD Facility, pursuant to one or more insurance policies with reputable
insurance carriers. Cardinal Health, Inc. and its subsidiaries shall be
designated as "additional insureds" under the product liability and commercial
general liability insurance policy(ies) and under the property damage insurance
policy(ies). Connetics shall deliver to CORD certificates evidencing such
insurance upon request by CORD. Connetics shall not cause or permit such
insurance to be canceled or modified to materially reduce its scope or limits of
coverage during the term of this Agreement. Except for any losses resulting
solely from the gross negligence or intentional misconduct of CORD, Connetics
shall bear all risk of loss or damage with respect to the Product (as between
Connetics and CORD), whether located at the Facility or otherwise.

      16. DISPUTE RESOLUTION. The Parties agree to use good faith efforts to
resolve all disputes within sixty (60) days of written notice that such a
dispute exists. If dispute under this Agreement cannot be resolved by the
Parties within such sixty (60) day period, the Parties agree to refer the matter
to one executive from each Party not directly involved in the dispute for review
and resolution. A copy of the terms of this Agreement, agreed upon facts and
areas of disagreement, and a concise summary of the basis for each side's
contentions will be provided to both executives who shall review the same,
confer, and attempt to reach a mutual resolution of the issue within thirty (30)
days after receipt of the materials referenced above. If the matter has not been
resolved within such thirty (30) day period, either or both Parties may pursue
resolution of the matter through litigation or other process available under law
or equity.

      17. REMEDIES. Notwithstanding any language to the contrary in the
Operating Guidelines, CORD shall bear the full cost of shipping and returns for
any Product which CORD ships to the wrong location, or for which CORD ships
Product different from - or in different amounts than - Customer Orders taken by
CORD on behalf of Connetics.

      18. MISCELLANEOUS.

      18.1 Relationship of the Parties. CORD shall act as Connetics' agent for
purposes of warehousing and distributing Product, processing Customer Orders and
returns, and handling accounts

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receivable. CORD shall have no authority to incur any debts on behalf of
Connetics, or to make any commitments on behalf of Connetics except as expressly
contemplated by virtue of the agency relationship described.

      18.2 Notices. Any notice or other communication required or desired to be
given to any Party under this Agreement shall be in writing and shall be deemed
given: (a) three business days after such notice is deposited in the United
States mail, first-class postage prepaid, and addressed to that Party at the
address for such Party set forth at the end of this Agreement; (b) one business
day after delivered to Federal Express, Airborne, or any other similar express
delivery service for delivery to that Party at that address; or (c) when sent by
facsimile transmission, with electronic confirmation, to that Party at its
facsimile number set forth following the signatures at the end of this
Agreement. Any notice delivered by facsimile transmission will be deemed
delivered upon electronic confirmation provided the notice is also deposited in
the U.S. mail, first-class postage prepaid. Either Party may change its address
or facsimile number for notices under this Agreement by giving the other Party
notice of such change pursuant to this Section 17.2.

      18.3 Governing Law. This Agreement shall be construed under the laws of
the State of Tennessee, without regard to its conflicts of laws provisions.

      18.4 Severability. If any term of this Agreement is declared invalid or
unenforceable by a court or other body of competent jurisdiction, the remaining
terms of this Agreement will continue in full force and effect.

      18.5 Non-Waiver. No failure by either Party to insist upon strict
compliance with any term of this Agreement, to enforce any right, or to seek any
remedy upon any default of the other Party shall affect, or constitute a waiver
of, the first Party's right to insist upon strict compliance, to exercise that
option, to enforce that right, or to seek that remedy with respect to that
default or any prior, contemporaneous, or subsequent default. No custom or
practice of the Parties at variance with any provision of this Agreement shall
affect, or constitute a waiver of, either Party's right to demand strict
compliance with all provisions of this Agreement.

      18.6 Force Majeure. Notwithstanding any other provisions of this Agreement
or the Distribution Agreement to the contrary, each Party's obligations under
this Agreement (exclusive of payment obligations) shall be excused if and to the
extent that any delay or failure to perform such obligations is due to fire or
other casualty, government restrictions, war, riot, strikes or labor disputes,
acts of God, or other causes beyond the reasonable control of that Party;
provided, however, that any Party hindered by such condition beyond its
reasonable control must employ reasonable efforts to overcome such hindrance as
promptly as practicable.

      18.7 Complete Agreement. This Agreement together with all of its Exhibits
constitutes the entire understanding between the Parties and supersedes any
contracts, agreements or understanding (oral or written) of the Parties with
respect to the subject matter of this Agreement, including specifically the
Original Agreement, and the System Access Agreement signed May 18, 1998. No term
of this Agreement may be amended except upon written agreement of both Parties,
unless provided otherwise in this Agreement.

      18.8 Assignment. Except as set forth in this Agreement, neither Party
shall have the right to assign this Agreement, or any of such Party's rights or
obligations under this Agreement, without the prior written consent of the other
Party, provided, however, that either Party may assign its rights under this
Agreement to any parent, subsidiary or affiliate without obtaining such consent.
This Agreement

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<PAGE>
shall be binding upon, inure to the benefit of, and be enforceable by and
against the respective successors and assigns of the Parties.

      IN WITNESS WHEREOF, the undersigned acknowledge and accept the terms of
this Agreement and have duly executed this Agreement.
<TABLE>
<S>                                        <C>
CORD LOGISTICS, INC.                       CONNETICS CORPORATION

By /s/ Frank C. Wegerson                  By /s/ C. Gregory Vontz
   ---------------------------------         ------------------------------------
   Frank C. Wegerson                             C. Gregory Vontz
   Vice President and General Manager            Executive VP & Chief Operating Officer

   15 Ingram Blvd, Suite #100                    3294 West Bayshore Road
   LaVergne, TN 37086                            Palo Alto, CA  94303

   Facsimile No.  (615) 793-4783                 Facsimile No. (650) 843-2899
</TABLE>
<PAGE>
                                    EXHIBITS

                  Exhibit A   Products

                  Exhibit B   Operating Guidelines

                  Exhibit C   Fee Schedule

                  Exhibit D   System Access Agreement
<PAGE>
                       AMENDMENT TO DISTRIBUTION AGREEMENT

THIS AMENDMENT TO DISTRIBUTION AGREEMENT (the "AMENDMENT AGREEMENT") is
effective as of September 1, 2001, between Connetics Corporation, a Delaware
corporation, having an address at 3400 West Bayshore Road, Palo Alto, California
94303-4227 ("CONNETICS") and CORD Logistics, Inc., an Ohio corporation, having
its principal place of business at 15 Ingram Blvd., Suite #100, LaVergne, TN
37086 ("CORD").

                                   BACKGROUND

Connetics and CORD are parties to a Distribution Agreement dated as of January
1, 2001 ("DISTRIBUTION AGREEMENT"). Connetics and CORD desire to expand the term
of the Distribution Agreement. Accordingly, Connetics and CORD agree as follows:

AGREEMENT

1.    The parties agree to delete EXHIBIT A of the Distribution Agreement in its
      entirety and replace it with AMENDED EXHIBIT A, which is attached to this
      Amendment Agreement.

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

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

CORD LOGISTICS, INC.                     CONNETICS CORPORATION

By:  /s/ Frank C. Wegerson               By:  /s/ Gregory Vontz
     -------------------------------          ----------------------------------
      Frank C. Wegerson                         C. Gregory Vontz
      Vice President & General                  Executive Vice President &
      Manager                                   Chief Operating Officer
<PAGE>
                               AMENDED EXHIBIT A

                                    PRODUCTS

<TABLE>
<CAPTION>
                        Product                       NDC #
                        -------                       -----
<S>                                                   <C>
                        Ridaura(R) (auranofin)        NDC 63032-011-60

                        Luxiq(R) 100g                 NDC 63032-021-00

                        Luxiq(R) 50g                  NDC 63032-021-50

                        OLUX(TM) 100g                 NDC 63032-031-00

                        OLUX(TM) 50g                  NDC 63032-031-50

</TABLE>

<PAGE>
                                   AMENDMENT

This amendment ("AMENDMENT") to the Distribution Agreement dated January 1, 2001
(the "AGREEMENT"), between Cardinal Health 105, Inc. (formerly known as CORD
Logistics, Inc.) ("CARDINAL HEALTH") and Connetics Corporation ("CONNETICS") is
entered into to modify and amend the terms and conditions of the Agreement as
set forth below. Any conflict between the provisions of this Amendment and the
Agreement shall be resolved in favor of this Amendment and capitalized terms
used in this Amendment shall have the same meaning given to them in the
Agreement, unless otherwise defined in this Amendment.

1. AMENDMENT

     The Agreement shall be amended by adding a new Section 19 as follows:

     "19.0 PATIENT ASSISTANCE/INDIGENT PATIENT PROGRAM

     19.1 Connetics is responsible for the pre-qualification process for all
     Patient Assistance/Indigent Patient Program ("PAP") recipients. Connetics
     shall transmit PAP orders to Cardinal Health in manual format only.
     Connetics shall not disclose to Cardinal Health any Protected Health
     Information as that term is defined in the Health Insurance Portability and
     Accountability Act of 1996. Connetics may place a number on PAP orders for
     inclusion on packing slips which allows the order recipient to identify the
     patient, provided that such number is not Protected Health Information and
     is not linked to patient information (e.g. no social security numbers, date
     of birth, etc.). Connetics shall comply with all applicable federal and
     state laws and provide on an annual basis certification of compliance with
     the Prescription Drug Marketing Act and regulations promulgated under that
     Act relating to the qualification of physicians and practitioners to
     receive prescription drugs under the PAP.

     19.2 Connetics shall request shipment only to properly licensed recipients
     and will not request shipment directly to patients. With each PAP order,
     Connetics shall provide Cardinal Health with a copy of the appropriate
     state medical license or state prescription drug license and, for
     controlled substance orders, a copy of the federal Drug Enforcement Agency
     license for the ship to recipient. Cardinal Health shall not process orders
     not having such licensure verification until Connetics provides such
     documentation.

     19.3 Cardinal Health shall create a new order format for PAP orders and
     shall process all PAP orders pursuant to normal stated SOP shipping
     procedures. Cardinal Health shall ship PAP orders via a carrier agreed upon
     by Connetics.

     19.4 Connetics shall indemnify and hold harmless Cardinal Health, its
     parent, and each of their directors, officers and employees from any and
     all Liability (as

<PAGE>
     defined in Section 13) arising out of Connetics' breach of its duties under
     this Section 19 Patient Assistance/Indigent Patient Program.

II. EFFECTIVE DATE. This Amendment shall be effective as of September 3, 2003.
Unless otherwise expressly set forth herein, all other terms and conditions set
forth in the Agreement shall remain in full force and effect.

CARDINAL HEALTH 105, INC.                 CONNETICS CORPORATION

By: /s/ Tim Martin                        By: /s/ Michael P. Miller
   -------------------------------           -----------------------------------
Tim Martin                                Name: Michael P. Miller
Vice President and General Manager              --------------------------------
Specialty Pharmaceutical Services         Title: SVP
                                                 -------------------------------
15 Ingram Blvd., Suite 100
LaVergne, TN 37086

<PAGE>
                 AMENDMENT TO EXCLUSIVE DISTRIBUTION AGREEMENT

      This Amendment to Exclusive Distribution Agreement dated January 1, 2001
("Agreement"), between Cardinal Health 105, Inc. (formerly known as CORD
Logistics, Inc. ("Cardinal Health")  and Connetics Corporation ("Client") is
entered into to modify and amend the terms and conditions of the Agreement as
set forth below. Any conflict between the provisions of this Amendment and the
Agreement shall be resolved in favor of this Amendment and capitalized terms
used herein shall have the same meaning given to them in the Agreement, unless
otherwise defined in this Amendment.

1.    The fee schedule set forth in the Agreement shall be amended to add the
      following fees related to Cardinal Health's Impromptu Web Based Reporting
      System:

<Table>
<Caption>
                  CLIENT
               FEE SCHEDULE
      IMPROMPTU WEB BASED REPORTING
------------------------------------------
<S>                                 <C>         <C>
One Time License Fee                $5,000      BASE ASSUMPTIONS:
                                                1. Includes two user license

Set-up Fee                              $0      ADDITIONAL FEES:
                                                1. Customized Impromptu reports will be quoted at
                                                $275.00 per hour for development

Monthly Access Fee                  $7,500      No change
</Table>

2.    This Amendment shall be effective upon full execution by the parties.
      Unless otherwise expressly set forth herein, all other terms and
      conditions set forth in the Agreement shall remain in full force and
      effect.

Cardinal Health 105, Inc.                 Connetics Corporation

By: /s/ Tim Martin                        By: /s/ Michael A. Nazak
   ---------------------------------         --------------------------------
Tim Martin                                Name:  Michael A. Nazak
Vice President and General Manager        Title: Sr. Director of Finance
                                                 and Controller

Date: September 12, 2003                  Date: 9/24/03<PAGE>
                                                                 Exhibit 10.1

             AMENDED AND RESTATED MANUFACTURING AND SUPPLY AGREEMENT

This Amended and Restated Manufacturing and Supply Agreement (the "Agreement")
is entered into effective as of April 24, 2003 ("Effective Date"), by and
between APG, an Indiana corporation ("APG"), and Connetics Corporation, a
Delaware corporation ("Connetics"). APG and Connetics are each referred to as a
"Party" to this Agreement, and collectively as the "Parties."

                                   BACKGROUND

A.       Connetics desires to use APG's facilities, resources and expertise to
         manufacture the Products, as defined below, and APG desires to act as a
         contract manufacturer of the Products agreed to by both Parties in
         accordance with the terms and conditions set forth in this Agreement.

B.       Connetics and APG previously entered into a Quality and Technical
         Agreement, dated January 8, 2002, as amended effective September 13,
         2002.

C.       Connetics and APG previously entered into a Manufacturing and Supply
         Agreement dated January 1, 2002, which was amended on July 1, 2002 (the
         "Original Agreement"). The Parties desire to amend and restate the
         Original Agreement to encompass the matters set forth in this
         Agreement.

D.       Upon the execution of this Agreement by the Parties, Connetics desires
         to pre-pay $1,500,000 for future development work and Products
         (the "Payment").

E.       [*]

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

                                    AGREEMENT

                                    ARTICLE 1
                                   DEFINITIONS

For the purposes of this Agreement, in addition to terms defined elsewhere in
this Agreement, the following capitalized terms shall have the following
meanings:

"AFFILIATE" means any corporation or other business entity controlled by,
controlling or under common control with a party hereto. For this purpose
"control" shall mean direct or indirect

                                                                          PAGE 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>

beneficial ownership of fifty percent (50%) or more of the voting stock, or a
fifty percent (50%) or more interest in the income of, such corporation or other
business entity.

"ANNUAL CREDIT" shall have the meaning set forth in SECTION 4.5.

"API" means active pharmaceutical ingredient.

"BATCH" shall have the meaning set forth in the Quality Agreement.

"CERTIFICATE OF ANALYSIS" means a summary of the quality control testing, as
described in the Specifications, performed by APG for Finished Product supplied
under this Agreement.

"CHANGE" shall have the meaning set forth in the Quality Agreement.

"cGMPs" means the current Good Manufacturing Practices of the FDA.

"COMMERCIALLY REASONABLE EFFORTS" means the effort by APG or Connetics to
deploy, in light of prevailing circumstances and taking into account obligations
and commitments to third parties, sufficient resources, capital equipment,
material and labor as might reasonably be expected to achieve in a commercially
appropriate time-scale, the benefits which are reasonably anticipated to accrue
to APG and Connetics from the commercial exploitation of the Products, and if
the Commercially Reasonable Efforts are to be directed to a specific goal, then
the achievement of that goal.

"CONFIDENTIAL INFORMATION" shall have the meaning set forth in SECTION 7.1.

"CONNETICS REPRESENTATIVE" means the person designated by Connetics who shall be
primarily on site at APG's facility.

"DATE OF MANUFACTURE" shall have the meaning set forth in the Quality Agreement.

"DEVELOPMENT AGREEMENT" means any separate agreement entered into by the Parties
with respect to a potential Product that is not yet ready to be manufactured on
a commercial scale, including the requirements surrounding production of units
of Product and Placebo appropriately labeled for use in Connetics' clinical
trials (in amounts to be specified by Connetics, as required). Each such
Development Agreement shall, when executed, be appended to this Agreement as an
EXHIBIT E (sequentially numbered as Exhibits E-1, E-2, etc.).

"DMF" means the drug master file for a Product, as filed by APG with the FDA.

"FDA" means the Food and Drug Administration of the United States of America.

"FINISHED PRODUCT" shall have the meaning set forth in the Quality Agreement.

"IND" means an Investigational New Drug Application for a Product, as filed by
Connetics with the FDA.

                                                                          PAGE 2

<PAGE>

"INITIAL TERM" shall have the meaning set forth in SECTION 10.1.

"LABELING" means the primary container label, secondary packaging, package
insert, shelf pack and shipper label specific to finished Product, including
Placebo, manufactured pursuant to this Agreement.

"LOSSES" shall have the meaning set forth in SECTION 11.1.

"MANUFACTURING FEE" means the fee paid by Connetics to APG for services required
to manufacture and package Products. The Manufacturing Fee is quoted in single
final Product Unit increments (i.e., by the can, bottle, or tube), and will be
set for each Product and for each size or formulation. . 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).

"MANUFACTURING STANDARDS" means the specifications for manufacturing, packaging,
labeling and storing the Products set forth in the Specifications, the master
batch record, cGMPs, MSDSs, and all other applicable U.S. laws and regulations.

"MSDS" means material safety data sheet(s).

"NDA" means a New Drug Application for a Product, as filed by Connetics with,
and approved by the FDA.

"PAYMENT" shall have the meaning set forth in RECITAL D.

"PLACEBO" means a Product adjusted to be formulated without the active
ingredient.

"PRODUCT(s)" means the products described on EXHIBIT A to this Agreement, as it
may be properly amended from time to time by agreement of the Parties, and which
is incorporated by this reference as though fully set forth in this paragraph.

"QUALITY AGREEMENT" means the Agreement set forth as EXHIBIT C to this Agreement
and incorporated by this reference as though fully set forth in this Agreement,
as it may be amended from time to time.

"RAW MATERIALS" means any and all raw materials and components other than the
API needed by APG to manufacture and supply Product according to the terms and
conditions of this Agreement.

"REGULATORY AUTHORITY" means the FDA or any equivalent or additional
governmental or regulatory agencies having jurisdiction with respect to APG,
APG's facilities, or the Products.

"SPECIFICATIONS" means the specifications established by Connetics in writing
for the manufacture of any Product.

                                                                          PAGE 3

<PAGE>

"UNIQUE MATERIALS" shall have the meaning set forth in SECTION 3.12 of this
Agreement.

"UNIT" means the Product in the package sizes set forth in the Specifications.
The trade or sample package may be changed from time to time and the term "Unit"
shall refer to the Product in such changed package.

                                    ARTICLE 2
                         SPECIFICATIONS AND MANUFACTURE

2.1      Manufacture of Products. During the term of this Agreement, and subject
         to the terms and conditions of this Agreement, APG shall formulate,
         fill and package the Products (including Placebo) in accordance with
         their respective Specifications, according to the terms of this
         Agreement and the Quality Agreement, as they may be amended from time
         to time. The Parties may mutually agree to alter the Specifications or
         to amend the Quality Agreement from time to time by written agreement
         without the necessity of amending this Agreement.

2.2      Conformance to Specifications. Products (and jointly approved for the
         purposes of this section, the Placebo) shall conform to the
         Specifications, the terms of the Quality Agreement, and all
         specifications provided in Connetics' IND or NDA. Notwithstanding the
         foregoing, if Connetics accepts Product in accordance with the
         provisions of this Agreement and the Quality Agreement, this SECTION
         2.2 shall be deemed to have been satisfied.

2.3      Labeling. APG will label and package Product in finished form, pursuant
         to a firm purchase order accepted by APG as described in SECTION 3.4.
         Connetics shall be responsible for the origination of artwork and text,
         and shall make all final decisions with regard to the Labeling.
         Connetics shall be responsible for assuring that such Labeling conforms
         to all applicable laws.

2.4      Raw Materials. APG shall have the sole responsibility to source all API
         and Raw Materials, including all quality control responsibility for
         such Raw Materials. APG shall secure reliable sources and maintain
         sufficient quantities of the API and the Raw Materials to manufacture
         Product in accordance with the terms and conditions of this Agreement.
         APG shall assume all responsibility and risk for the safekeeping,
         storage and handling of all API and Raw Materials.

2.5      Batch Testing; Certificate of Authenticity. APG shall test, or cause to
         be tested, in accordance with the Specifications, each batch of Product
         manufactured pursuant to this Agreement before delivery to Connetics.
         Prior to each shipment of Product, APG shall provide to Connetics a
         Certificate of Analysis attesting to the quality of each batch
         contained within the shipment, including review and approval by the
         appropriate quality control unit of all batch production and control
         records. APG shall maintain and provide Connetics with such
         documentation as may be required for compliance with FDA and other
         applicable regulations.

                                                                          PAGE 4

<PAGE>

2.6      Good Manufacturing Practice. APG shall manufacture, store and prepare
         all Products for shipping in accordance with cGMPs, in an FDA inspected
         facility, currently envisioned to be APG's facilities in Indiana,
         located at 1919 Superior Street, Elkhart, Indiana (formulation and
         compounding; in process testing; finished product testing) and 2825
         Middlebury Street, Elkhart, Indiana (fill and packaging). APG shall
         ensure that the housekeeping and maintenances of each facility complies
         with cGMP requirements. APG may not change manufacturing of Products to
         an alternate facility without first obtaining Connetics' written
         approval, including the approvals required pursuant to the Quality
         Agreement, such approval not to be unreasonably withheld.

2.7      DMF. APG shall maintain a DMF or like filing, suitable for APG's
         manufacture of Products, with the applicable regulatory agencies
         (including FDA) and shall ensure that its "active status" is
         maintained. APG shall use Commercially Reasonable Efforts to timely
         accomplish, and bear the costs of, preparing for regulatory inspection,
         approval and associated filings required for the manufacture of
         Connetics' Products. Connetics shall directly pay or reimburse APG for
         any fees and payments to such regulatory agencies required for such
         inspection, approval and associated filings (e.g., any FDA inspection
         fee); it is understood that Connetics is not responsible for any
         additional fees and payments related to the general operation of APG's
         business or facilities. APG will provide letter(s) granting Connetics
         and its designees the right of cross-reference to the DMF. APG reserves
         the right to cancel such letter(s) in case of termination of this
         Agreement.

2.8      Licenses. APG agrees that it shall, at its sole cost and expense,
         maintain any and all licenses, permits and consents necessary and/or
         required for APG to manufacture the Product and otherwise perform its
         obligations under this Agreement.

2.9      Inspections. Connetics has the right at any time during the term of
         this Agreement, upon reasonable prior notice and during reasonable
         business hours and without disruption to APG's business, to inspect
         APG's facility, and to make FDA-type inspections at its plant to
         satisfy itself that APG manufactures and documents the Product
         according to current cGMPs, consistent with FDA standards and
         requirements. Such inspections may only be made by individuals
         reasonably acceptable to APG. The provisions of this SECTION 2.9 are
         subject to the confidentiality provisions OF ARTICLE 7. Connetics shall
         be responsible for its costs of travel and accommodation for such
         inspections.

2.10     Changes to Specifications.

         (a)      If Connetics desires any material change to the Specifications
                  or manufacturing process, Connetics shall deliver, sixty (60)
                  days prior to the expected date of implementation, written
                  notice to APG specifying such change desired by Connetics, and
                  APG shall acknowledge in writing any such notice within thirty
                  (30) days after APG receives the notice; provided, however,
                  that the Specifications or process shall not be supplemented,
                  modified or amended in any respect without the prior written
                  agreement of the Parties. APG will use Commercially Reasonable
                  Efforts to implement changes within one hundred and

                                                                          PAGE 5

<PAGE>

                  twenty (120) days after APG's acknowledgement of such notice.
                  If Connetics requests a change to a Product Specification,
                  including the manufacturing process, and APG agrees that such
                  change is feasible, such change shall be incorporated within
                  the Product Specification pursuant to a written amendment to
                  this Agreement. Connetics shall be responsible for obtaining
                  any required FDA approval prior to implementation of such a
                  change at Connetics' cost.

         (b)      APG will communicate to Connetics in a timely manner any
                  change in the Product Specification, including the
                  manufacturing process, initiated by APG, and will obtain
                  Connetics' written approval by way of written amendment of
                  this Agreement incorporating such change within the Product
                  Specification prior to implementation of the change. No such
                  change may be instituted except in compliance with this
                  Agreement and the Quality Agreement. Connetics shall have the
                  option of obtaining, or having APG obtain any required FDA
                  approval or other regulatory approval prior to implementation
                  of such a change. APG may provide additional services in
                  conjunction with the manufacture of Products, such as
                  additional formulation, process development or stability
                  testing, at the request of Connetics and pursuant to
                  Connetics' purchase order, and all data and results from such
                  additional services shall be owned by Connetics and protected
                  as confidential under this Agreement.

2.11     Connetics Representative at APG. Connetics may, at Connetics' expense,
         place a company representative on-site at APG's manufacturing facility
         during the term of this Agreement. Subject to the following sentence,
         such representative shall have full access to all operations,
         documents, and records that specifically pertain to the manufacture of
         the Products. The Connetics Representative shall accept APG's
         procedures regulating external customer relationships (including GMP
         training, guarantee of confidentiality, and health procedures), and
         shall not materially disrupt APG's operations. Nothing in this SECTION
         2.11 shall be read to prevent APG from denying access to the Connetics
         Representative at any time when the confidentiality of another APG
         customer would be compromised by the presence of the Connetics
         Representative.

2.12     Equipment. Connetics has purchased the equipment listed on EXHIBIT D,
         all of which is to be kept at APG's facilities at 1919 Superior Street
         and 2825 Middlebury Street, Elkhart, Indiana. APG shall use the
         equipment solely in the manufacture and testing of Connetics' Products,
         and shall be responsible for maintaining and servicing the equipment.
         APG consents to the filing of any papers or documents necessary to
         secure Connetics' security interest in the equipment. Division 9 of the
         California Commercial Code shall govern the rights and obligations of
         the Parties relative to the security interests in the equipment.

                                   ARTICLE 2.5
                                   EXCLUSIVITY

2.5.1    Exclusivity. As consideration for the Payment, during the term of this
         Agreement, APG shall not engage in any new manufacturing or development
         activities for any aerosol

                                                                          PAGE 6

<PAGE>

         foam-based prescription dermatology product(s) for any other party
         without first obtaining Connetics' written consent, which consent can
         be withheld by Connetics for any reason and at its sole discretion. All
         manufacturing and/or development activities for aerosol foam-based
         prescription dermatology product(s) APG is engaged in for other parties
         as of the effective date of this Agreement are permitted and do not
         require Connetics' written consent.

2.5.2    Protection of Know-How. Whether or not APG engages in activities
         specified in SECTION 2.5.1, but especially in those instances when APG
         does engage in those activities, whether such activities are engaged in
         prior to or after the effective date of this Agreement, or engaged in
         with or without Connetics' consent, APG shall protect and keep
         confidential, pursuant to the provisions of ARTICLE 7, all of
         Connetics' know-how. Connetics' know-how shall include but not be
         limited to:

         (a)      the manufacturing plan, process and/or instructions;

         (b)      the Specifications;

         (c)      testing procedures;

         (d)      validation, verification, and/or certification protocols,
                  including preliminary data and results;

         (e)      stability runs and/or testing;

         (f)      equipment qualifications, validations and/or verifications
                  specific to the Products; and

         (g)      equipment layout for the equipment used to manufacture the
                  Products.

         Furthermore, during the preparation, manufacture and internal review
         following the manufacturing process for the Products, no third party or
         unauthorized person shall have access to the area in which the
         manufacturing process takes place. No third party or unauthorized
         person shall have access at any time to the equipment and machinery
         dedicated to the manufacture of the Products.

2.5.3    Acceleration upon Breach. If APG breaches the provisions of this
         ARTICLE 2.5 and Connetics does not terminate this Agreement pursuant to
         SECTION 10.2, then all remaining Annual Credits, shall be immediately
         accelerated and the remaining portion of the Payment that has not been
         credited to Connetics shall be applied 100% to all then-current and
         future Product orders and/or development work until fully credited to
         Connetics.

                                                                          PAGE 7

<PAGE>

                                    ARTICLE 3
                               PLANNING AND SUPPLY

3.1      Production. APG will produce Products to meet the mutually agreed upon
         forecasts, subject to the provisions of this ARTICLE 3. APG will keep
         Connetics reasonably informed of all scheduled production activity for
         the Products.

3.2      Termination of Obligation. APG's obligation to supply Product to
         Connetics shall terminate pursuant to the provisions of ARTICLE 10
         below.

3.3      Forecasts. Connetics shall provide APG with an annual forecast for
         budgeting and production planning purposes. Connetics shall also
         deliver to APG a monthly update during the first calendar week of each
         month, together with a summary of changes from the previous update.
         Forecasts shall include the amounts of each Product to be manufactured
         and supplied by APG and the expected timing for the delivery of each
         shipment during the forecast period.

3.4      Purchase Orders. Connetics will place written purchase orders directly
         or through its designated representatives with APG approximately twelve
         (12) weeks prior to requested shipment date, including the following
         details: number of units, requested shipping date, shipping
         instructions and Connetics' order reference number including the price
         calculated according to this Agreement. Each purchase order issued
         pursuant to this Agreement shall be governed by the terms and
         conditions of this Agreement, and shall override any conflicting
         provisions in any purchase order and any invoice or packing slip
         generated by APG with respect to the details set forth in this SECTION
         3.4.

3.5      Receipt and Acceptance by APG. APG shall promptly acknowledge its
         receipt of purchase orders and inform Connetics of the anticipated
         dates of manufacture and delivery of each Product presentation to
         Connetics. APG shall respond in writing as to its acceptance of each
         firm purchase order within fifteen (15) days of receipt of such order.
         Any portion of the order that exceeds the most recent corresponding
         twelve (12) month forecast (supplied pursuant to SECTION 3.3) by more
         than one hundred ten percent (110%) will be accepted at APG's
         discretion. Once a specified quantity, form and delivery date terms
         have been agreed to by the Parties in any purchase order placed
         pursuant to this SECTION 3.5, the purchase order may not be canceled by
         either Party except as provided in SECTION 3.10 or in SECTION 3.11
         below. Connetics acknowledges that the acceptance of a purchase order
         triggers the purchase of Unique Materials, as defined in Section 3.12.

3.6      Shipment; Delays. APG shall use Commercially Reasonable Efforts to ship
         Product to Connetics by the delivery date specified in the accepted
         purchase order. If APG believes there will be a significant delay in
         shipment of Finished Product beyond the delivery dates specified in any
         accepted purchase order, APG shall promptly inform Connetics of such
         expected delay and shall use Commercially Reasonable Efforts to
         minimize the delay.

                                                                          PAGE 8

<PAGE>

3.7      Change Orders. The time of delivery and quantities specified in a
         purchase order accepted by APG pursuant to SECTION 3.5 above shall be
         binding upon the Parties and may not be changed or canceled, except as
         provided in SECTIONS 3.9 AND 3.10 below.

3.8      Increased Demand. APG will use Commercially Reasonable Efforts to
         accommodate Connetics' requests for Units in excess of those reserved
         for Connetics; provided, however, that it shall not be a breach of this
         Agreement if APG, despite its Commercially Reasonable Efforts, is
         unable to supply quantities of Product to Connetics in excess of 110%
         of the annual forecast supplied pursuant to SECTION 3.3 for that year.

         3.9      Postponement of Manufacturing; Penalties.

         (a)      By Connetics. Connetics may postpone a purchase order for
                  production in accordance with the provisions in this Section.
                  Connetics may postpone each purchase order one time. In the
                  event of postponement pursuant to this SECTION 3.9, APG shall
                  use Commercially Reasonable Efforts to reschedule the
                  postponed order to a date agreeable to both Parties.
                  Regardless of the amount of notice, if Connetics does not
                  reschedule the Date of Manufacture to a date within forty-five
                  (45) calendar days of the originally scheduled date, the
                  Purchase Order shall be deemed cancelled, and Connetics shall
                  incur the penalties, if any, pursuant to SECTION 3.10.

         (b)      By APG.

                  (i)      APG shall use Commercially Reasonable Efforts to meet
                           the terms of a purchase order that it accepts, taking
                           into account mutually agreed upon forecasts under
                           SECTION 3.3, available plant capacity and timing of
                           its production.

                  (ii)     APG shall immediately notify Connetics if APG is
                           unable to fill any purchase order place by Connetics
                           pursuant to SECTION 3.4 for any reason, and advise
                           Connetics of the revised delivery date. Connetics
                           shall then have the option of terminating the
                           purchase order without obligation of payment or of
                           accepting the revised delivery date.

3.10     Cancellation of Purchase Orders; Penalties. Connetics may cancel a
         purchase order for production in accordance with the provisions in this
         Section. In addition to any charges for Unique Materials pursuant to
         SECTION 3.12, Connetics shall be assessed a charge for cancellation,
         determined according to the following schedule:

         (a)      If Connetics gives at least forty-five (45) calendar days
                  notice prior to the manufacturing date assigned by APG
                  pursuant to SECTION 3.5, there shall be no penalty for
                  cancellation.

         (b)      If Connetics gives less than forty-five (45) calendar days and
                  more than fourteen (14) days notice, APG may invoice Connetics
                  for, and Connetics shall be required to pay to APG an amount
                  equal to thirty percent (30%) of

                                                                          PAGE 9

<PAGE>

                  the amount owed under the purchase order, calculated in
                  accordance with EXHIBIT B; provided, however, that APG must
                  use Commercially Reasonable Efforts to reallocate the suite to
                  manufacture another product on the originally scheduled date,
                  and no charge shall be assessed to Connetics if such efforts
                  are successful.

         (c)      If Connetics gives fourteen (14) days or less notice, APG may
                  invoice Connetics for, and Connetics shall be required to pay
                  to APG an amount equal to, fifty percent (50%) of the amount
                  owed under the purchase order, calculated in accordance with
                  EXHIBIT B; provided, however, that APG must use Commercially
                  Reasonable Efforts to reallocate the suite to manufacture
                  another product on the originally scheduled date, and no
                  charge shall be assessed to Connetics if such efforts are
                  successful.

3.11     Shipment; Inspection; Rejection

         (a)      Shipment of Product. APG shall ship, or cause to be shipped at
                  Connetics' expense, the Product to Connetics or such
                  destination(s) as Connetics may designate in writing. Delivery
                  of Product to a common carrier authorized by Connetics shall
                  constitute delivery to Connetics, and risk of loss shall pass
                  to Connetics at that time. APG agrees to provide support to
                  assist Connetics to pursue any Product related claims it may
                  have against carriers, provided that Connetics shall reimburse
                  APG for any out-of-pocket expenses APG may incur in providing
                  such support. All invoices and other shipping documents shall
                  be sent by first class mail or by fax to Connetics' address
                  for notices under this Agreement, directed to the attention of
                  Controller.

         (b)      Non-Conforming Product. Connetics may reject any shipment of
                  Product that does not conform to the Manufacturing Standards,
                  subject to the terms of this Section and the Quality
                  Agreement. Except with respect to "hidden defects," within ten
                  (10) business days after APG's internal release of Product,
                  Connetics shall inspect the Product and notify APG whether it
                  will accept or reject the Product. If Connetics does not
                  notify APG of the non-conformity of such Product, the Product
                  shall be deemed to meet the Specifications, except for hidden
                  defects. No inspection under this Section shall relieve APG of
                  its obligations and warranties under this Agreement. If
                  Connetics rejects all or any part of any shipment of Product,
                  the procedures to be followed are:

                  (i)      Connetics shall submit to APG in writing any claim
                           that Product does not conform with the Specifications
                           or cGMPs, accompanied by a report of Connetics'
                           analysis (which analysis shall be conducted in good
                           faith) and a sample of the Product at issue,
                           explaining in reasonable detail the basis on which
                           the allegedly nonconforming Product does not meet the
                           Specifications. Once nonconformance is confirmed and
                           fault is determined to belong with APG pursuant to
                           the provisions of this SECTION 3.11(b), Connetics
                           shall not be obligated to pay for such nonconforming

                                                                         PAGE 10

<PAGE>

                           shipment of Product. Only those tests listed in the
                           Specifications may be used to demonstrate
                           nonconformance of Product.

                  (ii)     APG shall conduct its own analysis of the sample in
                           good faith within thirty (30) days after the receipt
                           by APG of the report and sample from Connetics, and
                           provide the results to Connetics.

                           (A)      If after APG's own analysis of the sample
                                    APG agrees with the claim of nonconformity,
                                    Connetics shall promptly inform APG if
                                    Connetics wishes to have APG replace the
                                    nonconforming Product with conforming
                                    Product. If Connetics wishes to receive such
                                    replacement Product, APG shall provide such
                                    replacement as soon as reasonably
                                    practicable thereafter, in which case
                                    Connetics shall be obligated to pay only for
                                    such replacement Product. Connetics shall
                                    not be obligated to pay for the
                                    nonconforming Product, and APG shall: (1)
                                    credit Connetics for the amount paid by
                                    Connetics to APG for the nonconforming
                                    Product if Connetics has already paid for
                                    such nonconforming Product or (2) cancel its
                                    invoice to Connetics for such nonconforming
                                    Product if Connetics has not yet paid for
                                    such nonconforming Product, and Connetics
                                    shall not be obligated to pay such canceled
                                    invoiced amount.

                           (B)      If, after its own analysis, APG does not
                                    agree with the claim of nonconformity or
                                    determines that Connetics is responsible for
                                    the nonconformity, such Product shall be
                                    tested for conformance with the applicable
                                    Specifications by an independent third party
                                    testing laboratory mutually acceptable to
                                    both parties. The independent analysis shall
                                    be binding on both Parties solely for the
                                    purpose of determining whether such Product
                                    may be rightfully rejected.

                  (iii)    After a final determination that the Product shipment
                           is nonconforming, and if APG is responsible for the
                           nonconformity, Connetics shall return or destroy it
                           at APG's request and cost in the most cost effective
                           and environmentally safe and appropriate manner
                           available, consistent with federal, state and local
                           laws and regulations.

                  (iv)     If conforming Product supplied under this Agreement
                           becomes nonconforming or unsuitable at no fault of
                           APG, Connetics will remain obligated to pay APG for
                           such Product. At APG's request, Connetics shall
                           return such unsuitable Product to APG. Otherwise,
                           Connetics shall destroy it in the most
                           environmentally safe and

                                                                         PAGE 11

<PAGE>

                           appropriate manner available, consistent with
                           federal, state and local laws and regulations.

         (c)      Hidden Defects. For purposes of this Agreement, "hidden
                  defect" means a defect in the Product not discovered by
                  Connetics during its testing of the Product in accordance with
                  generally accepted practices in the pharmaceutical industry
                  and which would not be a defect reasonably expected to be
                  discovered in accordance with such testing. In the case of a
                  hidden defect, Connetics shall have the right to request that
                  APG provide to Connetics, within 30 days after APG receives
                  notice of the hidden defect, Product that meets the
                  Specifications or to promptly provide Connetics with full
                  credit for the Purchase Price paid by Connetics for the
                  returned Product.

         (d)      Notwithstanding the other provisions of this SECTION 3.11,
                  Connetics shall have no right to reject any Product that fails
                  to conform with the Manufacturing Standards if the
                  nonconformance is attributable to (i) events outside of APG's
                  control that occurred after delivery to a common carrier, or
                  (ii) processes, procedures or Product components specified or
                  approved in writing by Connetics in the Specifications or
                  otherwise, provided that APG followed or used such processes,
                  procedures and Product components materially in accordance
                  with the Specifications.

3.12     Unique Materials. Connetics shall reimburse APG for its actual costs
         expended for the purchase of "Unique Materials" (i.e., certain raw
         materials, artwork, printed cans, labels, cartons and special valves)
         purchased by APG expressly to meet its performance obligations under
         this Agreement in reliance upon a firm purchase order pursuant to
         SECTION 3.4 and which later are made obsolete, or to the extent that
         such Unique Materials remain on hand at the expiration of this
         Agreement as provided under SECTION 10.1. For purposes of this Section,
         material is obsolete if it cannot be incorporated into the Product due
         to changes mandated by a Regulatory Authority, changes directed by
         Connetics, or Connetics-mandated cancellation or postponement. Once
         material becomes obsolete, APG may invoice Connetics from time to time
         for APG's cost to acquire such obsolete material, which invoices shall
         identify the material in question and shall be accompanied by a
         reasonably detailed statement of the cause of such obsolescence and a
         certification that APG has disposed of such materials in accordance
         with the terms of this Agreement.

3.13     Risk of Loss. Risk of loss of Product shall be with APG until delivery
         of Product to a common carrier pursuant to SECTION 3.11 of this
         Agreement.

3.14     Insurance. APG shall at its own expense obtain and maintain workers'
         compensation and comprehensive general liability insurance with respect
         to performance under this Agreement, in amounts that APG determines to
         be reasonable, but in no event less than $5,000,000.00.

                                                                         PAGE 12

<PAGE>

                                    ARTICLE 4
                             PRICE AND PAYMENT TERMS

4.1      Price for Connetics' Products. The price for Connetics' Products shall
         be the actual cost of Raw Materials and Components, plus the
         Manufacturing Fee. The Manufacturing Fee shall be a per Unit fee for
         Products in amounts to be agreed per Unit for each Product and for each
         size or formulation. As of the Effective Date, the agreed upon
         Manufacturing Fee for each Product shall be set forth in the document
         attached as EXHIBIT B to this Agreement, which Exhibit may be amended
         from time to time by the mutual written agreement of the Parties to add
         or delete Products and/or size or formulation of Products. The
         Manufacturing Fee and Product Rebate set forth in Exhibit B for the
         Products listed in Exhibit A shall not be increased or decreased during
         the Initial Term of this Agreement, as defined in SECTION 10.1.

4.2      Invoices. APG shall submit to Connetics an invoice five (5) days after
         APG's internal release of Product. 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 3.11 and APG agrees with such finding,
         Connetics shall not be obligated to pay for such non-conforming
         shipment.

4.3      Currency. Amounts due to APG under this Agreement are payable in U.S.
         Dollars.

4.4      Pre-payment. APG may only use the Payment to reduce current debts it
         has with certain of its vendors, which vendors APG will identify in
         writing prior to receiving the Payment. Upon the execution of this
         Agreement by the Parties, and receipt by Connetics of the list of
         vendors specified in the previous sentence, Connetics shall pay APG the
         Payment.

4.5      Annual Credit. APG will repay the Payment by applying a credit to
         current and future commercial and samples Product orders and any future
         development work for Connetics at the rate of [*] (the "Annual
         Credit"), subject to acceleration as provided for in this Agreement.
         The Annual Credit will be applied each year as a [*] of Product orders
         and/or development work. The first Annual Credit, unless otherwise
         accelerated, shall be applied to all then-open and future Product
         orders and/or development work starting on the date that APG gets loan
         funding on the New Loan. All subsequent Annual Credits, unless
         otherwise accelerated, shall be applied to all open and future Product
         orders and/or development work each year starting on the anniversary
         date of this Agreement until fully credited to Connetics.

4.6      Acceleration. If APG does not obtain loan funding on the New Loan as
         well as complete [*] subject to an additional 30 day grace period if
         needed, then all remaining Annual Credits shall be immediately
         accelerated and the remaining portion of the Payment that has not yet
         been credited to Connetics shall be applied 100% to all then-current
         and future Product orders and/or development work until fully credited
         to Connetics.

                                                                         PAGE 13

[*]  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>

                                   ARTICLE 4.5
                                   COLLATERAL

After APG obtains funding on the New Loan, APG shall grant Connetics a security
interest in all current and future API and Raw Materials (collectively the
"Collateral"). The security arrangement will be evidenced by a security
agreement and shall be perfected by the filing of financing statements (UCC-1)
with applicable authorities. Financing statements (UCC-1) shall be filed only
after APG obtains funding on the New Loan. Except for the lender funding the New
Loan, APG shall obtain subordination agreements from other lenders if any then
existing lender has a senior security interest in the Collateral, such that
Connetics' security interest shall be senior to all others.

                                    ARTICLE 5
                                   WARRANTIES

5.1      Quality. Each shipment of Product under this Agreement shall have been
         manufactured in accordance with U.S. cGMPs in a duly licensed facility
         and shall have been subject to a quality control inspection by
         Connetics in accordance with the Specifications and the Quality
         Agreement. APG shall number each Product shipment with a vendor lot
         number that is traceable to Raw Materials used to manufacture such
         Product.

5.2      cGMP employees. Within 90 days after APG obtains loan funding on the
         New Loan, APG agrees to hire, with Connetics' assistance and consent,
         two new cGMP employees to work at APG on cGMP matters. If the positions
         are not filled within 90 days after APG obtains a loan commitment on
         the New Loan, then all remaining Annual Credits shall all be
         immediately accelerated and the remaining portion of the Payment that
         has not yet been credited to Connetics shall be applied 100% to all
         then-current and future Product orders and/or development work until
         fully credited to Connetics.

5.3      Representations and Warranties.

         (a)      APG warrants that Product delivered to Connetics pursuant to
                  this Agreement shall, at the time of delivery:

                  (i)      have been manufactured, filled, packaged, and shipped
                           in accordance with all applicable laws, rules,
                           regulations or requirements;

                  (ii)     have been stored in accordance with all laws, rules,
                           regulations or requirements relating to the handling
                           of hazardous materials;

                  (iii)    have been manufactured, filled, packaged and stored
                           in accordance with, and will conform to, the
                           Specifications;

                                                                         PAGE 14

<PAGE>

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

                  (v)      not be 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. APG 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. APG 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. APG represents and warrants that it
                  shall comply with all federal, state, local and foreign laws,
                  regulations and other requirements applicable to the
                  manufacture, testing and storage of the Product and the
                  performance of APG's obligations under this Agreement. APG
                  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.

5.4      Limitations; Indemnification.

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

         (b)      No Implied Representations; Warranties or Conditions. EXCEPT
                  AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER APG
                  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 NONINFRINGEMENT,
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SUCH
                  PRODUCT, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE
                  PRACTICE.

         (c)      Limitation of Liability. EXCEPT FOR ANY LOSS, LIABILITY,
                  DAMAGE OR OBLIGATION ARISING OUT OF OR RELATING TO THE
                  DISCLOSURE OF

                                                                         PAGE 15

<PAGE>

                  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
                  INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL
                  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 DAMAGE. THESE LIMITATIONS SHALL
                  APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
                  LIMITED REMEDY.

                                    ARTICLE 6
                               TECHNOLOGY TRANSFER

6.1      Technology Transfer by Connetics. APG acknowledges that from
         time-to-time for business reasons unrelated to APG's performance,
         Connetics may wish to qualify one or more additional manufacturing
         sources for Product. Without derogating from APG's rights under this
         Agreement, if Connetics wishes to qualify an additional source, APG
         shall cooperate with Connetics in transferring the manufacturing
         technology and know-how to another entity ("Connetics Technology
         Transfer"). For purposes of this ARTICLE 6, the term "cooperation" may
         include providing documentation, Raw Materials or Components, samples
         of Product, or other information at Connetics' request, and means not
         taking any action to hinder the qualification of the second source
         (e.g., by delaying a response to Connetics' requests for assistance).
         Connetics shall reimburse APG for its time and materials expended to
         cooperate with Connetics in connection with the Connetics Technology
         Transfer.

6.2      Technology Transfer by APG. If during the period that any portion of
         the Payment has not been fully credited to Connetics, APG stops doing
         business as a going concern Connetics has the right to use APG
         facilities, equipment, manufacturing technology and know-how ("APG
         Technology Transfer") to manufacture Connetics' Products subject to any
         of APG's lenders' senior rights and approvals. In such event APG shall
         cooperate with Connetics in all respects with the APG Technology
         Transfer. Connetics' rights to the APG Technology Transfer shall cease
         when the Payment has been fully credited to Connetics.

                                    ARTICLE 7
                                 CONFIDENTIALITY

7.1      Confidentiality.

         (a)      Confidential Information. The Parties acknowledge that by
                  reason of their relationship to each other under this
                  Agreement, each will have access to certain information and
                  materials concerning the other's business, plans, trade
                  secrets, customers (including, but not limited to, customer
                  lists), technology, and/or

                                                                         PAGE 16

<PAGE>

                  products that is confidential and of substantial value to that
                  Party, which value would be impaired if such information were
                  disclosed to Third Parties ("CONFIDENTIAL INFORMATION"). Each
                  Party agrees that it will not use in any way other than
                  expressly authorized or contemplated under this Agreement, nor
                  disclose to any third party, any such Confidential Information
                  revealed to it by the other Party (except that Confidential
                  Information may be disclosed, as required for the purposes of
                  this Agreement, to any Regulatory Authority, an Affiliate,
                  assignee, distributor, consultant or third party contractor or
                  research and development organization under similar written
                  obligations of non-disclosure and non-use), and will take
                  every reasonable precaution to protect the confidentiality of
                  such information and with no less restrictive precautions than
                  it takes to protect its own confidential information. If
                  Confidential Information is required to be disclosed in
                  response to a valid order by a court, Regulatory Authority or
                  other government body of competent jurisdiction, or if
                  otherwise required to be disclosed by law, or if necessary to
                  establish the rights of either Party under this Agreement, the
                  receiving Party shall use Commercially Reasonable Efforts to
                  provide the disclosing Party with advance notice of such
                  required disclosure to give the disclosing Party sufficient
                  time to seek a protective order or other protective measures,
                  if any are available, for such Confidential Information.

         (b)      Exceptions. For purposes of this Agreement, information shall
                  be deemed Confidential Information if such information, by its
                  nature or due to the context within which it is disclosed, is
                  obviously intended by the disclosing Party to be kept
                  confidential even if not identified as such in writing or with
                  legends or other markings. The person disclosing Confidential
                  Information shall endeavor to confirm verbally disclosed
                  Information as "CONFIDENTIAL" in writing, given the
                  understanding that failure to do so does not constitute a
                  designation of non-confidentiality, particularly when the
                  confidential nature is apparent from context and subject
                  matter. Upon request by either Party, the other Party will
                  advise whether or not it considers any particular information
                  or materials to be Confidential Information. Confidential
                  Information does not include information, technical data or
                  know-how that:

                  (i)      is or becomes publicly available through no fault of
                           the receiving Party or its individual employees,
                           agents or members amounting to a breach of this
                           Agreement;

                  (ii)     is lawfully obtained on a non-confidential basis by
                           the receiving Party from a third party who is not
                           obligated to retain such information in confidence;

                  (iii)    the receiving Party can demonstrate, by competent
                           evidence, was known to it or any of its Affiliates
                           from a source other than the disclosing Party or any
                           of its Affiliates prior to the disclosure under this
                           Agreement;

                                                                         PAGE 17

<PAGE>

                  (iv)     the receiving Party can demonstrate by its written
                           records is independently developed by employees of
                           the receiving Party or an Affiliate of the receiving
                           Party, which employees were neither privy to nor had
                           access to the Confidential Information and which is
                           developed without use in any way of the Confidential
                           Information;

                  (v)      must be disclosed to governmental agencies, provided
                           that: (A) this exception shall only apply to
                           disclosure to such agencies, and not to any other
                           person or entity; and (B) the disclosing Party shall
                           (1) provide the other Party with prompt notice
                           (including copies of all written requests or demands)
                           of any proposed disclosure to any governmental
                           agency, with an explanation of the Confidential
                           Information of the other Party to be disclosed; and
                           (2) cooperate in any lawful effort by the other Party
                           to prevent, limit or restrict disclosure of its
                           Confidential Information to such government agency.

7.2      Remedy. If either Party breaches any of its obligations with respect to
         this ARTICLE 7, or if such a breach is likely to occur, the other Party
         shall be entitled to seek equitable relief, including specific
         performance or an injunction, in addition to any other rights or
         remedies, including money damages, provided by law, without posting a
         bond.

7.3      Agreement Terms. Subject to SECTION 15.2 and the exclusions set forth
         in SECTION 7.1(b), the Parties shall treat the terms and conditions of
         this Agreement as Confidential Information; provided, however, after
         written notification to the other Party, each Party may disclose the
         existence of this Agreement and the material terms and conditions of
         this Agreement under circumstances that reasonably ensure the
         confidentiality thereof to: (a) any government or regulatory
         authorities, including without limitation the United States Security
         and Exchange Commission pursuant to applicable law (excluding, to the
         extent legally permitted, disclosure of financial terms in any publicly
         available versions of information so disclosed), (b) its legal
         representatives, advisors and prospective investors, and (c) to
         Connetics' licensors to the extent required for compliance with
         Connetics' obligations under third party licenses.

7.4      Return of Confidential Information. Within ten (10) days following the
         termination of any agreement between the Parties with respect to the
         subject matter the receiving Party agrees to promptly return all
         tangible items relating to the Confidential Information, including all
         written material, photographs, models, compounds, compositions and the
         like made available or supplied by the disclosing Party to receiving
         Party, and all copies thereof, upon the request of the disclosing
         Party, except such records as may be required to be kept for FDA or
         other government regulatory compliance. Recipient further agrees to
         identify those persons to whom the Confidential Information that is the
         subject of this Agreement was disclosed upon request of the disclosing
         Party.

                                                                         PAGE 18

<PAGE>

7.5      Inside Information. APG understands that Confidential Information may
         constitute "inside information" of Connetics for securities purposes
         and agrees to refrain from any unlawful disclosure, trading or other
         improper use of such information.

                                    ARTICLE 8
                                   ASSIGNMENT

8.1      Assignment by APG. APG shall have no right or authority to assign the
         Agreement or any portion of the Agreement, to sublet or subcontract in
         whole or in part, or otherwise delegate its performance under this
         Agreement, without Connetics' prior written consent, which consent
         shall not unreasonably be withheld. No assignment shall be effective
         until the assignee shall have unconditionally assumed in writing all of
         the assignor's obligations under this Agreement and a written notice of
         such assignment is given to Connetics. Notwithstanding the foregoing,
         nothing in this Agreement shall prohibit APG from assigning this
         Agreement to any Affiliate of APG that may from time to time own or
         operate the Indiana facility or any other facility to which APG may
         move its manufacturing operations. No such assignment shall relieve APG
         of primary liability for the performance of its obligations under this
         Agreement.

8.2      Assignment by Connetics. Connetics may assign this Agreement, provided
         prior reasonable written notice has been given to APG. APG agrees that
         if this Agreement is assigned to any third party or Affiliate, all the
         terms and conditions of this Agreement shall continue between such
         third party or Affiliate and APG with the same force and effect as if
         said Agreement had been made with such third party or Affiliate in the
         first instance, provided that no such assignment shall relieve
         Connetics of primary liability for the performance of its obligations
         under this Agreement.

8.3      Binding Effect and Assignment. When duly assigned in accordance with
         this ARTICLE 8, this Agreement shall be binding upon and inure to the
         benefit of the assignee. Any attempted assignment contrary to the
         provisions of this ARTICLE 8 shall be deemed ineffective, and the
         non-assigning Party shall have the right to terminate this Agreement,
         with the effect described in SECTION 10.2.

                                    ARTICLE 9
                                  FORCE MAJEURE

Neither Party shall be considered in default of performance of its obligations
under this Agreement, except any obligation under this Agreement to make
payments or apply credits when due, to the extent that performance of such
obligations is delayed by contingencies or causes beyond the reasonable control
and not caused by the negligence or willful misconduct of such Party, including
but not limited to strike, fire, flood, earthquake, windstorm, governmental acts
or orders or restrictions, or force majeure, to the extent that the failure to
perform is beyond the reasonable control of the nonperforming Party, if the
Party affected shall give prompt written notice of any such cause to the other
Party. The Party giving such notice shall thereupon be excused from performance
of its obligations under this Agreement for the period of time that the

                                                                         PAGE 19

<PAGE>

condition constituting force majeure continues and the non-performing Party uses
good faith diligent efforts to mitigate, avoid or end such delay as soon as
practicable.

                                   ARTICLE 10
                              TERM AND TERMINATION

10.1     Term. Subject to the rights to terminate sooner under this Article 10,
         this Agreement shall expire on May 1, 2008 (the "Initial Term"), after
         which this Agreement may be renewed for successive periods of one or
         more calendar year(s) each, by written agreement of the Parties.

10.2     Termination for Material Breach. Either Party may terminate this
         Agreement upon written notice if the other Party has breached any of
         its material obligations under this Agreement, and (a) such breach has
         not been cured within 60 days after written notice of the breach, or
         (b) if a plan, reasonably acceptable to the non-breaching Party, is not
         implemented to cure as soon as practicable after notice of the breach

10.3     Termination upon Insolvency. Either Party may, in addition to any other
         remedies available to it by law or in equity, terminate this Agreement
         immediately by written notice to the other Party upon (i) the filing by
         the other Party of a voluntary petition in bankruptcy or seeking
         reorganization, liquidation, dissolution, winding-up, arrangement,
         composition or readjustment of its debts or any other relief under any
         bankruptcy, insolvency, reorganization or other similar act or law of
         any jurisdiction now or hereafter in effect, (ii) the filing against
         such other Party of an involuntary petition in bankruptcy which is not
         dismissed within 60 days, (iii) the appointment of a receiver or
         trustee of any of such other Party's property if such appointment is
         not vacated within 60 days, (iv) the adjudication of such other Party
         as insolvent, or (v) the assignment of such other Party's property for
         the benefit of its creditors (collectively, "Insolvency"). In the event
         of an Insolvency, if the Agreement is not terminated, then all
         remaining Annual Credits shall be immediately accelerated and the
         remaining portion of the Payment that has not yet been credited to
         Connetics shall be applied 100% to all then-current and future Product
         orders and/or development work until fully credited to Connetics.

10.4     Termination for Force Majeure. Either Party may terminate this
         Agreement upon thirty (30) days written prior notice in the event of
         the other Party's inability to substantially perform its obligations
         under this Agreement for more than one hundred eighty (180) days due to
         an event of force majeure as described in SECTION 9.1.

10.5     Payment upon Termination. If the Agreement is terminated pursuant to
         SECTION 10.2, SECTION 10.3 or SECTION 10.4, then all remaining Annual
         Credits shall be immediately accelerated and the remaining portion of
         the Payment that has not yet been credited to Connetics shall be
         immediately due and payable to Connetics.

10.6     Termination without Cause. After the Payment has been fully credited to
         Connetics, either Party may terminate this Agreement upon twelve (12)
         months' written notice.

                                                                         PAGE 20

<PAGE>

10.7     Accrued Liabilities. The termination of this Agreement for any reason
         shall not discharge either Party's liability for obligations incurred
         under this Agreement and amounts unpaid at the time of such
         termination. Connetics shall be liable to pay APG for any Product, work
         in progress and materials purchased by APG, less any remaining portion
         of the Payment that has not been credited to Connetics, to fulfill its
         obligations under this Agreement, provided however that APG shall make
         all Commercially Reasonable Efforts to mitigate its damages under such
         circumstances.

10.8     Return and Disposition of Property. Upon the termination of this
         Agreement for any reason, each Party shall return to the other Party or
         its designee all of such other Party's property, including, but not
         limited to, all proprietary information, in its possession. To the
         extent required by law or to comply with such Party's continuing
         obligations under this Agreement, each Party may keep a single copy of
         tangible property belonging to the other Party. APG shall dispose of
         all bulk active ingredients, raw materials, containers, and Labeling
         not necessary to complete work in progress at Connetics' expense, less
         any remaining portion of the Payment that has not been credited to
         Connetics, in accordance with Connetics' reasonable instructions.

10.9     Reversion of Rights. Upon the termination of this Agreement for any
         reason, APG shall have no further rights to manufacture under
         Connetics' patents, and all rights, title or interest in Connetics'
         technology shall revert automatically to Connetics without the need for
         further action.

                                   ARTICLE 11
                                 INDEMNIFICATION

11.1     Indemnification by APG. APG shall indemnify Connetics, its Affiliates
         and their respective directors, officers, employees and agents, and
         defend and hold each of them harmless, from and against any and all
         suits, losses, actions, demands, investigations, claims, damages,
         liabilities, costs and expenses (including, without limitation,
         reasonable attorneys' fees and expenses) (collectively, "LOSSES")
         brought by third parties arising from or occurring as a result of:

         (a)      a nonconformity of Product with the warranties under SECTIONS
                  5.1 and 5.2 except for any damages attributable to the
                  negligence of Connetics, its employees or agents;

         (b)      APG's failure to comply with the Specifications;

         (c)      any willful act or omission or negligence of APG or its
                  employees, agents or other contractors in the manufacturing
                  and testing of the Product; or

         (d)      APG's failure to comply with the Act and the regulations under
                  the Act in the production of Product.

                                                                         PAGE 21

<PAGE>

         (e)      any breach (or alleged breach) by APG of its representations,
                  warranties, or material obligations under this Agreement;

         (f)      the manufacture or the storage of the Product prior to the
                  date of shipment of Product to Connetics by APG or its
                  Affiliates,

         all except to the extent caused by the negligence or willful misconduct
         of Connetics or its officers, agents, employees, Affiliates,
         sublicensees or customers.

11.2     Indemnification by Connetics. Connetics shall indemnify APG, its
         Affiliates and their respective directors, officers, employees and
         agents, and defend and save each of them harmless, from and against any
         and all Losses brought by third parties arising from or occurring as a
         result of:

         (a)      failure by Connetics to comply with the Food Drug and Cosmetic
                  Act and the regulations under the Act;

         (b)      the handling or other use of the Product including by end
                  users;

         (c)      any willful act or omission or negligence of Connetics or its
                  employees, agents or other contractors

         (d)      any breach (or alleged breach) by Connetics of its
                  representations, warranties, or material obligations under
                  this Agreement;

         (e)      the manufacture by Connetics or third parties contracted by
                  Connetics, or the storage of Product after the date of
                  shipment of Product to Connetics by APG or its Affiliates,

         all except to the extent caused by the negligence or willful misconduct
         of APG or its officers, agents, employees, Affiliates, sublicensees or
         customers.

11.3     Patent Indemnification. Connetics shall indemnify, defend, and hold APG
         and its employees, servants and agents harmless from and against any
         and all claims, demands, actions, suits, losses, damages, costs,
         expenses (including reasonable attorney's fees), and liabilities which
         APG may incur, suffer or be required to pay by reason of any patent
         infringement suit brought against APG because of APG's manufacture of
         Product to the extent that the alleged infringement arose out of or
         related to APG's use of processes, compounds or other products the
         rights to which are claimed to be owned by Connetics.

11.4     Process. If either Party expects to seek indemnification from the other
         pursuant to the provisions of this ARTICLE 11, it shall promptly give
         notice to the indemnifying Party of any such Claim. The indemnifying
         Party shall have the right to control the defense of such Claim and the
         indemnified Party shall cooperate with the indemnifying Party in the
         defense of such Claim. The indemnifying Party shall have the right to
         settle or compromise any claim against the other Party without the
         consent of the other Party, provided that the terms of the settlement:

                                                                         PAGE 22

<PAGE>

         (a)      provide for the unconditional release of the Party being
                  indemnified;

         (b)      require the payment of compensatory monetary damages only by
                  the indemnifying Party; and

         (c)      expressly states that neither the fact of settlement nor the
                  settlement agreement shall constitute, or be construed or
                  interpreted as, an admission by the Party being indemnified of
                  any issue, fact, allegation or any other aspect of the claim
                  being settled.

         The Party being indemnified shall not pay or voluntarily permit the
         determination of any liability which is subject to any such action
         while the indemnifying Party is negotiating the settlement thereof or
         contesting the matter, except with the prior written consent of the
         indemnifying Party, which consent shall not be unreasonably withheld or
         delayed.

                                    ARTICLE 12
                            AUDIT RIGHTS; INSPECTIONS

12.1     Inspections. Connetics, upon its own discretion and at its own cost and
         expense, is entitled during ordinary business hours and at dates
         acceptable to APG to inspect or to have inspected, APG's plant and
         procedures used for manufacture and storage of the Products. Such
         inspections shall not materially disrupt APG's business for other
         customers.

12.2     Books and Records. APG agrees to maintain and cause its Affiliates to
         maintain complete and accurate books and records of account so as to
         enable Connetics to verify amounts due and payable under this
         Agreement. In particular, APG shall preserve and maintain all such
         records and accounts required for audit for a period of four (4) years
         after the calendar quarter for which the record applies.

12.3     Audit of APG's Records. During the term of this Agreement, Connetics
         shall have the right upon four (4) weeks notice to APG to have an
         independent certified public accountant, selected by Connetics and
         reasonably acceptable to APG, audit APG's records relating specifically
         to the Products during normal business hours; provided, however, that
         such audit shall not take place more frequently than once a year and
         shall not cover records for more than the preceding four (4) years.

12.4     Government Inspection. APG agrees to advise Connetics by telephone and
         facsimile immediately of any proposed or announced visit or inspection,
         and as soon as possible but in any case within twenty-four (24) hours
         of any unannounced visit or inspection, by any Regulatory Authority of
         any facilities used by APG in the performance of its obligations under
         this Agreement. APG shall provide Connetics with a reasonable
         description of each such visit or inspection promptly (but in no event
         later than five [5] calendar days) thereafter, and with copies of any
         letters, reports or other documents (including Form 483's) issued by
         any such authorities that relate to the Products, or such facilities,
         processes or procedures. Connetics may review APG's responses to any
         such reports and communications, and if practicable, and, insofar as
         timely received, Connetics'

                                                                         PAGE 23

<PAGE>

         reasonable views and requests shall be taken into account prior to
         submission of such reports and communications to the relevant
         Regulatory Authority.

                                   ARTICLE 13
                                    DISPUTES

13.1     Arbitration. If the Parties' are unable to settle amicably any claim,
         dispute, controversy or difference arising out of or in relation to or
         in connection with this Agreement or for breach of this Agreement
         through consultation and negotiation in good faith and a spirit of
         mutual cooperation, then the dispute shall be resolved through binding
         arbitration in accordance with the rules of the American Arbitration
         Association then in effect. Judgment upon the award rendered by the
         arbitrators may be entered in any court having jurisdiction thereof. In
         any arbitration pursuant to this section, the award shall be rendered
         by a majority of the members of a board of arbitration consisting of
         three members, one being appointed by each Party and the third being
         appointed by mutual agreement of the two arbitrators appointed by the
         parties. The place of arbitration shall be Palo Alto, California.

13.2     Waiver of Trial by Jury. If the Parties fail to resolve a dispute
         through negotiation or arbitration in accordance with SECTION 13.1,
         each Party shall have the right to pursue any of the remedies legally
         available to resolve the dispute; provided, however, that the Parties
         expressly waive any right to a jury trial in any legal proceedings
         under this ARTICLE 13.

13.3     Governing Law. This Agreement shall be governed, controlled,
         interpreted and defined by and under the laws of the State of
         California and the United States without regard to that body of law
         known as conflicts of law; provided that issues relating to the
         validity and enforceability of patents shall be governed by the laws of
         the jurisdiction by which such patent was granted.

                                   ARTICLE 14
                                     NOTICES

Any notice required or permitted by this Agreement shall be in writing and shall
be sent by prepaid registered or certified mail, return receipt requested; by
facsimile; by internationally recognized courier; or by personal delivery, in
each case addressed to the other Party at the address below or at such other
address for which such Party gives notice under this Agreement.

         If to Connetics, at:

                  Connetics Corporation
                  Attn: President and Chief Executive Officer
                  3290 West Bayshore Road
                  Palo Alto, California 94303

                                                                         PAGE 24

<PAGE>

         If to APG, at:

                  Accra Pac Group
                  Attn:  Chief Executive Officer
                  1919 Superior Street
                  Elkhart, Indiana 46516
                  With a copy to:  President

Such notice shall be deemed to have been given when delivered or, if delivery is
not accomplished by some fault of the addressee, when tendered. Either Party may
change its address for notice by delivering a written notice of the new address
in accordance with this Article.

                                   ARTICLE 15
                             NATURE OF RELATIONSHIP

15.1     No Agency; Independent Contractor. Each Party is and shall be
         considered to be an independent contractor of the other Party. Neither
         Party shall be the legal agent of the other for any purpose whatsoever
         and neither Party has any right or authority to make or underwrite any
         promise, warranty or representation, to execute any contract or
         otherwise to assume any obligation or responsibility in the name of or
         on behalf of the other Party. Neither Party shall be bound by or liable
         to any third persons for any act or for any obligation or debt incurred
         by the other toward such third party, except to the extent specifically
         agreed to in writing by the Party so to be bound.

15.2     Public Statements. The Parties shall endeavor to provide courtesy
         copies of any public announcements concerning the relationship created
         by this Agreement. Neither Party shall make any representations
         concerning the other without the prior consent from the other Party.
         Notwithstanding the foregoing, each Party consents to references to it
         in reports or documents or other disclosures sent to stockholders or
         filed with or submitted to any governmental authority or stock
         exchange. Except for such disclosure as is required by applicable law
         and/or stock exchange regulation, neither Party shall make any
         announcement, news release, public statement, publication or
         presentation relating to the existence of this Agreement or the
         arrangements referred to in this Agreement without first notifying the
         other Party.

15.3     No License. Nothing in this Agreement, including the original transfer
         of technical information from Connetics to APG, shall constitute any
         grant, option or license to APG under any patent or other rights now or
         hereafter held by Connetics.

                                                                         PAGE 25

<PAGE>

                                   ARTICLE 16
                              ADDITIONAL PROVISIONS

16.1     Headings. Article and section headings contained in this Agreement are
         included for convenience of reference only and shall not affect in any
         way the meaning or interpretation of this Agreement.

16.2     Partial Invalidity. If any provision of this Agreement is held to be
         invalid, illegal, or unenforceable by a court of competent
         jurisdiction, then: (a) such provision will be deemed amended to
         conform to applicable laws of such jurisdiction so as to be valid and
         enforceable, or, if it cannot be so amended without materially altering
         the intention of the parties, it will be stricken; (b) the validity,
         legality and enforceability of such provision will not in any way be
         affected or impaired thereby in any other jurisdiction; and (c) the
         remaining provisions of this Agreement will remain in full force and
         effect.

16.3     Survival. The covenants and agreements set forth in ARTICLES 7, 11 AND
         13 shall survive any termination or expiration of this Agreement and
         remain in full force and effect regardless of the cause of termination.

16.4     Entire Agreement. This Agreement, including the attached Exhibits,
         constitutes the entire agreement of the Parties with respect to the
         subject matter, and supersedes all prior or contemporaneous
         understandings or agreements, whether written or oral, between
         Connetics and APG with respect to such subject matter, including but
         not limited to the Original Agreement and Term Sheet dated April 15,
         2003. In particular, (a) in the event of a conflict between this
         Agreement and the terms and conditions of any purchase order or other
         form generated in performance of this Agreement, then the terms and
         conditions of this Agreement shall control except insofar as any such
         purchase order or confirmation establishes:

                  (i)      the quantity and form of any Product ordered;

                  (ii)     the shipment date;

                  (iii)    the shipment routes and destinations; or

                  (iv)     the carrier;

         and (b) in the event of conflict between this Agreement and the Quality
         Agreement (as it may be amended from time to time), the terms of this
         Agreement shall govern all aspects of the relationship between the
         Parties except that the Quality Agreement shall govern with respect to
         quality matters.

16.5     Waivers. No waiver of any term or condition of this Agreement shall be
         valid or binding on either Party unless agreed in writing by the Party
         to be charged. The failure of either Party to enforce at any time, or
         for any period of time, any provision of this Agreement, or the failure
         to require at any time performance by the other Party of any provision
         of this Agreement, shall in no way be construed to be a present or
         future waiver of such provisions or of the right of such Party
         thereafter to enforce that provision or other provisions of this
         Agreement.

                                                                         PAGE 26

<PAGE>

16.6     Amendment. Except as set forth in SECTION 2.1, no amendment or
         modification of this Agreement shall be valid or binding upon the
         Parties unless made in writing and signed by the duly authorized
         representatives of both Parties.

16.7     Construction. The Parties agree that they have been represented by
         counsel during the execution and negotiation of this Agreement.
         Accordingly the Parties waive the application of any law, regulation,
         holding or rule of construction that provides that ambiguities in an
         agreement or other document will be construed against the party
         drafting such agreement or document.

16.8     Counterparts. This Agreement may be executed in two or more
         counterparts, each of which shall be deemed an original and all of
         which together shall constitute one and the same agreement. This
         Agreement may be signed and delivered to the other Party by facsimile
         signature; such transmission will be deemed a valid signature.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their respective duly authorized officers as of the Effective Date.

Connetics Corporation                           APG

By: /s/ Greg Vontz                              By:  /s/ Robert E. Theroux
   ___________________________________              ____________________________

Title: EVP & COO                                Title: President & COO
      ________________________________                 _________________________

                                                                         PAGE 27

<PAGE>

                                LIST OF EXHIBITS

EXHIBIT A                   PRODUCTS

EXHIBIT B                   PRICING

EXHIBIT C                   QUALITY AGREEMENT

EXHIBIT D                   EQUIPMENT LIST

                                                                        EXHIBITS

<PAGE>

                                    EXHIBIT A

                                    PRODUCTS

MARKETED NAME                  NDC CODE                PRODUCT SIZE
-------------                  --------                ------------

Luxiq                        63032-021-00                100 gram
OLUX                         63032-031-00                100 gram
Luxiq                        63032-021-15                 15 gram
OLUX                         63032-031-15                 15 gram

<PAGE>

                                    EXHIBIT B

                                     PRICING

The Manufacturing Fee for each Product, as contemplated by SECTION 4.1 of this
Agreement, is set forth below.

<Table>
<Caption>
                                             MANUFACTURING FEE PER UNIT**
                                             ----------------------------
MARKETED NAME             PRODUCT SIZE    PHASE ONE***         PHASE TWO****
-------------             ------------    ------------         -------------
<S>                       <C>             <C>                  <C>
Luxiq                       100 gram      [    [*]                  [*]    ]
OLUX                        100 gram      [    [*]                  [*]    ]
Luxiq                        15 gram      [    [*]                  [*]    ]
OLUX                         15 gram      [    [*]                  [*]    ]
</Table>

** In compliance with Section 4.1, Raw Materials and Components will be [*].
   Manufacturing Fee includes final testing and final packaging.

*** Phase One represents the price for filling. This structure applies only to
    validation lots. Phase One billing cannot occur until after the release of
    the filling batch records.

**** Phase Two represents final packout and release.

PRODUCT REBATE: Connetics shall be entitled to a volume discount, which shall be
paid in the form of a rebate on the Phase One Manufacturing Fee according to the
following schedule:

<Table>
<Caption>
                                             Connetics shall be entitled to a
If in any calendar year Connetics orders:    rebate equal to:
-----------------------------------------    --------------------------------
<S>                                          <C>
[                   *                                        *               ]
</Table>

Volume refers to the combined volume of orders and sizes for any calendar year.

[*]  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 C

                                QUALITY AGREEMENT

Quality and Technical Agreement between Connetics Corporation and APG, dated
January 8, 2002, as amended effective September 13, 2002, as it may be further
amended from time to time.

                                                                        Exhibits

<PAGE>

                                    EXHIBIT D

                                 EQUIPMENT LIST

[*]

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

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