DISTRIBUTION SERVICES AGREEMENT

     This  agreement  is  made  as  of  August  15,  1998,   between  CollaGenex
Pharmaceuticals,  Inc., a Delaware corporation  ("Client"),  and CORD Logistics,
Inc., an Ohio corporation ("CORD").

                             Background Information

     A. Client 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,  retail pharmacies,  and other health care providers in the
Territory,  and of providing Information Systems and other services that support
its clients' use of its distribution capabilities.

     C. Client  desires to engage CORD as its exclusive  distribution  agent for
Periostat(R)  (the  "Product")  in the  Territory,  following  FDA  approval  of
Periostat(R), and to perform certain other services described in this agreement,
all upon the terms and conditions set forth in this agreement.

                             Statement of Agreement

     Customer and CORD (the  "Parties")  hereby  acknowledge the accuracy of the
above Background Information and agree as follows:

     Section 1.  Appointment.  Upon the terms and  conditions  described in this
agreement,  Customer hereby appoints CORD as its exclusive distribution agent in
the Territory for distribution of the Product and Product samples (collectively,
the "Product") to Clients's direct customers ("Customers").

     CORD's  services to Client shall be as described below and in the Operating
Guidelines (defined in Section 6) to this agreement (the "Services"). Changes to
such Operating  Guidelines  may only be made with the prior written  approval of
CORD  and  Client.  Such  requirements  in  the  Operating   Guidelines  may  be
supplemented or amended from time to time by Client with 30 days prior notice to
and approval by CORD, which approval shall not be unreasonably withheld. If CORD
notifies Client in good faith that any such supplement or amendment will require
a  material   modification  to  the  CORD  Facility  or  CORD's   procedures  or
requirements  which are  unique and  specific  to the  Product  or the  Services
resulting in a material increase to CORD's anticipated costs and expenses,  then
Client and CORD shall  consult  regarding  such  reasonable  costs and  expenses
(hereinafter,  simply "unique costs") and the parties shall negotiate the extent
to which Client shall pay such unique costs resulting from that modification.

     Section 2. Product Supply,  Warehousing and Storage.  Client shall ship the
Product to CORD at CORD's  distribution  facility currently located at 1135 Heil
Quaker Boulevard,  Suite 100, La Vergne, TN 37086 or to such other  distribution
facility  in the  Territory  as may  be  designated  by  CORD  (individually  or
collectively,  the "CORD Facility"),  in sufficient  quantities to meet Client's
anticipated  Customer  orders.  CORD shall visually inspect each shipment of the

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Product for external  damage or loss in transit and notify Client of such damage
or loss within ten days following discovery of such damage or loss by CORD.

     Client shall provide CORD with  projections  of its  anticipated  quarterly
shipments  of Product to CORD no later  than 30 days prior to the  beginning  of
each  quarter.  CORD shall store the Product in the CORD  Facility in accordance
with the requirements outlined in the Operating Guidelines. Client shall pay all
costs and expenses of  delivering  the Product to the CORD  Facility.  CORD will
never take title to the  Product,  even when such Product is located at the CORD
Facility.

     Section 3.  Standard  Product  Distribution.  All Customer  orders shall be
processed by CORD as described in the Operating  Guidelines.

     Customer  orders will be delivered by a courier  mutually  chosen by Client
and CORD.  CORD will invoice Client for such handling  services and freight cost
on a monthly  basis.  CORD will use  reasonable  efforts to manage any claims by
Client against the courier,  provided,  however,  that CORD shall not be be held
responsible for all lost or damaged shipments.

     In  addition,  Client  shall  reimburse  CORD for all  costs  and  handling
expenses of  packaging  material  used for shipping the Product and all business
forms unique to Client (e.g., packing slips, invoices, etc.).

     The Product shall be shipped on a first expiration  date-first out basis or
as otherwise  directed by Client. In addition,  CORD shall establish (and Client
shall approve) procedures for the processing and shipment of emergency orders on
weekends and holidays,  provided that Client shall  separately pay all increased
costs resulting from such orders.

     Section 4. Product Prices. Within thirty days prior to launch, Client shall
deliver to CORD a Product price list for Customers who purchase the Product (the
"Customer  Price List").  Client shall notify CORD of any change in the Customer
Price List not less than 10  business  days prior to the  effective  date of any
such change.  The Parties hereby  acknowledge that Client,  and not CORD, is the
seller of the Product to Customers.

     Section 5. Financial Support Services.

     (a) CORD shall perform the,  billing,  contract pricing  maintenance,  cash
application,   collections,   chargeback  processing,   and  reporting  services
described in the Operating Guidelines (the "Financial Support Service).

     (b) CORD shall have no  obligation  to pay for the Product or to  reimburse
Client for any losses incurred in connection with the failure of any Customer to
pay Client any amount due.

     (c)  Customers  shall be  directed  to make  payments  for the  Products in
accordance with the Operating Guidelines.

     Section  6.  Operating  Guidelines.  CORD and  Client  have  developed  the
"operating  guidelines"  relating to the product and the services,  which define
and  document  the  responsibilities  of  CORD  and  Client  in  support  of the
relationship  described in this  agreement  (the  "Operating  Guidelines").  The
Operating  Guidelines  are attached as Exhibit D to this

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<PAGE>

Agreement.  CORD and  Client  shall  comply in all  material  respects  with the
Operating  Guidelines.  All Operating  Guidelines  shall be  implemented in good
faith and in a commercially reasonable manner, subject to the qualifications set
forth  therein;  provided  that in the event of any  inconsistency  between  the
Operating  Guidelines  and the other  provisions  of this  agreement,  the other
provisions of this  agreement  shall  control.  The Operating  Guidelines may be
amended from time to time upon the mutual agreement of CORD and Client.

     Section 7. Returns and  Recalls.  CORD shall  assist in the  processing  of
Product returns, including recall returns. The fees to be paid to CORD for these
return services are described in Section 8.

     CORD shall process  Customer Product return  authorizations  and credits as
set forth in the Operating Guidelines  ("Product Return Services").  The fee for
such Product Return  Services by CORD will be included as a part of the Customer
Service Fees described in Section 8.

     If Client is required  to recall,  or, on its own  initiative,  recalls any
Product,  CORD  will  assist  Client  with that  recall  in all ways  reasonably
requested by Client ("Product Recall Services");  provided that Client shall pay
to CORD an amount equal to all  reasonable  costs incurred by CORD in connection
with any such Product Recall Services..

     Section 8. Fees. As  compensation  for the Services,  Client shall pay CORD
the fees described below (the "Fees"):

      a) Implementation Fees. Shall be in the amount specified in Exhibit A (the
         "Fee Schedule").

      b) Storage/Distribution  Fees.  This  component  of the Fees  shall  cover
         storage    of    product    and    distribution     services.     These
         Storage/Distribution  Fees  shall be based  upon the  number of pallets
         stored  per month at the  Facility,  and the  number of  Invoice  Lines
         (defined below) of Product shipped from the CORD Facility or the number
         of Invoice Lines of Product returns received at the CORD Facility.  The
         Storage/Distribution Fees shall be calculated as described in  (the Fee
         Schedule) and the following provisions of this section. For purposes of
         this  agreement,  the term  "Invoice  Line"  shall  mean:  (i) for each
         shipment  of  Product  to  a  Customer,   each  distinct   Product  SKU
         (shelf-keeping  unit) specified in the packing slip, shipping manifest,
         or other similar  document  dispatched  with such shipment and (ii) for
         each Customer return processed, including recall returns, each distinct
         SKU included as part of that return. For each calendar month, the total
         number of Invoice  Lines to be calculated  for purposes of  determining
         the  amount of the  Storage/Distribution  Fees  payable  for that month
         shall be determined by aggregating  the Invoice Lines  contained in all
         shipments completed and returns processed during such month.

      c) Information  System  Access and Use Fees.  This  component  of the Fees
         shall cover Client's access and use of CORD's or an affiliate of CORD's
         Information  System,  consisting of the computer  hardware and software
         and other  components  described in the attached  Exhibit B (the "Order
         Entry  System"),  and  other  services  relating to Client's use of the
         System  which  are  described  in  that  Exhibit.  Access  to the Order
         Entry System shall be provided pursuant to a

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<PAGE>

         System  Access  Agreement in the form of the attached  Exhibit C, which
         agreement  (the  "System  Access  Agreement")  shall be executed by the
         Parties concurrently with this agreement.  The Order Entry System shall
         be made  available to Client's  Facility so long as Client first has in
         place a local area network  sufficient to support all Client  terminals
         and personal computers which will have access to the Order Entry System
         and a  centralized  server  sufficient  for  data  storage  related  to
         Client's  use of  the  Order  Entry  System.  All  costs  and  expenses
         associated with  establishing  initial hook-up of all communication and
         electronic information lines necessary for interface of the Order Entry
         System with Client's  information  systems  [located at 301 South State
         Street, Newtown, PA 18940], will be included in the Implementation Fee.
         Client  shall  have sole  responsibility  for all  costs  and  expenses
         associated  with  maintaining  all such  communication  and  electronic
         information lines. CORD and Client shall each assign  knowledgeable and
         qualified  employees to facilitate the use of the Order Entry System as
         contemplated by this agreement.

      d) Financial Support Services Fees. This component of  the  Fees shall  be
         for  cash   application,   collections   services,   contract   pricing
         maintenance and reporting services, and chargeback processing described
         in  the  Operating  Guidelines,  which  fees  (the  "Financial  Support
         Services Fees") shall be in the amount specified in Exhibit A.

      e) Customer  Service Fees.  This  component of the Fees shall be a monthly
         fee as compensation for the Customer Services performed pursuant to the
         Operating Guidelines,  which fees (the "Customer Service Fee") shall be
         in the amount specified in Exhibit A.

      f) Chargeback/Contract  System  Access  and Use Fee.  This Fee shall be as
         compensation  for the access and use of CORD's  chargeback and contract
         administration software, which fees (the "Chargeback/Contract Fee") are
         included in the monthly system Access Fee, specified in Exhibit A.

      g) Electronic Data Interchange Set-up,  Maintenance,  Access and Use Fees.
         This  component  of the Fees  shall  be as  compensation  for  services
         related to the set-up and  maintenance of Electronic  Data  Interchange
         ("EDI") transaction  capabilities between Client and its Customers, and
         access and use of a healthcare  industry  value-added  network  through
         CORD for the  processing  of EDI  transactions  between  Client and its
         Customers,  which fees are included in the  Information  System Fees in
         Exhibit A.

     Following  the end of each calendar  month,  CORD shall issue an invoice to
Client for the Fees payable with respect to CORD's  performance  of the Services
for the prior month. The Fees or other amounts owed to CORD by Client under this
agreement shall be payable within 30 days of the date of CORD's invoice for such
Fees or other amounts.  If the Fees or other amounts  payable to CORD under this
agreement  are not paid when due,  then  CORD  shall  have the right to impose a
service charge on the unpaid amount 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)
until such amount is paid in full.

                                       4
<PAGE>

     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  (a  "Cost
Adjustment"),  then CORD may propose an increase to the applicable  component of
the Fees as of any anniversary of the Commencement Date by an amount designed to
eliminate any Cost Adjustment; provided that the costs used for determining such
increases shall be reasonably  determined  under Generally  Accepted  Accounting
Principles and cost allocation methods applied on a consistent basis. CORD shall
notify  Client of any such proposed  Cost  Adjustment  not less than 120 days in
advance. If CORD and Client cannot agree on such proposed Cost Adjustment,  then
Client may terminate  this agreement on 90 days notice,  and no Cost  Adjustment
will apply during such remaining 90 days until termination.

     Section 10. Term and  Termination.  (a) The initial term of this  agreement
(the  "Initial  Term") shall begin on the date that  inventory of the Product is
first entered into the Order Entry System (the "Commencement Date") and continue
until the third anniversary of the Commencement Date, unless or until terminated
sooner pursuant to the other provisions of this section. After the Initial Term,
this agreement  shall renew  automatically  for successive  renewal terms of one
year each unless  notice of  termination  is given by any Party at least 90 days
prior to the end of the term then in effect,  in which case this agreement shall
terminate at the end of that term.  Any reference in this agreement to the "term
of this agreement" shall include the Initial Term and any such renewal terms.

     (b) Either Party shall have the right to terminate  this agreement upon the
breach by the other Party of a material  provision  of this  agreement  and that
Party's  failure to cure such breach within  30-days  following  written  notice
thereof  from the  non-breaching  Party  or, in the event  such  failure  is not
capable of being cured within such 30-day period,  the breaching Party's failure
to continue to diligently prosecute such cure thereafter;  provided,  that, with
respect to any failure to make any payment when due under this  agreement,  such
period in which to cure shall be reduced to 10 days.

     (c)  Either  Party  shall  have  the  right  to  terminate  this  agreement
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,  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.

     (d) Sections 13 and 15 through 18, inclusive, and the first paragraph under
"Warehousing"  in the Operating  Guidelines in Exhibit D of this agreement shall
survive the termination of this agreement,  and no termination of this agreement
shall affect any liabilities arising, or based upon acts or omissions occurring,
prior to the date of such termination.

     Section 11.  Audits.  Client  shall have the right during  normal  business
hours (i.e.,  8:00 a.m. to 5:00 p.m. local time),  upon reasonable prior notice,
to: (a) review and audit CORD's records relating directly to Product received at
and shipped from the CORD Facility;  (b) conduct,  together with representatives
of CORD,  an  inventory  of the  Product at the CORD  Facility  ;and (c) conduct
together with  representatives  of CORD, a tour of the CORD Facility.  CORD will
maintain its records relating to the Product for at least three years.

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<PAGE>

     Section 12.  Compliance  With Laws. Each Party shall conduct its activities
in connection with this agreement in substantial  compliance with all applicable
laws, rules, regulations, and order of governmental entities..

     Section 13.  Representations  and  Warranties.  Each Party  represents  and
warrants to the other that:  (a) it has full power and  authority  to enter into
this  agreement  and perform and observe all  obligations  and  conditions to be
performed or observed 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.  Client  further  represents and warrants to CORD that
the Product is and shall be manufactured in conformity with the Food,  Drug, and
Cosmetic Act, as amended, and all other applicable laws, rules, regulations, and
order of governmental entities..

     Section  14.  Taxes.  Client  shall  pay when  due all  sales,  use,  gross
receipts,  excise,  and  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 or  similar  charges  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 Client under this section
shall not include taxes based on the net income of CORD.

     Section 15. 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,  patents,  service marks,  logos, or other similar
marks in any  manner  except  with the prior  written  approval  of that  Party;
provided  that the foregoing  shall not prohibit  CORD's use of Client' names or
marks in connection with the performance of the Services in a manner  consistent
with this agreement,  the past practices of the Parties or their affiliates,  or
the practices within the industry.

     Section 16.  Confidentiality.  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,  including without
limitation financial  information,  information regarding business practices and
techniques,   and  systems  and  technology   information   (the   "Confidential
Information");  provided  that,  for  purposes of this  agreement,  Confidential
Information shall not include information disclosed by one Party to the other to
the extent that such information:  (a) is or becomes 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;  or (c) becomes known to the other Party or any of its affiliates  from a
source,  not known to the other Party to be legally  prohibited  from discussing
such  information.  (d) is independently  developed by the other Party or any of
its affiliates. The specific material terms of this agreement shall be deemed to
be the Confidential Information of each Party.

     Neither Party shall,  directly or indirectly,  at any time: (i) disclose to
any person or entity any  Confidential  Information  of the other Party (whether
learned before or after the date of this  agreement),  or (ii) use, or permit or
assist any person or entity to use, any such Confidential Information, excepting
only:  (A)  disclosures  required  by  law,  as  reasonably  determined  by  the
disclosing  receiving  Party or its  legal  counsel,  and (B)  disclosures  on a
confidential basis to directors,

                                       6
<PAGE>

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.

     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,  which consent will not be
unreasonably withheld,  certify to the other Party, pursuant to a certificate in
form and substance satisfactory to the other Party, as to the destruction of all
such documentation and other materials.

     Section 17.  Indemnification.  Each Party shall indemnify and hold harmless
the other 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  reasonable
attorneys' fees) arising directly or indirectly out of any failure of that Party
to perform and observe fully all  obligations  and conditions to be performed or
observed by that Party  pursuant to this agreement or any breach of any warranty
made by that Party in this  agreement.  Client  further  agrees to indemnify and
hold harmless CORD and its parent and  affiliates  and each of their  directors,
officers,  employees,  agents and  representatives  from and against all claims,
liability,  losses,  damages,  costs, and expenses (including without limitation
reasonable  attorney's  fees) arising  directly or  indirectly  out of injury or
death to person or property alleged to have been caused by any defect in Clients
Product. NOTWITHSTANDING THE FOREGOING, 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.

     Section 18.  Insurance.  During the term of this  agreement and for as long
thereafter as necessary to cover claims  resulting from this  agreement,  Client
shall maintain: (i) product liability and commercial general liability insurance
having a limit of not less than $10 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 as "loss payees" under
the property  damage  insurance  policy(ies).  Prior to the  Commencement  Date,
Client shall deliver to CORD  certificates  evidencing  such  insurance.  Client
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  or  thereafter  as provided  above.  Except for any losses  resulting
solely from the negligence or intentional  misconduct of CORD, Client shall bear
all risk of loss or damage with respect to the Product,  whether  located at the
CORD Facility or otherwise.

     Section 19. Relationship of the Parties. The relationship among the Parties
is and  shall  be that of  independent  contractors.  This  agreement  does  not
establish or create a partnership or joint venture among the Parties.

                                       7
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     Section 20. 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  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.  Any Party may change  its  address  or  facsimile  number for
notices under this agreement by giving the other Parties notice of such change.

     Section  21.  Remedies.  Each Party  acknowledges  that in the event of any
violation  by that Party of any of the  provisions  of Section 15 and 16 of this
agreement, the other Party would suffer irreparable harm and its remedies at law
would be  inadequate.  Accordingly,  in the event of any  violation or attempted
violation  of any such  provisions  by either  Party,  the other  Party shall be
entitled to a temporary restraining order,  temporary and permanent injunctions,
specific  performance,  and other  equitable  relief,  without  any  showing  of
irreparable  harm or damage or the posting of any bond.  The rights and remedies
of each Party under this  agreement  shall be cumulative  and in addition to any
other  rights or  remedies  available  to such  Party,  whether  under any other
agreement, at law, or in equity.

     Section 22. Governing Law. All questions concerning the validity or meaning
of this agreement or relating to the rights and  obligations of the Parties with
respect to  performance  under this  agreement  shall be construed  and resolved
under the laws of the State of Delaware.

     23  Severability.  The intention of the Parties is to comply fully with all
laws and public  policies,  and this agreement  shall be construed  consistently
with all laws and public policies to the extent  possible.  If and to the extent
that any court of competent  jurisdiction  determines  that it is  impossible to
construe any  provision of this  agreement  consistently  with any law or public
policy and consequently  holds that provision to be invalid,  such holding shall
in no way affect the validity of the other  provisions of this agreement,  which
shall remain in full force and effect.

     Section 24.  Non-waiver.  No failure by either  Party to insist upon strict
compliance with any term of this agreement,  to exercise any option,  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, that Party's right to
demand strict compliance with all provisions of this agreement.

     Section 25. Force Majeure. If the performance of any part of this agreement
by  either  Party  shall be  affected  for any  length  of time by fire or other
casualty,  government restrictions,  war, riots, strikes or labor disputes, lock
out,  transportation  delays,  acts of God, or any other causes which are beyond
the control of the  Parties,  such Party shall not be  responsible  for delay or
failure of  performance  of this  agreement  for such length of time,  provided,
however,  that the obligation of one Party to pay amounts due to any other Party
shall not be subject to the  provisions of this section.

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<PAGE>

     Section 26.  Genders and Numbers.  Where  permitted  by the  context,  each
pronoun in this  agreement  includes  the same  pronoun in the other  genders or
numbers  and each noun used in this  agreement  includes  the same noun in other
genders.

     Section 27. Complete Agreement.  This agreement (together with the exhibits
attached  hereto and the other  documents  referred to herein,  all of which are
hereby  incorporated  herein by reference) contains the entire agreement between
the  Parties  and   supersedes   all  prior  or   contemporaneous   discussions,
negotiations, representations, warranties, or agreements relating to the subject
matter of this  agreement.  No  changes  to this  agreement  shall be made or be
binding on either Party unless made in writing and signed by both Parties.

     Section 28.  Successors.  Except as set forth in this  Section 28,  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,  which consent shall not be unreasonably  withheld.  Subject to
the preceding  sentence,  this  agreement  shall be binding  upon,  inure to the
benefit of, and be  enforceable  by and against the  respective  successors  and
assigns of the Parties.



CollaGenex Pharmaceuticals, Inc.          CORD Logistics, Inc.

By:/s/ Nancy C. Broadbent                 By:/s/ Frank C. Wegerson
   ----------------------------              ------------------------------
      (Name) Nancy C. Broadbent                Frank C. Wegerson
      (Title) Vice President                   Vice President & General Manager

Initials: NCB                             Initials: FCW
         -----                                     -----


Address:                            Address:
301 South State Street              1135 Heil Quaker Blvd, #100
Attn:  Controller                   Attn:  Vice President & General Manager
Newtown, PA  18940                  LaVergne, TN  37086
FAX::  (215) 579-8577               FAX:  (615) 793-4783

                                       9
<PAGE>


Exhibits

                  Exhibit A   Fee Schedule
                  Exhibit B   Order Entry System
                  Exhibit C   System Access Agreement
                  Exhibit D   Operating Guidelines















                                       10
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------


                                  FEE SCHEDULE
                                  ------------


1) Program  Implementation  Fees - One-Time  Start-Up: $    *  
     ($  *    payable completion Year 1, $  *    Year 2; $  *   
     completion Year 3)

2) Information Systems Fees
        a)  Information System Access Fees:
            Monthly System Access Fee:                 $   *    beginning Year 3

3) Customer Service Fees
        a)  Monthly Fixed Fee:                         $   *   
        b)       *                                     $   *   

4) Financial Services Fees
        a)  Monthly Fixed Fee:                         $   *    
        b)       *                                     $   *   

5) Distribution Fees:
     Fixed Expense Pallet Storage:                     $   *   Pallet/Month
         a) Assuming 90-day Inventory on Hand
         b) Fees Billed Monthly, Audited Weekly, Adjusted for Variance Quarterly
            Quarterly
         c) *  Assumes  42"x48"x48"  stacked  pallet.  (Implementation  Planning
            may  yield alternate Pallet  Configurations  which, in turn, may
            yield different Monthly Pallet Charges and will be amended.)

     Variable Line Charge for Pick/Pack/Stage:
         a) Per Line Product Fee:               $  *  
         b) Per Piece Product Return Fee:       $  *  
         c) Per Line Samples and Literature     $  *  

4) Other Client Incurred Fees  will be paid by CORD and Billed to Client
         a) Transportation Charges, Per Client Specifications plus  5%
            administration fee
         b) Packaging   and  Container   Charges,   Per  Client   Specifications
            plus  15% administration fee
         c) Third-Party   Destruction   Charges,   Per   Client   Specifications
            plus 5% administration fee

Future Price  Increases:  The above fees will be held firm through      *       
    .  A         *           per annum  price  increase  will apply to  services
described above effective       *        .

*    Confidential  information  has been omitted and filed  separately  with the
     Securities and Exchange Commission.

                                       11
<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

                          ORDER ENTRY SYSTEM
                          ------------------

A. System Access
   -------------

Includes access to CORD's processor and operating systems (Monday through Friday
12 hours per day (5:30 a.m.  to 5:30 p.m.,  Pacific  Standard  Time),  excluding
holidays.
B. Software Access and Maintenance
   -------------------------------

Includes access to CORD's or an affiliate of CORD's standard  software.  CORD or
an affiliate of CORD shall perform  necessary  modification to bring the systems
in compliance with the standard functionality described below.

   Customer service
   Reports necessary to perform Medicaid rebate calculations.
   Billing (Customization of invoicing/packing slips)
   Inventory tracking and reporting
   Lot tracking
   Order entry
   Warehousing
   Returns processing
   Ability to download system data to Client's processors for reporting writing
   All standard reports
   Contracts/pricing maintenance and chargeback processing


Systems Development/Additional Services:

Client bears  financial  responsibility  for  customization  beyond the standard
systems functionality  described above. Such customization  performed by CORD or
its  representatives  (exclusive of the base  package) in  connection  with this
agreement shall be billed to Client as follows:

   Systems and software development--$ *    per hour per person, plus travel.
   On-site training--$ *    per hour/person, plus travel.
   Supplies, equipment and other, to be agreed upon by both parties.

*    Confidential  information  has been omitted and filed  separately  with the
     Securities and Exchange Commission.


                                       12
<PAGE>

                                                                       EXHIBIT C
                                                                       ---------

                             SYSTEM ACCESS AGREEMENT
                             -----------------------


     This  agreement  is made as of _January 1, 1998,  between  CORD  Logistics,
Inc., an Ohio corporation ("Licensor"), and CollaGenex Pharmaceuticals,  Inc., a
Delaware Corporation ("Licensee"), who hereby agree as follows:

            1. System Access; Maintenance Obligations.  On the terms and subject
to the  conditions  described in this  agreement and the  Distribution  Services
Agreement  having the same date as this agreement  between Licensor and Licensee
(the   "Distribution   Agreement"),   Licensor   hereby  grants  to  Licensee  a
nonexclusive  license (the "License") to utilize  Licensor's Order Entry System,
consisting of the computer hardware, software, and other components described in
Exhibit B to the Distribution Agreement  (collectively,  the "System"),  for the
information  processing  needs of Licensee in connection with the Services to be
provided by Licensor under the Distribution  Agreement.  Licensee shall maintain
during the term of this agreement the network and local area network  (including
without limitation  centralized server) requirements for the System described in
the Distribution Agreement.

     During  the  term of  this  agreement,  Licensee  shall  employ  reasonable
security   measures  and  policies   designed  to   safeguard   the   integrity,
accessibility,  and  confidentiality  of all of Licensee's  data resident on the
System and establish  reasonable  disaster and emergency recovery plans designed
to minimize disruption from System operation interruptions.  Licensee shall have
the  right  to  review  the  operation  of the  System  from  time to time  upon
reasonable  prior notice from  Licensee to Licensor;  provided that such reviews
shall be  conducted  in a manner  to avoid  disruption  of  Licensor's  business
operations to the extent possible.

            2. Proprietary  Rights.  Licensee shall have the right to use access
the System during the term of this agreement as expressly  provided in paragraph
1 of this agreement,  but not otherwise.  Licensee shall not assign or otherwise
transfer,  disclose,  copy, modify, or decompile the System or any part thereof.
The  System  and all parts  thereof,  in all of their  tangible  and  intangible
manifestations,  all  existing  or new  enhancements,  developments,  derivative
works, and other adaptions or modifications to the System (or any part thereof),
and all related  proprietary rights, are and shall remain the exclusive property
of Licensor.  Except for the License,  Licensee shall have no right,  title,  or
interest  in or to the  System or any part  thereof.  Upon  termination  of this
agreement, Licensee shall promptly return to Licensor all portions of the System
then in Licensee's possession or under its control.

            3.  Warranties.  Licensee  acknowledges  that  it has  had  adequate
opportunity  to review the System and its features and  operation,  and Licensee
accepts  the  System  "AS IS" for its use as  contemplated  in the  Distribution
Agreement.  Licensor  hereby  warrants  that the System  will  record,  process,
calculate,  present, and, where appropriate,  insert true and accurate dates and
calculations for calendar dates falling on or after January 2000. LICENSOR MAKES
NO   REPRESENTATIONS   OR  WARRANTIES,   AND  HEREBY  EXPRESSLY   DISCLAIMS  ALL
REPRESENTATIONS  AND  WARRANTIES,  EXPRESS  OR  IMPLIED,  RELATING  DIRECTLY  OR
INDIRECTLY TO THE SYSTEM OR ANY PART THEREOF,  INCLUDING WITHOUT  LIMITATION ANY
WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR
PURPOSE.

            4.  Limitation  On Liability.  LICENSOR  SHALL NOT BE LIABLE FOR ANY
CONSEQUENTIAL,  INDIRECT,  SPECIAL, OR OTHER SIMILAR DAMAGES ARISING DIRECTLY OR
INDIRECTLY  OUT OF THE USE OR INABILITY  TO USE THE SYSTEM OR ANY PART  THEREOF,
EVEN IF INFORMED OF THE  POSSIBILITY  OF SUCH  DAMAGES,  WHETHER  CLAIMED  UNDER
CONTRACT, TORT, OR ANY OTHER LEGAL THEORY.

     IF ANY OF THE  LIMITATIONS  ON THE LIABILITY OF LICENSOR  CONTAINED IN THIS
AGREEMENT ARE FOUND TO BE INVALID OR UNENFORCEABLE FOR ANY REASON, THEN LICENSOR
AND LICENSEE  EXPRESSLY AGREE THAT THE MAXIMUM  AGGREGATE  LIABILITY OF LICENSOR
FOR ALL CLAIMS  RELATING TO THE SYSTEM  SHALL NOT EXCEED  100% OF THE  AGGREGATE
BASE PACKAGE FEES PAID BY LICENSEE TO LICENSOR FOR  LICENSEE'S USE OF THE SYSTEM
UNDER THE DISTRIBUTION AGREEMENT.

            5.  Taxes.  Licensee  shall  pay  when  due all  sales,  use,  gross
receipts, excise, property, and other taxes or similar charges (other than taxes
based upon  Licensor's  net income) now or hereafter  imposed as a result of the
transactions contemplated by this agreement.

                                       13
<PAGE>

            6. Term.  The term of this  agreement  shall  begin upon  Licensee's
initial use of the System as evidenced by the first entry of inventory  into the
System (which may be a date earlier than the Commencement Date specified for the
Distribution Agreement) and shall end: (a) automatically upon the termination of
the  Distribution  Agreement  (for  any  reason),  or (b) on  any  earlier  date
specified  by Licensee in notice to Licensor  given not less than 180 days prior
to the specified  termination  date;  provided  that: (i) paragraph 2 through 5,
inclusive,  and paragraph 8 of this agreement  shall survive the  termination of
this  agreement,  and (ii) no  termination  of this  agreement  shall affect any
liabilities  arising, or based upon acts or omissions  occurring,  prior to such
termination.

     Licensee  shall  continue  to have  access to the System  for a  reasonable
period of time (not to exceed 60 days)  following  termination of this agreement
solely  for  purposes  of  retrieving  and  transferring  to a  separate  system
Licensee's data relating to its pre-termination  operations,  and Licensor shall
reasonably  cooperate with Licensee to preserve the integrity and  accessibility
of  Licensee's  data during such  period;  provided  that,  during such  period,
Licensee  shall  continue to pay the full Base Package and other fees payable by
Licensee under the Distribution Agreement and comply with all other requirements
imposed upon Licensee under this agreement.

            7. Notices. Any notice or other communication required or desired to
be given to either party under this  agreement  shall be in writing and shall be
deemed given:  (a) three days after  mailing,  if deposited in the United States
mail,  first-class  postage prepaid,  and addressed to that party at its address
set  forth at the end of this  agreement;  (b) when  received  if  delivered  to
Federal Express or any other similar overnight  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 at the
end of this agreement.  Either party may change its address or facsimile  number
for  notices  under  this  agreement  by giving the other  party  notice of such
change.

            8.  Remedies.   Licensee  each  shall  indemnify  Licensor  and  its
affiliates,  directors, officers, employees, agents, and representatives against
all claims, liabilities, losses, damages, costs, and expenses (including without
limitation reasonable attorneys' fees) arising directly or indirectly out of any
failure of Licensee to perform and observe fully all  obligations and conditions
to be performed  or observed by Licensee  pursuant to this  agreement.  Licensee
acknowledges  that in the event of any violation by it of any of the  provisions
of paragraph 2 of this agreement, Licensor would suffer irreparable harm and its
remedies at law would be inadequate.  Accordingly, in the event of any violation
or attempted  violation of any such  provisions by Licensee,  Licensor  shall be
entitled to a temporary restraining order,  temporary and permanent injunctions,
specific  performance,  and other  equitable  relief,  without  any  showing  of
irreparable  harm or damage or the posting of any bond, in addition to any other
rights or remedies which may be available to Licensor.

            9.  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,  material  shortages,  strikes or
labor  disputes,  acts of God, or other causes beyond the reasonable  control of
that party.

            10. Successors. Licensee shall not assign or otherwise transfer this
agreement or any of its rights or obligations  under this agreement  without the
prior  written  consent of Licensor,  which  consent  shall not be  unreasonably
withheld.  Subject to the preceding  sentence,  this agreement  shall be binding
upon,  inure to the benefit of, and be enforceable by and against the respective
successors and assigns of each party.

            11.  Interpretation.   This  agreement  shall  be  governed  by  and
construed in accordance with the laws of the State of Ohio. If and to the extent
that any court of competent  jurisdiction  determines  that it is  impossible to
construe any  provision of this  agreement  consistently  with any law or public
policy and consequently  holds that provision to be invalid,  such holding shall
in no way affect the validity of the other  provisions of this agreement,  which
shall remain in full force and effect.

<PAGE>

            12.   Complete   Agreement.   This  agreement   (together  with  the
Distribution  Agreement,  which is  hereby  incorporated  herein  by  reference)
constitutes the entire agreement between the parties with respect to the subject
matter  of  this  agreement  and   supersedes   all  prior  or   contemporaneous
discussions, negotiations,  representations,  warranties, or agreements relating
to the subject  matter of this  agreement.  This agreement may not be amended or
otherwise modified except by a written instrument signed by each party.

                                       14
<PAGE>


CollaGenex Pharmaceuticals, Inc.          CORD Logistics, Inc.


By:/s/ Nancy C. Broadbent                 By:/s/ Frank C. Wegerson
   ----------------------------              -----------------------------------
      (Name) Nancy C. Broadbent                 Frank C. Wegerson
      (Title) Vice President                    Vice President & General Manager
      Initials: NCB                             Initials: FCW
                ---                                       ---

Address:                            Address:
301 South State Street              1135 Heil Quaker Blvd, #100
Attn:  Controller                   Attn:  Vice President & General Manager
Newtown, PA  18940                  LaVergne, TN  37086
FAX:   (215) 579-8577               FAX:  (615) 793-4783

















                                       15
<PAGE>

                                                                       EXHIBIT D


              COLLAGENEX PHARMACEUTICALS INC./CORD LOGISTICS, INC.

                              OPERATING GUIDELINES

In  execution of the  Distribution  Services  Agreement,  CORD  Logistics,  Inc.
("CORD")  will  follow  the  Operating  Guidelines  as  developed  jointly  with
CollaGenex  Pharmaceuticals Inc. ("CollaGenex").  These Operating Guidelines are
in addition to CORD Information Systems Operating  Instructions,  as well as the
CORD  Standard  Operating  Procedures  ("SOPs").  Copies of these  documents are
maintained by both parties and will be reviewed, and updated if necessary,  from
time to time as mutually agreed, but not less than once per calendar year.

WAREHOUSING
-----------

CORD will  maintain  its  warehouse  facility in  accordance  with all state and
federal licensing requirements and will ensure full compliance with Prescription
Drug  Marketing Act and FDA guidelines  and  regulations.  CORD will ensure full
compliance with all cGMP, SOP and QA procedures.  Documented  training  programs
will be maintained by CORD.

CORD will comply with storage,  handling and shipping  conditions  designated by
CollaGenex  for the  Products.  Products  will be stored in an area with secured
access,  accessible only to authorized CORD personnel as agreed to by CollaGenex
and CORD.

Inventory  will be received  into and tracked on an automated  inventory  system
capable of full lot tracking on a shipment by shipment basis.  Inventory must be
recorded  and  controlled  by SKU,  by lot number and by  expiration  date.  Any
quarantined  Product must be physically  segregated and  appropriately  labeled.
Quarantined Product can only be released from quarantine status in the automated
inventory system by an authorized CollaGenex or, if designated by CollaGenex,  a
CORD QA  employee  and  physically  released  by an  authorized  CORD  employee.
Inventory will be routinely verified by CORD through weekly cycle counts. Should
deviations occur,  CollaGenex and CORD will jointly determine corrective actions
required.  CollaGenex  and their  auditors  will have  access  for  pre-arranged
physical  inventory  observations.  CORD will notify  CollaGenex  of all expired
Product  or  Product  which has  reached  "short  dated"  status,  specified  by
CollaGenex to be six months prior to expiration  date.  Disposition of returned,
rejected or expired Product must be handled according to CollaGenex's direction.

DISTRIBUTION
------------

CORD and  CollaGenex  will agree upon a common  carrier  that  provides the most
favorable rates and pick up schedule.  CORD will procure and bill CollaGenex for
all shipping materials in accordance with this Agreement.  CORD's proposal.  All
Product will be shipped  utilizing  packaging  and shipping  carton(s) as deemed
appropriate by CORD.  Unless instructed  otherwise by CollaGenex,  shipping will
occur based on the shipping procedures provided by CollaGenex.

CORD will comply with First to Expire,  First Out (FEFO)  inventory  allocation.
Any deviations from FEFO must have prior approval by CollaGenex in writing.

                                     Page 1
<PAGE>

CORD will perform quality  verification by an individual other than the employee
whom picked the order, on all CollaGenex shipments. All orders will be confirmed
on the same business day in which shipment occurs.

CORD will establish an account for CollaGenex with the carrier  selected by CORD
and approved by CollaGenex.  If UPS is the selected  carrier,  shipping  charges
will be billed  directly to CORD's  account and passed through to CollaGenex per
the  Distribution  Agreement.   All  freight  and  insurance  will  be  paid  by
CollaGenex. Title will pass to the customer at the point of delivery to a common
carrier. CORD will perform proof of delivery or freight claim services on behalf
of the customer for CollaGenex. In the event of legitimate customer claims, CORD
will issue a credit to the  customer  for the invoice  amount.  CollaGenex  will
approve all such credits.

CUSTOMER CREDIT
---------------

CollaGenex  will determine the customers to whom it will sell on a direct basis.
Customer class  definitions  will be  established  and customers will be grouped
according to their functional criteria. Wholesalers will be required to sign the
CollaGenex  Distributor  Agreement  form  which will  automatically  renew on an
annual basis until terminated by either Party.

CollaGenex will assign credit limits to customers.  The CORD system will monitor
orders and outstanding  accounts  receivable  against such credit limit and hold
orders as  needed.  Additionally,  CollaGenex  may  elect to place a  customer's
account on credit hold so that all orders are reviewed  prior to  shipment.  All
orders held for credit  limits or for credit hold will be reviewed  and approved
by CollaGenex prior to shipment.

CORD will be responsible  for inputting and for maintaining  customer  profiles.
The  initial  set up will be verified  to  information  provided by  CollaGenex.
Subsequent  customers will be added after a customer profile automation form has
been completed by CollaGenex.

CUSTOMER SERVICE
----------------

CORD will staff the CollaGenex  Customer Service line from 7:00 a.m. - 6:00 p.m.
central  standard  time. No more than two rings will occur before the customer's
call is handled.  As a backup to the customer service  representatives,  a voice
mail  system  will be  maintained  to accept  telephone  orders  and to  collect
messages from customers.  CORD's dedicated  customer service line for CollaGenex
will  incorporate  programming  to  forward  calls  to a  CollaGenex  designated
clinical service phone number if calls of a clinical nature are received outside
of regular customer service hours.  CORD's Customer Service  representative will
be knowledgeable about CollaGenex and the Product and will conduct themselves in
a courteous and professional manner.

Orders
------

Orders will be accepted via EDI, telephone,  fax or mail. All orders received by
2:00  p.m.  central  time and  validated  as  approved  orders  will be  shipped
according  to  CollaGenex's  shipping  procedures.  EDI orders will be collected
throughout the day, accordingly to a pre-determined  scheduled developed by CORD
and  CollaGenex.  EDI Orders  received  after  12:00 p.m.  central  time will be
shipped the following  shipping day,  excepting  holidays and days designated by
CollaGenex as non-shipment dates.

                                     Page 2
<PAGE>

Customers  must  order  according  to  CollaGenex  minimum  order and order line
quantity  as stated  in the  CollaGenex  Distributor  Agreement  and on  Product
ordering instructions.

CollaGenex  will instruct its customers to place orders based on the  CollaGenex
Distribution Agreement.  However at CollaGenex's discretion,  the policy may not
be enforced at launch.  Post-launch  customer order  frequency will be monitored
via a report  furnished  by  CORD.  Customers  habitually  exceeding  the  order
frequency policy may be required to pay freight costs. CollaGenex will determine
when  this  policy  will be  enforced  and  will  notify  CORD  of the  specific
instructions for enforcement in writing.

CollaGenex reserves the right to limit quantities,  to hold or to refuse orders.
These decisions will be executed by CORD.

CORD will  ensure  order  entry  accuracy  of 98% or higher for all order  lines
processed  during each  calendar  quarter.  Errors  which may occur  within this
tolerance  range are wrong Product NDC input or incorrect  order quantity input.
Should  deviations occur outside the tolerance  range,  CollaGenex and CORD will
jointly determine corrective actions.

Pricing and Terms
-----------------

CollaGenex  will  publish  terms to  wholesalers  and  warehouse  chains.  Those
standard  terms are 2% - 30 days;  net 31 days.  Contracted  customers  may have
non-standard terms.

List prices for wholesalers and warehouse chains will be published by CollaGenex
and  are  subject  to  change  from  time  to time  at the  sole  discretion  of
CollaGenex.  Contract  prices will be  determined by CollaGenex on a contract by
contract  basis.  CollaGenex  will  notify  CORD  of  such  price  changes  with
sufficient  notice  for  update  of the CORD  system  files.  Advance  notice to
customers may or may not be provided, at CollaGenex's  discretion.  All customer
notifications will be developed by CORD and approved by CollaGenex.

All  system  maintenance  of  pricing  and  terms  will be  performed  by  CORD.
CollaGenex will provide to CORD in writing any changes to prices or terms.  CORD
will be  responsible  for  updating  the CORD  system  within  24 to 48 hours of
receipt of such  notice.  All CORD  employees  are bound by the  confidentiality
provisions of the Agreement  between CORD and CollaGenex and, as such, shall not
disclose  CollaGenex sales data or pricing information outside the specific CORD
employees  who  have a need  to  know  of  this  information  in the  course  of
performing their routine job responsibilities.

CORD will provide the necessary  reports  within time frames to be agreed by the
parties to ensure  CollaGenex  can comply  with the  reporting  requirements  of
Medicaid (OBRA), Veterans HealthCare Act, PHS Covered Entities, and state rebate
programs.  CollaGenex will define reporting requirements against which CORD will
produce the required reports.

INVOICING
---------

CORD  Customer  Service  will  ensure all  invoices  are mailed or,  once an EDI
invoicing  system is  implemented,  transmitted via EDI the same business day as
the shipment occurs; or by noon the following business day.

                                     Page 3
<PAGE>

For any order shipped after the close of business,  the invoice will be prepared
and mailed the following business day.

Once an EDI  invoicing  system  is fully  and  jointly  implemented  by CORD and
CollaGenex, CORD will execute and complete EDI testing for additional CollaGenex
customers within 30 days of the customer's request.

PRIME VENDOR PROGRAM/CHARGEBACKS
--------------------------------

CollaGenex may enter into prime vendor  arrangements  for contract or government
mandated pricing arrangements.  CollaGenex has the right to accept or refuse the
contractee's request to be named prime vendor. Once EDI chargeback processing is
available,  CollaGenex,  where possible, will encourage the contract customer to
select  a  wholesaler  with  full  EDI   capabilities,   receipt  of  bid  award
notification,   chargeback  submission,  chargeback  reconciliation  and  credit
invoicing to serve as their prime vendor.

CORD,  on  behalf of  CollaGenex,  will run  chargeback  processing  daily  with
reconciliation of chargeback discrepancies within 5 working days. The chargeback
SOP will define the parameters available to CORD to resolve discrepancies.

All  chargebacks  will be  processed  according  to the  chargeback  policy  for
CollaGenex.  All  validated  chargeback  submissions  will be settled via credit
invoice.  CollaGenex  will  not  make  advance  payments  or  authorize  advance
deductions of chargebacks.

Prime vendors will be  instructed  that all returns from  CollaGenex's  contract
customers must be reported as a reverse chargeback. CollaGenex will maintain the
right to audit a prime vendor's records related to chargeback requests.

ACCOUNTS RECEIVABLE
-------------------

CollaGenex will open and maintain a lockbox.  CORD will receive the notification
of lockbox deposits along with the customer's remittance information.  CORD will
reconcile and apply the cash receipt to the outstanding  accounts  receivable on
the same day as received from the bank or within 24 hours of receipt.  CORD will
have no access to funds in the  lockbox.  To aid the cash  application  process,
CollaGenex  will  authorize  accounts  receivable  payment terms of one day past
published  terms.  This grace period will not be communicated to customers.  For
payments  received with a postmark  beyond the payment  terms grace period,  the
discount  will be  disallowed  and  maintained  as a balance due on the Accounts
Receivable account. CORD will notify the customer of the outstanding balance via
a letter to be developed by CORD

Accounts Receivable will be monitored by CORD with appropriate collection action
taken  as  directed  by  CollaGenex.  The  performance  measurement  for CORD is
confirmation  of the strict  compliance  with the SOP for collection of past due
receivables.

GOVERNMENT REPORTING
--------------------

Within the first five  business  days  following a calendar  quarter  end,  CORD
personnel will provide the following Government reports to CollaGenex:

                                     Page 4
<PAGE>

       IFF Direct Sales Report
       IFF Indirect Sales Report
       AMP Report
       Non FAMP Report
       Best Price Report
       Most Favored Price Report
CORD will also make available all supporting  schedules and source  documents to
be used by CollaGenex to perform  verification of the Government reports as they
deem necessary.

RETURN GOODS/RECALLS
--------------------

Returns
-------

Returns  will  be  processed  according  to the  Return  Procedures  defined  by
CollaGenex.

CORD will  complete the  processing  of all returns and issue  credits  within 5
business days of receipt of the return.

Recalls
-------

Recalls will be processed according to Recall Procedures defined by CollaGenex.

CORD will provide the necessary  recall  reporting using the CORD CIS Recall and
lot history reports.

MONTH-END CLOSE
---------------

CORD will comply with all  month-end  reporting  requirements  as  specified  by
CollaGenex.  CollaGenex will complete its close by the 5th working day after the
last day of the month being closed.

LAUNCH REQUIREMENTS
-------------------

CORD will make all efforts,  as previously  approved by  CollaGenex,  to support
CollaGenex requirements for a quick entry into the marketplace.  Activities that
CORD will perform include pre-loading customer orders,  pick/pack/ship within 24
hours of FDA approval or Product  availability from CollaGenex.  Specific launch
instructions will be developed by CollaGenex.

SYSTEMS
-------

CollaGenex  retains  ownership  to all data in the CORD CIS  system  related  to
CollaGenex's  business. All CollaGenex data must be segregated within the system
with appropriate system access. CollaGenex must have on-line access to inventory
records, lot tracking,  customer profiles, item maintenance,  pricing and terms,
and other critical data as defined in the  procedures.  Reporting and interfaces
will be defined by  CollaGenex  and  jointly  agreed  upon with CORD.  CORD will
maintain all systems within the change  control SOPs.  CORD's CIS processor will
be accessible by CollaGenex  7:30 a.m. - 7:30 p.m.  central time Monday  through
Friday except for routine, schedule maintenance. Unscheduled system downtime per
calendar  quarter shall not exceed 2% of the normally  accessible  access hours.
CORD will immediately  notify CollaGenex of any system

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problem that might affect  services and an  estimated  time for  restoration  of
system  access.  Daily system  backups of changed  object files and weekly fully
system backups will be performed according to Regional Data Center SOP #RDC-004.
Fire proof offsite  storage is utilized for the  safekeeping  of the weekly full
backups.

AUDITS/INSPECTIONS
------------------

Upon reasonable  prior notice,  CollaGenex  personnel and their  representatives
will have access to CORD  facilities  for review and audit of CORD's  records to
assure  compliance to cGMP and contractual  agreements and to conduct,  together
with CORD representatives, periodic inventories of CollaGenex Products.

CORD  will  assist  with   inspections/audits   of  the  Federal   Food  &  Drug
Administration  or other  governmental  or official  agencies.  CORD will notify
CollaGenex immediately of any such audits that are of an unscheduled nature.

CONTINUOUS IMPROVEMENT
----------------------

CollaGenex  and CORD will meet  quarterly to review  performance  and to jointly
develop continuous improvement to the CollaGenex services.