EXHIBIT NO. 10.1

   CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
                EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.



                                LICENSE AGREEMENT



                                     BETWEEN



                            ATRIX LABORATORIES, INC.


                                       AND


                        COLLAGENEX PHARMACEUTICALS, INC.






                                 AUGUST 24, 2001




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                                TABLE OF CONTENTS

                                                                            PAGE


Article I DEFINITIONS..........................................................1

Article II LICENSE AND PURCHASE................................................9

     Section 2.01.   License Grant.............................................9
     Section 2.02.   Trademarks................................................9
     Section 2.03.   Occurrence of First Commercial Sale by CollaGenex.........9

Article III PAYMENTS AND ROYALTIES.............................................9

     Section 3.01.   License Fee...............................................9
     Section 3.02.   Royalty Payments..........................................9
     Section 3.03.   Reports, Exchange Rates..................................10
     Section 3.04.   Records and Audits.......................................10
     Section 3.05.   Taxes....................................................10

Article IV PAYMENTS...........................................................11

     Section 4.01.   Payment Terms............................................11
     Section 4.02.   Payment Method.......................................... 11
     Section 4.03.   Late Payments............................................11
     Section 4.04.   CollaGenex's Contribution Margin.........................11

Article V ATRIX CO-MARKETING RIGHTS...........................................11

     Section 5.01.   Co-Marketing Rights......................................11

Article VI TERM AND TERMINATION...............................................12

     Section 6.01.   Term.....................................................12
     Section 6.02.   Termination By CollaGenex................................12
     Section 6.03.   Termination By Atrix.....................................12
     Section 6.04.   Termination Upon Certain Events..........................13
     Section 6.05.   Remedies.................................................14
     Section 6.06.   Effect of Termination....................................14
     Section 6.07.   License Following Expiration.............................16

Article VII COMMERCIALIZATION OF THE PRODUCT..................................16

     Section 7.01.   CollaGenex's Obligations.................................16
     Section 7.02.   Marketing Advisory Board.................................17
     Section 7.03.   Co-Promotional Activities of Atrix.......................18

Article VIII MANUFACTURE AND SUPPLY...........................................19

     Section 8.01.   Agreement to Supply Products.............................19
     Section 8.02.   Quality Assurance........................................19
     Section 8.03.   Atrix's  Duties..........................................19
     Section 8.04.   Failure to Supply........................................20
     Section 8.05.   Allocation...............................................21

<PAGE>

Article IX PURCHASE AND SALE..................................................21

     Section 9.01.   Purchase Price and Payment...............................21
     Section 9.02.   Purchase Price Adjustment................................21
     Section 9.03.   Labeling and Artwork.....................................21
     Section 9.04.   Purchase Forms...........................................22
     Section 9.05.   Confirmation.............................................22
     Section 9.06.   Delivery.................................................22
     Section 9.07.   Forecasts and Orders.....................................22
     Section 9.08.   Professional Samples.....................................23

Article X WARRANTY, REJECTION AND INSPECTIONS.................................24

     Section 10.01.   Atrix Warranty..........................................24
     Section 10.02.   Rejection of Product or Professional Samples for
                      Failure to Conform to Specifications....................24
     Section 10.03.   CollaGenex Inspections..................................25

Article XI REGULATORY COMPLIANCE..............................................25

     Section 11.01.   Maintenance of Marketing Authorizations.................25
     Section 11.02.   Adverse Drug Event Reporting and Phase IV Surveillance..25
     Section 11.03.   Phase IV Studies........................................26
     Section 11.04.   Assistance..............................................26
     Section 11.05.   Compliance..............................................27

Article XII PATENTS AND TRADEMARKS............................................27

     Section 12.01.   Maintenance of Patents or Marks.........................27
     Section 12.02.   Cooperation.............................................27
     Section 12.03.   Atrix to Prosecute Infringement.........................27
     Section 12.04.   Infringement Claimed by Third Parties...................28

Article XIII REPRESENTATIONS, WARRANTIES and COVENANTS........................28

     Section 13.01.   Corporate Power.........................................28
     Section 13.02.   Due Authorization.......................................28
     Section 13.03.   Binding Obligation......................................28
     Section 13.04.   Ownership of Atrix Patent Rights........................28
     Section 13.05.   Patent Proceedings......................................29
     Section 13.06.   Adverse Properties......................................29
     Section 13.07.   Preservation of Name and Reputation.....................29
     Section 13.08.   Debarment...............................................29
     Section 13.09.   Limitation on Warranties................................29
     Section 13.10.   Limitation of Liability.................................29

Article XIV COVENANTS OF COLLAGENEX AND ATRIX.................................29

     Section 14.01.   Covenant Not to Launch Competitive Product..............29
     Section 14.02.   Limitation to the Territory.............................30
     Section 14.03.   Marketing and Instructional Materials...................30
     Section 14.04.   A&S Spending Levels.....................................31
     Section 14.05.   Variances...............................................31

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     Section 14.06.   Cash Alternatives.......................................31
     Section 14.07.   Minimum Size of Detail Force............................31
     Section 14.08.   Detail Calls............................................31
     Section 14.09.   Access to Books and Records.............................31
     Section 14.10.   Marketing Expenses......................................32
     Section 14.11.   Protection of the Marks.................................32
     Section 14.12.   Distribution System.....................................32
     Section 14.13.   Further Actions.........................................32
     Section 14.14.   Equitable Relief........................................32

Article XV PRODUCT RECALL.....................................................33

     Section 15.01.   Product Recalls or Withdrawal...........................33
     Section 15.02.   Recall Costs............................................33
     Section 15.03.   Notification of Complaints..............................34
     Section 15.04.   Notification of Threatened Action.......................34

Article XVI INDEMNIFICATION AND INSURANCE.....................................34

     Section 16.01.   CollaGenex Indemnified by Atrix.........................34
     Section 16.02.   Atrix Indemnified by CollaGenex.........................34
     Section 16.03.   Prompt Notice Required..................................35
     Section 16.04.   Indemnitor May Settle...................................35
     Section 16.05.   Insurance...............................................35

Article XVII DISPUTE RESOLUTION...............................................36

     Section 17.01.   Disputes................................................36
     Section 17.02.   Mediation...............................................36
     Section 17.03.   Trial Without Jury......................................36
     Section 17.04.   Performance to Continue.................................36
     Section 17.05.   Provisional Remedies....................................37
     Section 17.06.   Determination of Patents and Other Intellectual
                      Property................................................37

Article XVIII CONFIDENTIALITY.................................................37

     Section 18.01.   Confidentiality.........................................37
     Section 18.02.   Publicity Review........................................37

Article XIX MISCELLANEOUS.....................................................38

     Section 19.01.   No-Solicitation.........................................38
     Section 19.02.   Commercially Reasonable Efforts.........................38
     Section 19.03.   No Right to Use Names...................................38
     Section 19.04.   Notices.................................................39
     Section 19.05.   Severability............................................39
     Section 19.06.   Entire Agreement/Merger.................................40
     Section 19.07.   Amendment...............................................40
     Section 19.08.   Counterparts............................................40
     Section 19.09.   No Waiver of Rights.....................................40
     Section 19.10.   Force Majeure...........................................40
     Section 19.11.   Further Assurances......................................40

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     Section 19.12.   Assignment and Sub-License..............................40
     Section 19.13.   Expenses................................................41
     Section 19.14.   Binding Effect..........................................41
     Section 19.15.   Governing Law...........................................41
     Section 19.16.   Survival of Representations and Warranties..............41
     Section 19.17.   No Strict Construction..................................41
     Section 19.18.   Independent Contractors.................................41


Exhibit A       --    Atrix Patent Rights....................................A-1
Exhibit B       --    Form of Certificate of Compliance......................B-1
Exhibit C       --    Specifications.........................................C-1
Exhibit D       --    Form of Stock Purchase.................................D-1
Exhibit E       --    Atrix Marks............................................E-1
Exhibit F       --    CollaGenex's Standard Operating Procedures.............F-1
Exhibit G       --    Product Fixed Price Schedule ..........................G-1

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<PAGE>



                                LICENSE AGREEMENT

     This  License  Agreement  is made as of August  24,  2001  (the  "Effective
Date"),  by  and  between  Atrix  Laboratories,  Inc.,  a  Delaware  corporation
("Atrix"),  with its principal place of business located at 2579 Midpoint Drive,
Fort  Collins,  Colorado  80525-4417  and  CollaGenex  Pharmaceuticals,  Inc., a
Delaware  corporation  ("CollaGenex"),  with its  principal  place  of  business
located  at  41  University  Drive,  Newtown,   Pennsylvania  18940.  Atrix  and
CollaGenex are sometimes  referred to  collectively  herein as the "Parties" and
individually as a "Party."

     WHEREAS, Atrix owns certain proprietary information, intellectual property,
Patents and Know-How, and possesses  manufacturing  capabilities for ATRIDOX(R),
ATRISORB(R) Free Flow and ATRISORB(R) Free Flow with Doxycycline, and subject to
the terms of this  Agreement,  Atrix desires to grant to CollaGenex an exclusive
license to market and sell  ATRIDOX(R),  ATRISORB(R)  Free Flow and  ATRISORB(R)
Free Flow with Doxycycline and any and all  Improvements  thereon for use in the
field of dentistry including all its specialties in the Territory; and

     WHEREAS,  CollaGenex  desires to obtain from Atrix an exclusive  license to
advertise,  promote, market,  distribute,  detail and sell the Licensed Products
(defined below); and

     WHEREAS,  Atrix is willing to grant such rights and licenses to  CollaGenex
under the terms and conditions hereinafter set forth.

     NOW,  THEREFORE,  in consideration  of the mutual  promises,  covenants and
agreements hereinafter set forth, the Parties mutually agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          (a) The  following  terms as used in the Agreement  shall,  unless the
     context  clearly  indicates  to the  contrary,  have the  meaning set forth
     below:

     "Act" means the United States Food, Drug and Cosmetic Act, as amended,  and
all regulations thereunder.

     "Affiliate"  means any entity which  directly or  indirectly  controls,  is
controlled by or is under common  control with either  CollaGenex or Atrix.  The
term  "control"  means the power to direct or control the affairs of such entity
by reason of  ownership of at least 50% of such entity by voting  stock,  equity
interest, contract or otherwise.

     "Agreement"  means  this  License  Agreement  and any  written  amendments,
addendums or modifications hereto.

     "Applicable  Laws"  means  all  applicable  laws,  rules,  regulations  and
guidelines  within or without the  Territory  that may apply to the marketing or
sale of the  Products in the  Territory  or the  performance  of either  Party's
obligations  under this Agreement  including  laws,  regulations


                                       1
<PAGE>

and guidelines governing the marketing, distribution and sale of the Products in
the Territory,  to the extent applicable and relevant, and including all cGMP or
current Good Clinical Practices  standards or guidelines  promulgated by the FDA
or the Governmental Authorities and including trade association guidelines.

     "A&S" means CollaGenex's  advertising and selling expenditures  incurred in
and  associated  with the  promotional  support of the  Products,  including the
creation,  development  and  acquisition of advertising  and selling  materials,
including  expenditures for samples,  detailing materials,  journal advertising,
in-office  waiting room  materials,  educational  programs,  convention  booths,
direct mail, consumer support,  Phase IV clinical trials for marketing purposes,
market  research,  market  surveys,  market  analysis and training of the Dental
Detail  Force  and  the  telesales  staff,  and  any  additional  staff  members
specifically  recruited  in order  to  directly  support  the  marketing  of the
Products,  all as recorded in  CollaGenex's  financial  statements in accordance
with GAAP.

     "ATRIDOX(R)"   means  the  ATRIGEL(R)  drug  delivery   system   containing
doxycycline for the subgingival therapy of periodontal disease.

     "ATRIGEL(R)"  means Atrix's  proprietary drug delivery system consisting of
flowable   compositions   (e.g.,   solutions,   gels,  pastes  and  putties)  of
biodegradable polymers and biocompatible solvents.

     "ATRISORB(R) Free Flow" means the biodegradable  guided tissue regeneration
("GTR") barrier for periodontal  surgery,  based on the ATRIGEL(R) drug delivery
system.

     "ATRISORB(R)  Free  Flow  with  Doxycycline"  means  the  ATRISORB  barrier
containing doxycycline, which aids in the regeneration and integration of tissue
components in GTR procedures and reduces  bacterial  colonization of the barrier
at the site of GTR surgery.

     "ATRISORB(R)  Products" means  ATRISORB(R)  Free Flow and ATRISORB(R)  Free
Flow with Doxycycline.

     "Atrix  Know-How"  means all  Know-How,  including  that related to Atrix's
proprietary  ATRIGEL(R) technology and which is under the Control of Atrix or is
created during the Term, which is not covered by the Atrix Patent Rights, but is
necessary or useful to develop,  Manufacture and  commercialize  the Products in
the Territory for use in the Field.

     "Atrix  Manufacturing  Cost"  means the actual cost of the  Manufacture  by
Atrix of a Products under a Manufacturing Process, including the related quality
assurance and quality control  activities as required by Applicable  Laws, which
actual cost shall be comprised of the cost of goods  produced as  determined  in
accordance with GAAP, and shall include direct labor, direct material, including
raw  materials  and  packaging  materials,  and  the  allocable  portion  of the
manufacturing overhead of Atrix directly attributable to the Manufacture of such
Product. The allocable portion of the manufacturing overhead shall be determined
by taking the total  facility cost for the period,  less an adjustment  for idle
capacity,  and allocating the remaining  facility cost by labor usage to each of
the products  produced in the facility  during the period.  For example:  if the
facility  cost  for  the  period  was  $1,000,000  and it was  operating  at 80%
capacity,   the  allocable  facility  cost  would  be  $800,000.  If  a  Product
represented 30% of labor usage during the period,  the allocable  portion of the
manufacturing  overhead directly attributable to the Manufacture of such Product
would be $240,000.  Atrix Manufacturing Cost shall exclude selling,  general and
administrative,  research and development, and interest expenses and any and all
debt service payments of Atrix.

     "Atrix Marks" means  "ATRISORB(R),"  "ATRIGEL(R)"  or  "ATRIDOX(R)"  or any
additional  trademarks  selected  by  Atrix to  describe  its  proprietary  drug
delivery technology and the Products, alone or accompanied by any logo or design
and any foreign language equivalents in sound or meaning,  whether registered or
not.



                                       2
<PAGE>

     "Atrix Patent  Rights" means all Patent Rights  including  those that claim
Atrix's  proprietary  ATRIGEL(R)  technology as of the Effective Date and at any
time during the Term,  which are necessary or  appropriate  to advertise,  sell,
market,  promote and  distribute  the Products in the  Territory  for use in the
Field  which  are under  the  Control  of Atrix as of the  Effective  Date,  and
Improvements  thereto  developed  during the Term. The Atrix Patent Rights as of
the Effective Date are set forth on Exhibit A.

     "Atrix Technology" means the Atrix Patent Rights and the Atrix Know-How.

     "Certificate of Compliance" means the certificate of compliance in the form
attached hereto as Exhibit B.

     "cGMP"  means  current  good  manufacturing  practices  as  defined  in  21
CFRss.110 et. seq.

     "Competitive Products" means:

          (a) any non-surgical,  professionally applied subgingival treatment of
     the  periodontal  pocket for which the primary  mechanism  of action is the
     reduction of bacterial load in the periodontal pocket.

          (b) any product that would constitute barriers for GTR or barriers for
     guided bone regeneration ("GBR"),  whether or not such GTR and GBR barriers
     contain antibiotics,  which is used as an adjunct to surgical treatment for
     periodontal disease.

     "Confidential  Information" means any confidential  information  (including
information  related to the Atrix  Technology)  of a Party  relating to any use,
process,   method,   compound,   research  project,  work  in  process,   future
development, scientific, engineering,  manufacturing,  marketing, business plan,
financial or personnel  matter relating to the disclosing  Party, its present or
future products, sales, suppliers,  customers, employees, investors or business,
whether in oral, written,  graphic or electronic form. Confidential  Information
shall  not  include  any  information  which  the  receiving  Party can prove by
competent evidence:

          (a) is now, or hereafter becomes,  through no act or failure to act on
     the part of the receiving Party, generally known or available;

          (b) is known by the  receiving  Party  at the time of  receiving  such
     information, as evidenced by its written records maintained in the ordinary
     course of business;

          (c) is hereafter furnished to the receiving Party by a Third Party, as
     a matter of right and without restriction on disclosure;

          (d) is independently developed by the receiving Party, as evidenced by
     its written records, without knowledge of, and without the aid, application
     or use of, the disclosing Party's Confidential Information; or

          (e) is the subject of a written permission to disclose provided by the
     disclosing Party.


                                       3
<PAGE>

     "Continental  United  States"  means  the 50  states  and the  District  of
Columbia.

     "Contribution  Margin" means that  percentage of Net Sales for all Products
sold by CollaGenex,  its Affiliates or agents,  which percentage  represents the
dollar  amount of Net Sales  retained by  CollaGenex as a result of such Product
sales,  determined by a fraction, (i) the numerator of which is equal to (A) the
aggregate  Net Sales for all Products  sold by  CollaGenex,  its  Affiliates  or
agents during a given period of time, minus (B) the aggregate amount of Purchase
Price payments,  royalty payments and Customer Service Costs attributible to all
such Products sold by CollaGenex, its Affiliates or agents during that period of
time, and (ii) the  denominator of which is equal to the aggregate Net Sales for
all Products sold by CollaGenex,  its Affiliates or agents during that period of
time.

     "Control"  means  the  possession  of the  ability  to grant a  license  or
sublicense as provided for herein  without  violating the terms of any agreement
or other arrangement with any Third Party.

     "Customer Service Costs" means those direct customer service costs incurred
by CollaGenex in connection with (i) warehousing the Products, (ii) distributing
the Products to its customer accounts (including shipping and handling charges),
(iii) order  processing,  billing and  collection  activities  for such customer
account,  and (iv) bad debt expense  incurred in connection  thereto.  "Customer
Service Costs" shall not include A&S or similar costs.

     "Dental Detail Force" means CollaGenex's field force of dental consultants,
divisional and regional managers who make sales and product recommendation calls
on Dental Professionals (each a "Dental Consultant").

     "Dental Professionals" means Dentists, dental practitioners,  dental school
staffs and dental hygienists.

     "Dentist"  means  any  professional  having  a  D.D.S.  or  D.M.D.  degree,
including general practitioners, dental specialists, endodontists, oral surgeons
and periodontists.

     "Detail Call" means a sales and product  recommendation  call by the Dental
Detail Force on Dental Professionals.

     "Eighth  Amendment" means the Eighth  Amendment to Agreement  between Atrix
and Block Drug Corporation, a New Jersey corporation ("Block").

     "Evaluation  Period" means the [**] periods preceding the month end of that
month that is  approximately 45 days prior to an Adjustment Date (e.g. [**] with
respect to the  Initial  Adjustment  Period),  and shall  refer to both the [**]
period and the [**] period, unless otherwise set forth in this Agreement.

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

     "Field" means the field of dentistry, including all of its specialties.

     "First Commercial Sale" means the first sale for use, consumption or resale
of a Product by CollaGenex or its  Affiliates  in the Territory  (excluding  any
sales for clinical trials or the distribution of Professional  Samples).  A sale
to an  Affiliate  shall  not  constitute  a First  Commercial  Sale  unless  the
Affiliate is the end user of the Product.

     "Fixed  Price  Schedule"  means the Fixed  Price  Schedule  as set forth in
Exhibit G, as amended in accordance with the terms of this Agreement.

     "GAAP" means generally accepted accounting principles, consistently applied
in accordance with past practice.


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<PAGE>

     "Good Clinical  Practices"  means good clinical  practices as defined in 21
CFRss.50 et. seq. andss.312 et. seq.

     "Governmental  Approval"  means all permits,  licenses and  authorizations,
including   Marketing   Authorizations,   required  by  the  FDA  or  any  other
Governmental  Authority  as a  prerequisite  to  the  Manufacturing,  packaging,
marketing and selling of the Products or the Units.

     "Governmental   Authority"  means  any  federal,   state,  local  or  other
government,  administrative or regulatory agency,  authority,  body, commission,
court, tribunal or similar entity.

     "Improvements" means any and all developments, inventions or discoveries in
the Field relating to the Atrix  Technology  developed,  or acquired by Atrix at
any time during the Term and shall include developments  intended to enhance the
safety and/or efficacy of a Product.

     "Know-How" means all know-how, trade secrets,  inventions, data, processes,
techniques, procedures,  compositions, devices, methods, formulas, protocols and
information,  whether or not patentable, which are not generally publicly known,
including,  without limitation, all chemical,  biochemical,  toxicological,  and
scientific research  information,  whether in written,  graphic or video form or
any other form or format.

     "Manufacture" or "Manufacturing  Process" means the production,  processing
and packaging of a Product or a  Professional  Sample,  in accordance  with this
Agreement and Applicable Laws.

     "Marketing  Authorization"  means all necessary and appropriate  regulatory
approvals,  including Pricing and Reimbursement Approvals,  where applicable, to
put a Product on the market in the Territory.

     "NDA" means a New Drug  Application,  and all  amendments  and  supplements
thereto,  filed or to be filed, with the FDA seeking  authorization and approval
to manufacture, package, ship and sell a product as more fully defined in 21 CFR
ss. 314.5 et seq.

     "Net Sales"  means the invoice  amounts  [**] for sales of each  Product by
CollaGenex or its Affiliates to Dental  Professionals  in bona  fide arms length
transaction,  less the  following  items,  provided  that  they  are  bona  fide
transactions  designed to optimize the sales of Product (a) cash  discounts  and
trade  allowances  actually  granted,  (b) rebates and  chargebacks  required by
Applicable Laws or made pursuant to agreements  with  customers,  (c) credits or
allowances  actually  granted upon the claims,  damaged goods,  outdated  goods,
rejections or returns of such Product, including recalls, (d) taxes, tariffs and
similar  obligations,  duties or other  governmental  charges (other than income
taxes) levied on, absorbed or otherwise  imposed on sales of such Product in the
Territory  and shown  separately  on the invoice,  (e) shipping  charges and (f)
insurance costs related to shipping.

     Components  of Net Sales  shall be  determined  in the  ordinary  course of
business in accordance with historical  practice and using the accrual method of
accounting in accordance with GAAP.

     In the event CollaGenex transfers a Product to a Third Party in a bona fide
arm's length  transaction,  for  consideration,  in whole or in part, other than
cash or to a Third Party in other than a bona fide arm's length transaction, the
Net Sales  price for such  Product  shall be deemed to be the  standard  invoice
price then being  invoiced  by  CollaGenex  in an arms length  transaction  with
similar customers. In the event that CollaGenex includes one or more Products as
part of a bundle of  products,  CollaGenex  agrees not to offer or sell any such
Product as a loss leader (i.e.  sold at less than the invoice price at which any
such Product is sold when not part of a bundle of products) in  determining  the
price of the bundled products.


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<PAGE>

     "Net  Selling  Price"  means  with  respect  to a given  time  period  on a
Product-by-Product  basis, Net Sales of a Product divided by the number of Units
sold for such Product during the applicable time period.

     "Packaging  Specifications" means the packaging and labeling specifications
for the Unit, as mutually  determined by Atrix and CollaGenex from time to time,
and in compliance with Applicable Laws.

     "Patent Rights" means all rights under patents and patent applications, and
any and all  patents  issuing  therefrom  (including  utility,  model and design
patents and certificates of invention), together with any and all substitutions,
extensions  (including  supplemental  protection  certificates),  registrations,
confirmations,  reissues,  divisionals,  continuations,   continuations-in-part,
re-examinations,  renewals and foreign  counterparts  of the  foregoing  and all
improvements, supplements, modifications or additions.

     "Phase IV" means,  as  applicable,  a study or program  designed  to obtain
additional  safety or efficacy data, detect new uses for or abuses of a drug, or
to  determine   effectiveness  for  labeled   indications  under  conditions  of
widespread usage, which is commenced after regulatory approval of a Product.

     "Pricing and  Reimbursement  Approvals" means any pricing and reimbursement
approvals  which must be obtained  before placing a Product on the market in the
Territory in which such approval is required.

     "Prime Rate of Interest"  means the prime rate of interest  published  from
time to time in The Wall  Street  Journal as the prime rate;  provided,  however
that if The Wall Street  Journal  does not  publish the prime rate of  interest,
then the term "Prime Rate of Interest" shall mean the rate of interest  publicly
announced by Bank of America, N.A., as its prime rate, base rate, reference rate
or the  equivalent  of such  rate,  whether  or not  such  bank  makes  loans to
customers at, above, or below said rate.

     "Product"  or  "Products"  means  ATRIDOX(R),  ATRISORB(R)  Free  Flow with
Doxycycline and ATRISORB(R) Free Flow, respectively, for use in the Field.

     "Product Due Date" means the first day that  CollaGenex is unable to supply
a Product to a customer  account as a direct result of Atrix's failure to supply
the Product to CollaGenex in accordance with the terms of this Agreement.

     "Professional Samples" means a carton containing one complete treatment kit
of ATRIDOX(R),  consisting of a syringe of ATRIGEL(R) delivery system, a syringe
of doxycycline  hyclate, a clear capillary tip and a cannula in a moisture proof
pouch and  instructions  for use (as such kit may be changed or  reformulated by
Atrix from time to time),  which may be used to demonstrate  the manner in which
ATRIDOX(R) is prepared and used, and which shall be labeled "professional sample
for trial purposes only, not for resale."

     "Shipment" or "Shipped" means each individual  group of Product received by
CollaGenex from Atrix.


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<PAGE>

     "Specifications"  means the specifications for each Product attached hereto
as Exhibit C.

     "Stock  Purchase  Agreement"  means that certain Stock  Purchase  Agreement
dated  as of the  same  date as this  Agreement  between  Atrix  and  CollaGenex
attached hereto as Exhibit D.

     "Territory" means the United States.

     "Third  Party"  means any  entity  other  than  Atrix or  CollaGenex  or an
Affiliate of Atrix or CollaGenex.

     "Unit"  means (i) with  respect  to  ATRIDOX(R),  a carton  containing  six
complete treatment kits, each kit consisting of a syringe of ATRIGEL(R) delivery
system, a syringe of doxycycline hyclate, a clear capillary tip and a cannula in
a moisture proof pouch and  instructions  for use, as such kit may be changed or
reformulated by Atrix from time to time;  (ii) with respect to ATRISORB(R)  Free
Flow, a carton containing three complete  treatment kits, each kit consisting of
a  syringe  containing  the  sterile  ATRISORB(R)  formulation,  a  cannula  and
instructions  for use, as such kit may be changed or  reformulated by Atrix from
time to time; and (iii) with respect to ATRISORB(R) Free Flow with  Doxycycline,
a carton  containing  three complete  treatment  kits,  each kit consisting of a
syringe  containing the sterile  ATRISORB(R)  formulation,  a syringe containing
powdered  doxycycline  hyclate,  a cannula and instructions for use, as such kit
may be changed or  reformulated  by Atrix from time to time. The trade or sample
package may be changed or reformulated by Atrix and CollaGenex from time to time
and the term "Unit" shall refer to the Product in such  changed or  reformulated
package.  With  respect  to  Professional  Samples,  a  "Unit"  shall  mean  one
Professional Sample.

     "United  States" means the Continental  United States and all  territories,
possessions and  commonwealths  of the United States,  Puerto Rico, Guam and the
U.S. Virgin Islands.

          (b) Each of the following terms is defined in the Section or under the
     defined term set forth opposite such term below:

         ADE....................................................Section 11.02(a)
         Adjusted Product Repurchase Cost....................Section 6.06(d)(ii)
         Adjustment Date.........................................Section 9.02(a)
         Atrix Sales Force..........................................Section 7.03
         Block................................................"Eighth Amendment"
         Dental Consultant................................."Dental Detail Force"
         Disputed Amount.........................................Section 6.03(a)
         Effective Date.................................................Preamble
         Force Majeure.............................................Section 19.10
         Indemnitee................................................Section 16.03
         Indemnitor................................................Section 16.03
         Initial Adjustment Date.................................Section 9.02(a)
         Initiating Group..........................................Section 19.01
         Loss......................................................Section 16.01
         Marketing Advisory Board................................Section 7.02(a)
         Marketing Materials.......................................Section 14.03


                                       7
<PAGE>

         Other Group...............................................Section 19.01
         Product Repurchase Cost.............................Section 6.06(d)(ii)
         Purchase Price.............................................Section 9.01
         Recall....................................................Section 15.01
         Representatives...........................................Section 18.01
         Royalty Payment Date.......................................Section 4.01
         Royalty Statement..........................................Section 3.03
         SEC.......................................................Section 18.02
         Service Cost Percentage.................................Section 9.02(a)
         SOP....................................................Section 11.02(c)
         Supplemental Royalty Statement..........................Section 9.02(a)
         Target Contribution Margin.................................Section 4.04
         Term.......................................................Section 6.01
         Variance................................................Section 9.02(b)

               (c)  INTERPRETATION.  The  Section  headings  contained  in  this
          Agreement  are for  reference  purposes  only and shall not affect the
          meaning or interpretation of this Agreement.  Except where the context
          clearly requires to the contrary: (i) each reference in this Agreement
          to a designated "Section" or "Exhibit" is to the corresponding Section
          or  Exhibit  of or to this  Agreement;  (ii)  instances  of  gender or
          entity-specific   usage   (e.g.,   "his"  "her"   "its"   "person"  or
          "individual")  shall not be interpreted to preclude the application of
          any provision of this Agreement to any individual or entity; (iii) the
          word  "or"  shall  not  be  applied  in  its  exclusive  sense;   (iv)
          "including" shall mean "including, without limitation"; (v) references
          to laws,  regulations  and  other  governmental  rules,  as well as to
          contracts, agreements and other instruments, shall mean such rules and
          instruments  as in effect at the time of  determination  (taking  into
          account any amendments  thereto  effective at such time without regard
          to whether such amendments were enacted or adopted after the effective
          date of this  Agreement)  and shall  include all  successor  rules and
          instruments  thereto;  (vi)  references to "$" or "dollars" shall mean
          the  lawful  currency  of  the  United  States;  (vii)  references  to
          "Federal" or "federal" shall be to laws,  agencies or other attributes
          of the  United  States  (and not to any  State or  locality  thereof);
          (viii) the  meaning of the terms  "domestic"  and  "foreign"  shall be
          determined  by  reference to the United  States;  (ix)  references  to
          "days" shall mean  calendar  days;  (x)  references to months or years
          shall be to the actual  calendar months or years at issue (taking into
          account  the actual  number of days in any such  month or year);  (xi)
          days,  business days and times of day shall be determined by reference
          to local time in Denver,  Colorado; (xii) the English language version
          of  this  Agreement  shall  govern  all  questions  of  interpretation
          relating to this  Agreement,  notwithstanding  that this Agreement may
          have been  translated  into,  and executed in,  other  languages;  and
          (xiii)  the  terms  "Product"  and  "Products"  shall  refer  to  each
          individual Product and all Products  collectively,  unless the context
          clearly indicates otherwise.


                                       8
<PAGE>

                                   ARTICLE II

                              LICENSE AND PURCHASE

     Section 2.01. LICENSE GRANT. Subject to the terms of this Agreement,  Atrix
hereby grants to CollaGenex an exclusive  sublicense  under the Atrix Technology
to use, market, advertise, promote, distribute, offer for sale and sell, but not
Manufacture,  the Products in the  Territory  for use in the Field,  without the
right to  sublicense.  This  exclusive  sublicense  can only be  transferred  by
CollaGenex on the basis set forth in Section 19.13.

     Section 2.02. TRADEMARKS.

          (a)  Subject  to the terms and  conditions  of this  Agreement,  Atrix
     hereby  grants to  CollaGenex  an  exclusive,  royalty-free  license in the
     Territory and in the Field to use the Atrix Marks solely in connection with
     the marketing, advertising,  promotion, distribution, offering for sale and
     sale, but not Manufacture, of the Products during the Term.

          (b)  CollaGenex  acknowledges  that the Atrix Marks being  licensed to
     CollaGenex under Section 2.02(a) belongs to Atrix and that CollaGenex shall
     have no  rights  in such  Atrix  Marks  except  pursuant  to such  license.
     CollaGenex  shall use the Atrix Marks as depicted on Exhibit E or otherwise
     in the exact form used by Atrix,  including without  limitation,  the "(R)"
     symbol or "(TM)" symbol,  as  applicable.  Any other use of the Atrix Marks
     shall be subject to the prior  written  approval  of Atrix.  All content or
     other specific graphic elements provided by Atrix shall remain the property
     of Atrix and shall be used only in the manner  set forth in this  Agreement
     except as otherwise previously approved in writing by Atrix.

     Section 2.03. OCCURRENCE OF FIRST COMMERCIAL SALE BY COLLAGENEX.  The First
Commercial  Sale  of  each  Product,   including   ATRISORB(R)  Free  Flow  with
Doxycycline,  shall occur on or prior to November  1, 2001;  provided  Atrix has
Units  available in  commercial  quantities  ready for shipment to CollaGenex in
accordance with CollaGenex's forecasts as provided in Section 9.07.

                                  ARTICLE III

                             PAYMENTS AND ROYALTIES

     Section  3.01.  LICENSE  FEE.  In partial  consideration  for the  licenses
granted under Sections 2.01 and 2.02,  CollaGenex  shall pay to Atrix an initial
one-time non-refundable license fee equal to One Million Dollars ($1,000,000) on
the Effective Date by wire transfer of immediately available funds to an account
designated by Atrix to CollaGenex  prior to the Effective Date. On the Effective
Date, Atrix shall purchase from CollaGenex Three Million Dollars ($3,000,000) of
CollaGenex's common stock, as provided in the Stock Purchase Agreement.

     Section 3.02.  ROYALTY  PAYMENTS.  CollaGenex  will pay Atrix the following
royalties  based on the  aggregate  Net Sales of the  Products in each  calendar
year:


                                       9
<PAGE>

          (a) [**] on the first [**] of  CollaGenex's  combined Net Sales of the
     Products during that calendar year; then

          (b) [**] of that  portion of  CollaGenex's  combined  Net Sales of the
     Products  that are in excess of [**] but not more  than  [**]  during  that
     calendar year; then

          (c) [**] of that  portion of  CollaGenex's  combined  Net Sales of the
     Products that are in excess of [**] during that calendar year.

     Section 3.03. REPORTS,  EXCHANGE RATES. CollaGenex shall furnish to Atrix a
quarterly written report (in sufficient detail to determine the relevant amounts
and dates specified in this Section 3.03) on a Product-by-Product basis, (a) the
calculation of Net Sales; (b) royalties payable in U.S.  dollars,  if any, which
shall have accrued  hereunder based upon Net Sales;  (c)  withholding  taxes, if
any,  required by law to be  deducted  with  respect to such sales;  and (d) the
dates of the First  Commercial  Sale of any Product (the  "Royalty  Statement").
Reports shall be due on the 45th day following the close of each quarter.

     Section 3.04.  RECORDS AND AUDITS.  During the Term and for a period of two
years  thereafter  or as  otherwise  required  in order for Atrix to comply with
Applicable  Law,   CollaGenex  shall  keep  complete  and  accurate  records  in
sufficient  detail to permit Atrix to confirm the  completeness and accuracy of:
(a) the  information  presented in each Royalty  Statement  and all payments due
hereunder; and (b) the calculation of A&S expenditures.  CollaGenex shall permit
an independent,  certified public accountant reasonably acceptable to CollaGenex
to audit  and/or  inspect  those  records  of  CollaGenex  (including  financial
records) that relate to Net Sales,  Royalty  Statements,  A&S  expenditures  and
compliance  with Sections 14.07 and 14.08 for the sole purpose of: (i) verifying
the  completeness  and accuracy of the Royalty  Statements;  (ii)  verifying the
calculation  of the Net  Selling  Price,  the  calculation  of Net Sales and the
calculation of A&S expenditures;  (iii) verifying  CollaGenex's  compliance with
Sections  14.07  and  14.08;  and  (iv)  to  confirm  royalty  payments  and A&S
expenditures  for the Products in each case,  during the two preceding  calendar
years.  Such inspection shall be conducted during  CollaGenex's  normal business
hours, no more than once in any 12 month period and upon at least ten days prior
written notice by Atrix to CollaGenex.  If such  accounting  firm concludes that
such payments were underpaid  during the periods  reviewed by such  accountants,
CollaGenex shall pay Atrix the amount of any such  underpayments,  plus interest
at a rate equal to the Prime Rate of Interest,  within 30 days of the date Atrix
delivers to CollaGenex  such  accounting  firm's report so concluding  that such
payments were  underpaid.  If such  accounting firm concludes that such payments
were overpaid  during such period,  Atrix shall pay to CollaGenex  the amount of
any such  overpayments,  without  interest,  within  30 days of the  date  Atrix
delivers to CollaGenex  such  accounting  firm's report so concluding  that such
payments were overpaid. Atrix shall bear the full cost of such audit unless such
audit  discloses an underpayment by more than [**] of the amount due during such
period. In such case, CollaGenex shall bear the full cost of such audit.

     Section 3.05.  TAXES. All taxes levied on account of the payments  accruing
to Atrix  under  this  Agreement  shall be paid by  Atrix  for its own  account,
including  taxes levied thereon as income to Atrix.  If provision is made in law
or regulation for withholding,  such tax shall be deducted from the payment made
by CollaGenex,  paid to the proper taxing  authority and a receipt of payment of
the tax secured and promptly delivered to Atrix.


                                       10
<PAGE>

                                   ARTICLE IV

                                    PAYMENTS

     Section 4.01.  PAYMENT  TERMS.  Royalties  shall be due and payable [**] 45
days after [**] (each a "Royalty Payment Date"). CollaGenex may prepay, in whole
or in part, any royalties prior to the applicable Royalty Payment Date.

     Section  4.02.  PAYMENT  METHOD.  Except as  otherwise  agreed  between the
Parties,  all royalties and other  payments due hereunder  shall be paid in U.S.
dollars and shall be originated from an United States bank located in the United
States and shall be made by bank wire transfer in immediately available funds to
such account as Atrix shall designate before such payment is due.

     Section 4.03. LATE PAYMENTS.  Unless otherwise  provided in this Agreement,
upon the failure of CollaGenex to pay any amount due under this Agreement within
five days after receipt of notice by CollaGenex  that such amount has become due
and payable  and has not been paid,  CollaGenex  shall pay  interest to Atrix on
such amount from the date such amount is due under this  Agreement  at the Prime
Rate of Interest,  plus 2%, or the highest rate  permitted  by  applicable  law,
calculated on the number of days such payment is delinquent, unless such payment
is being disputed by CollaGenex in good faith pursuant to Section 6.03.

     Section 4.04.  CollaGenex's  Contribution Margin. The intent of the Parties
is that  CollaGenex  shall  receive a  Contribution  Margin of [**] (the "Target
Contribution  Margin") for the [**] period commencing [**] and [**] and for each
[**]  period  thereafter.  The  Parties  acknowledge  and agree  that the Target
Contribution Margin is not an entitlement of CollaGenex.  Further, if the Target
Contribution  Margin is not  obtained  for any  twelve  month  period or at all,
CollaGenex shall not be entitled to receive the dollar amount represented by the
difference between the actual  Contribution Margin minus the Target Contribution
Margin,  if  negative,  and Atrix  shall not be  entitled  to receive the dollar
amount of such difference if positive;  rather each Parties sole remedy for such
differences shall be through the adjustment mechanism set forth in Section 9.02.

                                   ARTICLE V

                            ATRIX CO-MARKETING RIGHTS

     Section  5.01.  CO-MARKETING  RIGHTS.  Except as set forth in this  Section
5.01,  Atrix shall have no right to  co-market  the  Products  in the  Territory
during the Term. Atrix may either directly or through a Third Party:

          (a)   Co-market   ATRIDOX(R)   in  the  United  States  in  the  event
     CollaGenex's aggregate Unit sales of ATRIDOX(R) in the United States do not
     equal or exceed [**] during months [**] following the Effective Date.

          (b)  Co-market  the  ATRISORB(R)  Products in the United States in the
     event  CollaGenex's  combined  aggregate  Unit  sales  of  the  ATRISORB(R)
     Products  do not equal or exceed  [**] during  months  [**]  following  the
     Effective Date.

          (c) If  Atrix  exercises  its  right to  co-market  a  Product  in the
     Territory the following  shall occur,  to the extent  allowed by Applicable
     Laws: (i) CollaGenex shall grant Atrix an irrevocable,  exclusive,  royalty
     free license,  except as against CollaGenex,  with the right to sublicense,
     under the license  granted to  CollaGenex  under Section 2.01 (and no other
     CollaGenex   proprietary  or  intellectual   property  rights)  to  market,
     advertise, promote, distribute, offer for sale and sell such Product in the
     Territory;  (ii) Atrix will be


                                       11
<PAGE>

     solely  responsible  for its expenses  related to marketing such Product in
     the  Territory and Atrix will retain all revenues from such Product that it
     or its sublicensees  sell in the Territory;  (iii) Atrix or its sublicensee
     shall market such Product  under a trademark and a trade dress that are not
     confusingly  similar  to the  trademark  and  trade  dress  being  used  by
     CollaGenex in the  Territory;  and (iv) the Marketing  Advisory Board shall
     automatically  dissolve  as of  the  date  Atrix  exercises  its  right  to
     co-market such Product.

          (d) If Atrix exercises its co-marketing rights under this Section 5.01
     and  sublicenses  such rights to a Third  Party,  Atrix  agrees to sell the
     Products to CollaGenex on terms no less favorable to CollaGenex  than those
     provided to such Third Party licensee.

                                   ARTICLE VI

                              TERM AND TERMINATION

     Section 6.01.  TERM.  This Agreement will take effect on the Effective Date
and will expire on a  Product-by-Product  basis upon the  expiration of the last
applicable  Atrix Patent Right or loss of patent  protection for each Product in
the Territory (the "Term").

     Section  6.02.  TERMINATION  BY  COLLAGENEX.  CollaGenex  may terminate the
Agreement by notice to Atrix as follows:

          (a) at any time with or  without  cause upon 12 months  prior  written
     notice to Atrix;

          (b) if Atrix  shall  commit any  willful  and  material  breach of the
     provisions of this Agreement;

          (c) if Atrix  shall  cease to  Manufacture  or supply the  Products to
     CollaGenex  pursuant  to this  Agreement,  except  as  otherwise  set forth
     herein;

provided  however,  that with  respect to  Sections  6.02(b)  and (c) that:  (i)
CollaGenex  has first given Atrix notice  specifying the details of the material
breach,  and (ii) Atrix has not cured such material breach within 30 days of the
effective date of notice of the material breach.

     Section 6.03.  TERMINATION BY ATRIX.  Atrix may terminate this Agreement by
notice to CollaGenex, upon any of the following conditions:

          (a) if CollaGenex shall fail to make any payments to Atrix on the date
     on which such  payments are due  hereunder  and such failure  continues for
     more than ten business days after notice of such failure to pay;  provided,
     however,  that this  subsection  (a) shall  not  apply to any  payment,  or
     portion thereof, under this Agreement, which is the subject of a good faith
     dispute (a  "Disputed  Amount")  between  CollaGenex  and  Atrix.  Further,
     CollaGenex shall pay interest on any Disputed Amount at a rate equal to the
     Prime Rate of  Interest  to begin  accruing  on a daily basis from the date
     such  payment  was due and  continuing  until such  payment is  received by
     Atrix.  Any Disputed Amount shall be resolved by the Parties within 30 days
     from the date CollaGenex notifies Atrix of a


                                       12
<PAGE>

     good faith dispute;  provided,  however,  if the Disputed  Amount cannot be
     resolved  to the mutual  satisfaction  of the  Parties  within  such 30 day
     period then either  Party may request  that the dispute be submitted to the
     Chief Executive  Officers of Atrix and CollaGenex,  respectively,  or their
     designees,  for joint  resolution.  If the  Disputed  Amount is not jointly
     resolved by the Parties'  Chief  Executive  Officers,  or their  designees,
     within ten days after the submission thereto,  then Atrix shall be entitled
     to pursue any and all remedies at law available to it. In no event will the
     dispute  resolution  period  exceed a maximum of 60 days  unless  otherwise
     agreed in writing by the Parties. Further, CollaGenex may in its discretion
     elect to pay any such  Disputed  Amount  and in the  event  such  amount is
     finally  determined  not to have been  payable by  CollaGenex,  Atrix shall
     reimburse CollaGenex for such amount, without interest;

          (b) if CollaGenex  shall fail to deliver to Atrix a Royalty  Statement
     by the Royalty  Payment Date and shall fail to cure such default  within 15
     days after notice from Atrix with respect thereto; provided,  however, that
     Atrix shall be entitled to terminate  this  Agreement  immediately  if such
     Royalty Statement is late on more than two occasions during a calendar year
     or on  more  than  three  occasions  during  any  period  consisting  of 12
     consecutive calendar quarters, without regard to any cure period;

          (c)   if   CollaGenex    shall   make   any   willful   and   material
     misrepresentation or false statement in any Royalty Statement;

          (d) if CollaGenex  shall commit any willful and material breach of the
     provisions of this Agreement;

          (e) if CollaGenex shall cease to offer the Product for distribution to
     its customers, except as may be provided for herein; or

          (f) if CollaGenex markets, distributes or sells a Competitive Product.

provided  however,  that with respect to Sections  6.03(c) through (f) that: (i)
Atrix has first given CollaGenex  notice  specifying the details of the material
breach, and (ii) CollaGenex has not cured such material breach within 30 days of
the effective date of such notice.

     Section  6.04.  TERMINATION  UPON CERTAIN  EVENTS.  This  Agreement  may be
terminated by the Party  specified  below forthwith upon prior written notice to
the other Party of the occurrence of either of the following events:

          (a) by either Party upon a cessation of  operations of the other Party
     or the  institution  by or against  such Party as debtor of any  proceeding
     (whether  voluntary  or  involuntary)  in  bankruptcy  or for  dissolution,
     liquidation, reorganization,  arrangement or the appointment of a receiver,
     trustee  or  judicial  administrator  (or  the  equivalent  thereof  in the
     jurisdiction  in  question) or any other  proceeding  under the law for the
     relief of debtors, if, in the case of an involuntary  proceeding,  the same
     shall  not  have  been  dismissed  or  stayed  within  45  days  after  its
     institution; or

          (b) by either  Party if the other  Party makes an  assignment  for the
     benefit of, or arrangement with, its creditors or becomes unable to pay its
     debts as they become due.


                                       13
<PAGE>

     A Party's  failure  to  terminate  this  Agreement  for any of the  reasons
specified  in this  Section 6.04 shall not in any way be deemed a waiver of such
Party's rights in respect  thereof or otherwise  limit its rights to enforce the
obligations hereunder.

     Section 6.05. REMEDIES.  All of the non-breaching Party's remedies shall be
cumulative, and the exercise of one remedy hereunder by the non-defaulting Party
shall not be deemed to be an election of remedies.  These remedies shall include
the  non-breaching  Party's  right to sue for damages  for such  breach  without
terminating this Agreement.

     Section 6.06. EFFECT OF TERMINATION.  Upon termination of this Agreement by
Atrix  pursuant to Sections 6.03 or 6.04 or by  CollaGenex  pursuant to Sections
6.02 or 6.04 the following shall occur:

          (a) CollaGenex shall have no right to practice within the Atrix Patent
     Rights or use any of the Atrix  Technology,  all rights,  title or interest
     in, or other  incidents of ownership  under,  the Atrix  Technology and the
     Atrix Marks shall revert to and become the sole property of Atrix,  and the
     licenses   granted  to  CollaGenex  under  Sections  2.01  and  2.02  shall
     terminate;

          (b) except with respect to the  termination  of this  Agreement  under
     Sections  6.02(b) or (c),  CollaGenex shall reimburse Atrix for those costs
     and expenses  reasonably  incurred or committed to by Atrix in anticipation
     of meeting forecasted amounts for six months from the last firm order which
     cannot  reasonably be canceled,  eliminated,  re-deployed,  or mitigated by
     using  reasonable  and  diligent  efforts (but  including  any direct costs
     incurred by Atrix in doing so).  CollaGenex  shall reimburse Atrix for such
     costs and  expenses  within ten days after its receipt of an  appropriately
     detailed  invoice setting forth those costs and expenses  incurred by Atrix
     pursuant to the terms of this subsection (b);

          (c) notwithstanding  subsection (a) above, CollaGenex may, in its sole
     discretion,  elect to sell off or distribute,  as applicable,  its existing
     inventory of the Products and  Professional  Samples in accordance with the
     terms set forth in subsection (d) below by notifying  Atrix of its decision
     within 30 days after the date it receives a notice of  termination by Atrix
     or the date it provides a notice of termination to Atrix;

          (d) if CollaGenex elects to sell off or distribute, as applicable, its
     existing inventory of the Products and Professional  Samples, it shall not,
     either  directly or  indirectly,  use or permit the use of the  Products or
     Professional  Samples  except as set forth  under this  subsection  (d) and
     shall proceed as follows:

               (i)  continue  to comply with its  payment  obligations  to Atrix
          under Articles III and IV;

               (ii) continue to sell off or distribute, as applicable,  existing
          inventory  of the  Products  and  Professional  Samples for six months
          after the notice of  termination.  At the expiration of such six month
          period  CollaGenex  shall,  at Atrix's  election,  either (A) sell all
          existing  inventory of the Products and Professional  Samples to Atrix
          or  (B)  destroy  all   remaining   inventory   of  the  Products  and
          Professional  Samples in accordance  with  Applicable  Law and


                                       14
<PAGE>

          provide Atrix with written proof of  destruction  sufficient to comply
          with  Applicable  Laws. In either case,  Atrix shall pay to CollaGenex
          the full  amount of the actual  cost paid by  CollaGenex  to Atrix for
          such remaining inventory of the Products and Professional Samples (the
          "Product  Repurchase  Cost");   provided,   however,   that  if  Atrix
          terminates this Agreement,  Atrix shall be entitled to deduct from the
          Product  Repurchase Cost the costs incurred by Atrix to repackage such
          Products   or   Professional   Samples   for  sale  or   distribution,
          respectively,  by  Atrix  or a  Third  Party  (the  "Adjusted  Product
          Repurchase Cost");

               (iii) if  CollaGenex  notifies  Atrix  that  CollaGenex  does not
          intend  to  sell  off  or  distribute,  as  applicable,  any  existing
          inventory of the Products and Professional Samples,  CollaGenex shall,
          at Atrix's election, either:

                    (A)  sell  all  existing   inventory  of  the  Products  and
               Professional Samples to Atrix; or

                    (B) destroy all  remaining  inventory  of the  Products  and
               Professional  Samples  in  accordance  with  Applicable  Law  and
               provide  Atrix with written  proof of  destruction  sufficient to
               comply with Applicable  Laws. In either case,  Atrix shall pay to
               CollaGenex the Product  Repurchase  Cost or the Adjusted  Product
               Repurchase Cost, as applicable;

               (iv)  if  CollaGenex  sells  any  inventory  of the  Products  or
          Professional  Samples to Atrix  pursuant  to this  subsection  (d), it
          shall  warrant that such  inventory  of the Products and  Professional
          Samples has been stored in compliance  with all  Applicable  Laws, has
          not been  adulterated and has otherwise been  maintained  according to
          the requirements of Applicable Laws and Governmental Authorities; and

               (v) any sales of the  Products or  Professional  Samples  made by
          CollaGenex to Atrix  pursuant to this  subsection (d) shall be made by
          CollaGenex within 30 days after the date it becomes obligated to do so
          and shall be shipped to Atrix  appropriately  packaged and stored. All
          transportation  costs in connection with such sale,  including without
          limitation, insurance, freight and duties, shall be [**]. Amounts owed
          by  Atrix  to  CollaGenex  pursuant  to  this  subsection  (d) for the
          Products or  Professional  Samples  shall be paid by Atrix  within ten
          days after receipt by Atrix of an appropriately  detailed invoice from
          CollaGenex  for  the  amount  so  owing  to it  by  Atrix  under  this
          subsection.

          (e) except as  otherwise  provided in this  Agreement,  expiration  or
     termination  of  this  Agreement  shall  not  relieve  the  Parties  of any
     obligation accruing prior to such expiration or termination.  Except as set
     forth below or elsewhere in this  Agreement,  the obligations and rights of
     the Parties  under  Sections  13.07 and 13.08 and Articles  XV, XVI,  XVII,
     XVIII and XIX and this Article VI shall survive  expiration or  termination
     of this Agreement.


                                       15
<PAGE>

          (f) subject to the provision of Section 6.07, within 30 days following
     the expiration or termination of this Agreement, each Party shall return to
     the other Party,  or destroy,  upon the written request of the other Party,
     any and all  Confidential  Information of the other Party in its possession
     and  upon a  Party's  request,  such  destruction  (or  delivery)  shall be
     confirmed  in writing to such Party by a  responsible  officer of the other
     Party.

     Section 6.07.  LICENSE FOLLOWING  EXPIRATION.  Upon expiration of the Term,
CollaGenex shall have (a) an irrevocable,  non-exclusive,  royalty-free license,
with the right to sublicense, to market, advertise,  promote,  distribute, offer
for sale and sell, but not Manufacture, the Products in the Territory, and (b) a
non-exclusive, royalty-free license to use the Atrix Marks to market, advertise,
promote, distribute and sell the Products, subject to the provisions of Sections
2.02(b)  and  2.02(c),  which  Sections  shall  survive the  expiration  of this
Agreement. Upon request by CollaGenex, Atrix shall continue to sell the Products
to  CollaGenex  upon terms  mutually  agreeable  to the  Parties  pursuant  to a
separate supply agreement to be negotiated in good faith between the Parties.

                                  ARTICLE VII

                        COMMERCIALIZATION OF THE PRODUCT

     Section 7.01. COLLAGENEX'S OBLIGATIONS.

          (a)  Marketing  Efforts.  CollaGenex  agrees  to use its  commercially
     reasonable  efforts to timely promote the sale,  marketing and distribution
     of the  Products  in  the  Territory,  consistent  with  accepted  business
     practices  devoting  the same  level of  efforts  as it  devotes to its own
     products of comparable  market  potential.  "Comparable  market  potential"
     shall  be  fairly  determined  by  CollaGenex  in good  faith  and  without
     limitation  may be based  upon  market  size,  price,  competition,  patent
     rights,   product  liability  issues  and  general  marketing   parameters.
     Notwithstanding  anything  herein to the contrary,  for the first 24 months
     following the Effective Date, [**] of this subsection 7.01(a) [**] with the
     [**].  CollaGenex shall promptly advise Atrix of any issues that materially
     and  adversely  affect  CollaGenex's  ability to market the Products in the
     Territory.  In such event,  senior executives of CollaGenex and Atrix shall
     meet and in good faith  discuss  what  actions  should be taken in light of
     such  issues.  Notwithstanding  the  foregoing  or  anything  else  in this
     Agreement to the  contrary,  CollaGenex  shall have no  responsibility  for
     refunding money for customer  returns of Product sold by Block or replacing
     outdated  Products  sold by Block with free  Product  that  CollaGenex  has
     purchased from Atrix.

          (b)  Trademarks.  Subject to the terms of this  Agreement,  CollaGenex
     shall be the  exclusive  licensee of the Atrix Marks in the  Territory  and
     shall use the Atrix Marks in connection  with the promotion,  marketing and
     sale of the  Products.  The Atrix Marks shall  remain the sole  property of
     Atrix.

          (c) Packaging.  Packaging and labeling of the Products,  the Units and
     the Professional Samples shall comply with the Packaging Specifications and
     Applicable  Laws.  Atrix,  in  consultation   with  CollaGenex,   shall  be
     responsible for assuring that such


                                       16
<PAGE>

     packaging  and  labeling  conform with all  Applicable  Laws of the FDA for
     selling the  Products  and  distributing  the  Professional  Samples in the
     United States, and that the Units comply with the Packaging  Specifications
     and Applicable  Laws where such Product is to be distributed  for sale. For
     purposes  of  clarity,  Atrix  shall be solely  responsible  for  providing
     initial  packaging that includes  CollaGenex's  name,  trade dress,  logos,
     contact  information and other identifying  insignia and information as may
     be agreed between the Parties in the Packing Specifications. All additional
     incremental  costs resulting from changes to the Packaging  Specifications,
     including  artwork and labeling (in accordance with Section 9.03),  made at
     the request of CollaGenex shall be borne by CollaGenex.

          (d)  Marketing  Plans  And  Reports.  Prior  to  January  15th of each
     calendar year,  CollaGenex shall submit to the Marketing  Advisory Board in
     writing the annual marketing, sales and distribution plan for the Territory
     detailing  CollaGenex's and its Affiliates'  proposed marketing,  sales and
     distribution  strategy  and tactics for the sale and  distribution  of each
     Product  during such  calendar  year,  or portion  thereof,  including  the
     expected  selling  price  schedules  for  each  Product  in  the  Territory
     (including  any (i) prompt  payment or other  trade or  quantity  discounts
     which  CollaGenex  expects  to offer and (ii)  commission  rates or rebates
     which CollaGenex expects to offer to distributors and agents). In addition,
     upon the request of Atrix,  CollaGenex shall provide the Marketing Advisory
     Board with copies of any plans or market research  reports  relating to the
     sale  or  marketing  of  the  Product  and/or  Product   competition  which
     CollaGenex or its Affiliates  commission or otherwise  obtain to the extent
     permissible by the agency preparing the report. To the extent the foregoing
     information  is contained  in plans or reports  which  contain  information
     about  other  products  or markets,  CollaGenex  may provide the  Marketing
     Advisory  Board only those excerpts from such plans or reports which relate
     to the Products and Product competition.

          Section 7.02. MARKETING ADVISORY BOARD.

          (a)  Formation  and  Function.  Promptly  after  the  Effective  Date,
     CollaGenex  and Atrix will each  appoint  two senior  representatives  to a
     committee (the  "Marketing  Advisory  Board") that shall have oversight for
     any activity under this Agreement for the Territory. CollaGenex will select
     an individual to serve as chairman of the Marketing  Advisory Board for the
     initial 12 months.  Thereafter,  the  chairmanship  will rotate  between an
     Atrix member and a CollaGenex  member every 12 months.  Each of  CollaGenex
     and Atrix  shall bear its own  travel  and  lodging  expenses  incurred  in
     connection  with the attendance of its  representatives  at meetings of the
     Marketing  Advisory  Board.  Except as set forth in  Section  5.01(c),  the
     Marketing  Advisory  Board will be  consulted  by both Parties on all major
     decisions in the  marketing of each  Product in the  Territory,  including,
     without limitation, in the following areas as they relate to each Product:

               (i) Product positioning in the marketplace;

               (ii) quantity of direct selling efforts,  including the number of
          sales details to be made;


                                       17
<PAGE>

               (iii) extent and degree of  non-personal  selling and promotional
          efforts;

               (iv) quantity and content of workshops and medical symposia;

               (v)  design  and  implementation  of a Phase IV study  program to
          support the Product, if any;

               (vi) design and implementation of a consumer awareness program;

               (vii)  selection  of dentists  for a medical  advisory  board and
          speakers bureau;

               (viii)  dispute   resolution   regarding  sales,   marketing  and
          promotional activities related to the Product;

               (ix) internet presence; and

               (x)  design  and  performance  of other  clinical  studies in the
          Territory.

          CollaGenex,  alone, will be responsible for making the final decisions
          on the marketing of each Product  regardless of the action or inaction
          of the  Marketing  Advisory  Board,  except  with  respect to Phase IV
          studies for which  Atrix bears 100% of the cost,  which shall be under
          the sole  direction  and control of Atrix.  CollaGenex  agrees that in
          making such  decisions  and taking such actions that it will  consider
          the effect of such  decisions and actions on the marketing and sale of
          such Product outside the Territory. Notwithstanding the foregoing, for
          the avoidance of doubt, Atrix, alone, shall make the final decision on
          all matters concerning the Manufacture of the Products.

               (b) Meetings.  The Marketing  Advisory  Board will meet every six
          months and at such  other  times as a Party may  request,  alternating
          between  Newtown,  Pennsylvania  and Fort  Collins,  Colorado and will
          otherwise communicate  regularly by telephone,  facsimile and/or video
          conference. The chairman of the Marketing Advisory Board shall prepare
          minutes of all meetings.  Each Party  recognizes the importance of the
          Marketing Advisory Board and will use diligent efforts to cause all of
          its  representatives  on the  Marketing  Advisory  Board to attend all
          meetings of the Marketing  Advisory  Board.  A Party may change any of
          its  appointments  to the  Marketing  Advisory  Board at any time upon
          giving written notice to the other Party.

     Section 7.03.  Co-promotional  activities of Atrix. Beginning on January 1,
2003,  Atrix  shall  have  the  right,  but  not  the  obligation,   subject  to
CollaGenex's supervision of Atrix's sales, marketing and promotional activities,
to participate in the sales, marketing and promotion of the Products or Product.
If Atrix so elects,  Atrix will provide  additional field sales  representatives
(the "Atrix Sales  Force")  and/or  funding to augment the sales,  marketing and
promotional  activities  of the Products by CollaGenex as the Parties may agree.
All costs  associated with the Atrix Sales Force shall be borne solely by Atrix.
The Atrix  Sales  Force will  report and be  subject to the  supervision  of the
current  CollaGenex  field  sales  management  system,  and will carry out those
co-promotional  tasks as directed by the Marketing  Advisory Board. All revenues
from the sale of products  realized by the efforts of the Atrix Sales Force will
be payable to CollaGenex and handled in the same manner and pursuant to the same
terms and conditions as all other revenues from the sale of Products are handled
by CollaGenex pursuant to this Agreement.


                                       18
<PAGE>

                                  ARTICLE VIII

                             MANUFACTURE AND SUPPLY

     Section 8.01.  AGREEMENT TO SUPPLY  PRODUCTS.  Subject to the terms of this
Agreement,  CollaGenex  agrees to purchase  exclusively  from  Atrix,  and Atrix
agrees to Manufacture for, and sell  exclusively to CollaGenex  during the Term,
CollaGenex's total requirements for the Products and the Professional Samples in
the  Territory  on  the  terms  and  conditions  set  forth  herein.  Atrix  may
subcontract  any part of the  Manufacturing  Process  for the  Products  and the
Professional  Samples to Third Parties  provided the Products,  the Professional
Samples and the facilities  continue to meet the requirements as defined in this
Agreement.  If subcontracting is initiated by Atrix, Atrix will bear the cost of
validation  and  necessary  stability  work.  To  ensure an  adequate  supply of
Product,  at all times during the Term Atrix shall  maintain  inventory for each
Product [**].

     Section 8.02.  QUALITY  ASSURANCE.  Atrix shall Manufacture the Products in
accordance with the  Specifications.  Atrix shall promptly notify  CollaGenex in
writing  of  any  changes   required  by  a   Governmental   Authority   in  the
Specifications or Atrix's quality  assurance  procedures that would render Atrix
unable to supply a Product and/or  Professional  Samples in accordance  with the
terms of this Agreement. The Parties agree to negotiate in good faith to develop
and execute an appropriate  action plan in such situation.  Any additional costs
or expenses shall be shared  between the Parties in such  proportion as is equal
to each  Party's  relative  fault in  causing  such  change or changes to occur;
provided,  however,  that if the Parties cannot reach an agreement in good faith
as to the  relative  fault of each Party or if neither  Party is at fault,  such
additional costs and expenses shall be born equally by the Parties.

     Section 8.03.  ATRIX'S  DUTIES.  Atrix agrees to furnish to CollaGenex with
every Shipment a written  certificate of analysis and  Certificate of Compliance
that  confirms  conformity of each Product and the  Professional  Samples to the
Specifications. In addition, Atrix shall:

          (a) provide  CollaGenex with written  sampling and testing  procedures
     used by Atrix to assure  that the  Products  and the  Professional  Samples
     conform to the Specifications;

          (b)  retain a sample of each  batch of  Product  and the  Professional
     Samples for a period equal to the greater of (i) one year after the date of
     Manufacture  of such batch of Product or  Professional  Samples or (ii) the
     period required by Applicable Laws. Upon CollaGenex's request,  Atrix shall
     make such samples available for inspection to CollaGenex,  or a Third Party
     selected by CollaGenex  and  reasonably  acceptable to Atrix.  The retained
     sample shall be sufficient in size to allow  CollaGenex or such Third Party
     to perform  tests to  determine  whether the  Product and the  Professional
     Samples meet the Specifications.  Atrix shall store the retained Samples in
     accordance with the Specifications;

          (c) maintain  records to ensure Atrix's  ability to perform a complete
     lot history via lot tracing of the Product and the Professional Samples;

          (d) keep on file all  manufacturing  records  and  analytical  results
     pertaining to the Manufacture of each batch of Product and the Professional
     Samples  for a  period  expiring  not  earlier  than  one  year  after  the
     expiration  date of the  last  lot of the last  batch  of  Product  and the
     Professional  Samples  Manufactured and Shipped to CollaGenex.  Atrix


                                       19
<PAGE>

     shall make such records  available to  CollaGenex  upon  request,  however,
     Atrix shall be responsible for investigating any Manufacturing  problems or
     defects;

          (e) consult on an ongoing basis with the Marketing  Advisory  Board on
     all  aspects  of the  Manufacture  of the  Products  and  the  Professional
     Samples,  including  the use of any  subcontractors  to perform part of the
     Manufacturing Process;

          (f) provide  CollaGenex with notice within 48 hours of notification of
     any  scheduled   inspection  by  any  Governmental   Authority  of  Atrix's
     facilities, books or records, or of the facilities, books or records of any
     subcontractor  being utilized by Atrix to perform any portion or all of the
     Manufacturing  Process. Atrix shall inform such Governmental Authority that
     CollaGenex  may  desire to be  present at such  inspection;  provided  that
     CollaGenex's   right  to  be  present  is  subject  to   approval  by  such
     Governmental  Authority  and subject to CollaGenex  being  available at the
     time and date established by such Governmental  Authority.  Atrix shall use
     reasonable  efforts to secure a time and date for such  inspection  that is
     reasonably  acceptable to CollaGenex;  provided,  however, that Atrix alone
     shall have the right to make the final decision on all such matters; and

          (g) Atrix agrees not to change the  Manufacturing  Process,  including
     components and raw materials, without first notifying CollaGenex.

     Section 8.04. FAILURE TO SUPPLY.

          (a) Atrix shall  immediately  notify  CollaGenex if Atrix is unable to
     fill any order  placed by  CollaGenex  pursuant to Section  9.07 and advise
     CollaGenex of the revised  delivery  date.  CollaGenex  shall then have the
     option of terminating  the purchase order without  obligation of payment or
     of accepting  the revised  delivery  date.  If Atrix is unable to cure such
     failure  within  [**]  after  such  notice,  Atrix may  elect,  in its sole
     discretion,   to   utilize   its  [**]  to  satisfy   CollaGenex's   supply
     requirements;  provided,  however,  any consequent  incremental costs which
     result by reason of  Atrix's  use of its [**] under  this  Section  8.04(a)
     [**].

          (b)  Notwithstanding  the  foregoing,  Atrix shall not be deemed to be
     unable to fill any order placed by CollaGenex as follows:

               (i) if Atrix's  inability to fill any order arises as a result of
          a [**] in  CollaGenex's  order  over  CollaGenex's  immediately  prior
          forecast.  For example, if CollaGenex's forecast for [**] CollaGenex's
          forecast  for [**]  CollaGenex  [**] Atrix would not be deemed [**] or

               (ii) in the event that Atrix must purchase  additional  equipment
          or  construct a new  facility in order to expand its capacity in order
          to meet  purchase  orders  hereunder,  Atrix  will be  deemed  to have
          satisfied  this Section  8.04(b)(ii)  by placing a purchase  order for
          such equipment or signing a contract for such  construction  within 60
          days of Atrix's  receipt of  CollaGenex's  purchase order showing firm
          quantities  in  excess  of  Atrix's  capacity;   provided  that  Atrix
          diligently  pursues and completes  within a reasonable time thereafter
          such purchase or construction.

          (c) Since the Parties  agree that it would be  difficult  to correctly
     and  adequately  determine the damages which  CollaGenex  may suffer in the
     event  Atrix  fails to supply the  Product  and  therefore  it would not be
     possible for  CollaGenex to obtain an adequate  remedy,  in the event Atrix
     fails to supply the Product to CollaGenex  in accordance  with the terms of
     this Agreement, such that CollaGenex is unable to supply the Product to its
     customers, then Atrix shall pay to CollaGenex the following amounts [**]:

          (i) [**] if Atrix  fails to supply the Product for a period of [**] or
          less after the Product Due Date;

          (ii) an  additional  [**] if Atrix  fails to supply the  Product for a
          period  exceeding [**] but less than or equal to [**] from the Product
          Due Date; and

          (iii) an  additional  [**] if Atrix  fails to supply the Product for a
          period exceeding [**] from the Product Due Date.


                                       20
<PAGE>


     The above [**] are a [**]. In no event will the aggregate  amounts  payable
     to  CollaGenex   under  this  Section   8.04(c)   exceed  [**]   CollaGenex
     acknowledges  and agrees  that the [**] set forth in this  Section  8.04(c)
     constitute  CollaGenex's [**] for Atrix's failure to supply the Products in
     accordance with the terms of this Agreement.  The date on which Atrix shall
     be deemed to have  recommenced  supply of the Product to  CollaGenex  under
     this  Section  8.04(c)  shall be one day after the date  CollaGenex  or its
     agent receives a Shipment of Product.

     Section 8.05. ALLOCATION.  If Atrix exercises its rights to co-market under
Article  V and if  Atrix is  unable  to  supply  all of the  requirements  for a
Product,  and quantities  ordered by CollaGenex in accordance with Section 9.07,
then Atrix shall  allocate  the  resources  available  to it so that  CollaGenex
receives at least its  proportional  share of available  supplies as  determined
based on reasonable  forecasts (taking into  consideration  past sales and sales
performance against forecast) of CollaGenex and Atrix.

                                   ARTICLE IX

                                PURCHASE AND SALE

     Section 9.01. PURCHASE PRICE AND PAYMENT.  Atrix shall sell, and CollaGenex
shall purchase, each Product at the price set forth on the Fixed Price Schedule,
which  shall be subject to  adjustment  in  accordance  with  Section  9.02 (the
"Purchase  Price").  Atrix shall invoice CollaGenex monthly for all Products and
Professional  Samples  shipped by Atrix to  CollaGenex  and payment shall be due
[**], 30 days from receipt of the invoice.

     Section 9.02. PURCHASE PRICE ADJUSTMENT.

          (a) Timing and Information  Requirements.  The Purchase Price for each
     Product shall be subject to adjustment (i) on [**] (the "Initial Adjustment
     Date"),  (ii) during the  following  [**] on each [**]  anniversary  of the
     Initial  Adjustment Date, and (iii) thereafter,  on the [**] anniversary of
     the Initial  Adjustment Date (each,  including the Initial Adjustment Date,
     and "Adjustment  Date").  On or prior to each Adjustment  Date,  CollaGenex
     shall provide to Atrix a supplement to the Royalty Statement otherwise then
     due  ("Supplemental   Royalty   Statement")  setting  forth  the  following
     information: (x) the aggregate [**] for that Evaluation Period and the [**]
     as a  percentage  of Net Sales (the  "Service  Cost  Percentage")  for that
     Evaluation  Period;  (y)  for  each  Product,  (A)  the  [**]  and  the net
     percentage  change  in the  [**] for that  Evaluation  Period,  and (B) the
     weighted average [**] for all Products and the net percentage change in the
     weighted average [**] for all Products for that Evaluation  Period; and (z)
     the [**] for that Evaluation Period.

          (b) When  Adjustment is Required.  Based on the  Supplemental  Royalty
     Statement,   the   Parties   will   adjust   the   Purchase   Price   on  a
     Product-by-Product  basis in accordance with the following provisions:  (i)
     no adjustment shall be made unless the difference  between the [**] for the
     preceding [**] Evaluation Period (or such shorter Evaluation Period in the
     case of an Initial  Adjustment  Date) (as  appropriately  adjusted  for any
     changes  arising as a result of [**] being in effect during such Evaluation
     Period), minus the [**] results in a cumulative net change of plus or minus
     [**] (the "Variance"),  and then only to the extent that either (A) the net
     percentage  change in the weighted  average [**] per Unit for all Products,
     and/or (B) the difference between the [**] at the beginning and end of that
     Evaluation  Period,  results  in a net  change  of plus or  minus  [**] The
     Purchase  Price shall be  adjusted  upward,  if the  Variance is a positive
     number, and downward, if the Variance is a negative number.

          (c) Amount of Adjustment.  Any required adjustment:  (i) shall only be
     made in the minimum  amount  necessary to delete any Variance at the end of
     the subsequent [**] Evaluation  Period and not in a shorter period of time,
     (ii)  shall  be  based on the  assumption  that  the [**] and the  weighted
     average  [**]  for all  Products  as of the  end of the  most  recent  [**]
     Evaluation  Period  shall  remain  in effect  for the next [**]  Evaluation
     Period  and  (iii)  shall in no event  reduce  the  Purchase  Price for any
     Product below the Atrix  Manufacturing  Cost for such Product plus [**] The
     Parties shall share equally in any  adjustment  resulting  from a change in
     the [**] (e.g.,  an  adjustment  of $0.50  instead of $1.00 to the Purchase
     Price).

          (d) Related Issues.  After  consultation with CollaGenex,  Atrix shall
     determine  the  amount of the  adjustment  and the  Products  to which such
     Purchase Price  adjustment  shall be made. Any adjustment shall take effect
     with respect to all [**] made after the applicable  [**] and the [**] shall
     automatically  be  revised to  reflect  the  adjusted  Purchase  Price.  No
     adjustment  shall apply  retroactively.  If CollaGenex  disagrees  with any
     action or inaction taken by Atrix under this Section 9.02 such disagreement
     shall be resolved in accordance with Article XVII.

     Section 9.03. LABELING AND ARTWORK.

                                       21
<PAGE>

          (a) After execution of this Agreement, CollaGenex shall have the right
     to review  and  comment  upon any  labeling  and  proposed  changes  to the
     labeling  of the  Products  and to  participate  in  discussions  with  the
     Governmental  Authorities  concerning  any  labeling or  proposed  labeling
     change. Notwithstanding the above, Atrix shall make the final decision with
     regard to any labeling or labeling revisions.

          (b) Both Parties will approve all artwork  developed  for inclusion in
     the Product  packaging,  including carton labels,  package  inserts,  etc.,
     which approval will not be unreasonably withheld, conditioned or delayed by
     either Party. For the avoidance of doubt,  Atrix will be solely responsible
     for the initial  conversion of the current  artwork to artwork  bearing the
     CollaGenex  name and trade dress,  as applicable.  The Parties  acknowledge
     that other  significant  changes  from  currently  approved  packaging  and
     labeling may require FDA approval prior to marketing.  If CollaGenex wishes
     to institute changes in labeling artwork,  after the Parties have agreed to
     and implemented the first labeling  artwork bearing the CollaGenex name and
     information, both Parties will develop a mutually acceptable implementation
     schedule.   The  actual  cost  of  implementing  such  change  will  be  at
     CollaGenex's  sole cost and expense,  including any materials made obsolete
     by CollaGenex's  changes to the artwork.  Neither Party shall alter, change
     or in any way modify the artwork,  which has previously been approved,  for
     any reason, without prior written authorization from the other Party, which
     approval will not be  unreasonably  withheld,  conditioned or delayed,  and
     provided that such approved artwork shall conform to all Applicable Laws.

     Section 9.04.  PURCHASE FORMS.  Purchase  orders,  purchase order releases,
confirmations,  acceptances  and  similar  documents  submitted  by a  Party  in
conducting   the   activities   contemplated   under  this   Agreement  are  for
administrative  purposes  only and shall  not add to or modify  the terms of the
Agreement. To the extent of any conflict or inconsistency between this Agreement
and any such document, the terms of this Agreement shall govern.

     Section 9.05. CONFIRMATION.  Atrix shall confirm each purchase order within
ten business days from the date of receipt of a purchase  order and shall supply
the  Products  within a  maximum  of 60 days  from the date of  acceptance  of a
purchase order, or later if so specified in the purchase order. Failure of Atrix
to confirm  any  purchase  order shall not relieve  Atrix of its  obligation  to
supply Products ordered by CollaGenex in conformity with this Agreement.

     Section 9.06.  DELIVERY.  Delivery terms for the Products and  Professional
Samples shall be FOB Atrix's manufacturing  facility at Fort Collins,  Colorado.
Atrix  shall ship the  Products  and  Professional  Samples in  accordance  with
CollaGenex's  purchase  order form or as  otherwise  directed by  CollaGenex  in
writing.  Title to any Product or Professional  Samples  purchased by CollaGenex
shall pass to CollaGenex  or its agent upon the earlier of (a) a common  carrier
accepting  possession  or control of such Product or  Professional  Samples,  as
applicable,  or  (b)  passage  of  such  Product  or  Professional  Samples,  as
applicable,  from the loading dock of Atrix's  facilities  to  CollaGenex or its
agent. When delivered to a common carrier, the Products shall have an expiration
date of no less than 18 months.

     Section 9.07. FORECASTS AND ORDERS.


                                       22
<PAGE>

          (a) On or prior to the Effective  Date,  CollaGenex will provide Atrix
     with a 12 month forecast of CollaGenex's  requirements for each Product, on
     a Product-by-Product basis, including Professional Samples, as follows:

               (i) During the first four calendar  quarters  following the First
          Commercial  Sale of each  Product,  the  forecasts  shall be  provided
          quarterly,  no less  than  45  days  prior  to the  beginning  of each
          quarter.  Said  requirements  will be  based  on  standard  production
          planning parameters including sales forecasts, sales demand forecasts,
          promotional forecasts, inventory requirements, and the like. The first
          two  quarters  of the 12 month  forecast  will be  stated  in  monthly
          requirements. The second two quarters of the 12 month forecast will be
          total  requirement  by  stock  keeping  unit  and  will be  stated  as
          quarterly  requirements.  The first 3 months of the 12 month  forecast
          will be firm orders to  purchase.  The second 3 months will be allowed
          to be flexed  from the  previous  forecast by plus or minus [**] until
          fixed  by  the  subsequent  forecast;   provided  that  the  aggregate
          adjustment  from the quantity  set forth in the previous  forecast for
          such 3 month period shall not exceed [**] during that 3 month  period.
          For example,  if  CollaGenex's  forecast for [**] was for [**] and its
          forecast for [**] was for [**] the maximum number of Units  CollaGenex
          could order at the time [**] becomes fixed would be [**].  The [**] of
          any [**] will be [**].

               (ii) After the first four calendar  quarters  following the First
          Commercial  Sale of a  Product,  CollaGenex  will  provide  to Atrix a
          rolling 12 month  forecast for each Product with the first 3 months of
          the rolling 12 month forecast a firm order to purchase.  Each forecast
          under this subsection (ii) shall be provided monthly,  no less than 20
          days prior to the beginning of each month. All orders will be for full
          batch quantities.

          (b) CollaGenex  agrees to purchase a sufficient amount of each Product
     to  enable   CollaGenex  to  carry   sufficient   inventory  to  allow  for
     fluctuations  in sales demand so as to allow Atrix  reasonable lead time to
     meet increased demand. All forecasts will be made by CollaGenex to Atrix in
     good faith based upon  standard  commercial  parameters.  From time to time
     after the Effective Date, the Parties shall consider  whether,  in light of
     market demand, manufacturing capacity, inventory levels and other pertinent
     factors,  to  revise  the  schedule  for  delivery  of  forecasts  and,  if
     appropriate, negotiate in good faith to revise such schedule.

     Section 9.08.  PROFESSIONAL SAMPLES.  Pursuant to the provisions of Section
9.07,  for so long as CollaGenex  retains a license  pursuant to Section 2.01 in
the  Territory,  Atrix shall supply to CollaGenex  Professional  Samples in such
amount as the Parties may mutually  agree.  For a period of [**]  following  the
Effective  Date,  Atrix  shall  provide  at [**]  the  Professional  Samples  to
CollaGenex,  up to a maximum  amount of [**]  during any [**] period and up to a
maximum  aggregate  amount of [**] during such [**] period.  Except as otherwise
set forth in this  Agreement,  [**]  Professional  Samples to CollaGenex at [**]
CollaGenex  (a)  shall  only use the  Professional  Samples  for  marketing  and
promotional  activities  (e.g.,  as  professional  or trial  samples  to be left
following Detail Calls, or in association  with other marketing  activities such
as  workshops,  symposia or trade  shows),  (b) shall not sell the  Professional
Samples  and (c)  shall  not use the  Professional  Samples  other  than for the
primary intent of inducing future sales of ATRIDOX(R).


                                       23
<PAGE>

                                   ARTICLE X

                       WARRANTY, REJECTION AND INSPECTIONS

     Section 10.01. ATRIX WARRANTY.  Atrix represents and warrants to CollaGenex
that the Products and Professional  Samples delivered pursuant to this Agreement
(a) shall  comply  with the  Specifications  and conform to the  certificate  of
analysis  for  such  Product;  (b)  are  not  adulterated  or  misbranded  under
Applicable  Laws; and (c) at the time of Manufacture and delivery to CollaGenex,
will be free from any failure or defects.

     EXCEPT AS OTHERWISE  SET FORTH HEREIN,  ATRIX MAKES NO OTHER  WARRANTIES OF
ANY OTHER KIND,  INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR
FITNESS OF THE PRODUCTS  AND  PROFESSIONAL  SAMPLES FOR ANY  PURPOSE,  AND ATRIX
EXPRESSLY  DISCLAIMS ANY SUCH OTHER  WARRANTIES WITH RESPECT TO THE PRODUCTS AND
PROFESSIONAL SAMPLES, EITHER EXPRESSED OR IMPLIED.

     Section 10.02.  REJECTION OF PRODUCT OR PROFESSIONAL SAMPLES FOR FAILURE TO
CONFORM  TO  SPECIFICATIONS.  Each  Shipment  shall be  considered  accepted  by
CollaGenex  based  on its  reliance  on the  Certificate  of  Analysis  and  its
appropriate physical inspection of the Product, subject to CollaGenex's right to
test or have a Third Party test any  Shipment  to  determine  conformity  of the
Shipment to the Specifications  and/or Applicable Laws. If CollaGenex  exercises
such right,  it shall  promptly  notify  Atrix of its decision and shall have 45
days after the receipt of any  Shipment to conduct such  testing.  If testing of
such Shipment shows a failure of the Shipment to meet the Specifications  and/or
Applicable  Laws,  CollaGenex  may return the entire  Shipment,  or any  portion
thereof,  to Atrix at Atrix's  expense  within a reasonable  time  following the
above described  testing,  provided that notice of non-conformity is received by
Atrix from CollaGenex  within 45 days of CollaGenex's  receipt of said Shipment.
CollaGenex  shall have the right to request  that Atrix  provide to  CollaGenex,
within 30 days after such  notice is  received  by it,  Product or  Professional
Samples that meet the  Specifications and Applicable Laws or to promptly provide
CollaGenex  with full credit for the Purchase  Price paid by CollaGenex  for the
returned  Product or Professional  Samples.  The cost of freight and handling to
return or replace the Products or  Professional  Samples shall be at the expense
of Atrix.  If  CollaGenex  does not notify  Atrix of the  non-conformity  of the
Product or Professional Samples within 45 days of receipt of said Shipment,  the
Product or Professional Samples shall be deemed to meet the Specifications,  the
Packaging  Specifications and Applicable Laws.  Notwithstanding anything in this
Agreement to the  contrary,  the Parties may agree to a return of the Product or
Professional  Samples or an adjustment in the Purchase Price in the event of any
failure or defect in the  Product or  Professional  Samples.  Should  there be a
discrepancy  between  CollaGenex's  test  results  and the  results  of  testing
performed  by Atrix,  such  discrepancies  shall be finally  resolved by testing
performed by an independent  Third Party mutually  agreed upon by CollaGenex and
Atrix.  The costs of such testing  shall be borne by the Party  against whom the
discrepancy is resolved.  In the event the Product or Professional  Samples have
been previously returned to Atrix and an independent Third Party determines that
the Product or Professional Samples meet the Specifications, CollaGenex shall be
responsible for all costs associated with the return.


                                       24
<PAGE>

     Section 10.03. COLLAGENEX INSPECTIONS. Atrix shall upon reasonable (but not
less  than ten days)  prior  written  notice by  CollaGenex  and  during  normal
business hours, allow CollaGenex to inspect and audit Atrix's facilities used to
Manufacture  the  Products  and the  Professional  Samples,  no more than  twice
annually,  to confirm that the Atrix's  facilities and the equipment,  personnel
and operating and testing procedures used by Atrix in the Manufacture,  testing,
storage and  distribution of the Products are in compliance with Applicable Laws
and the Governmental Approvals; provided that such inspection does not interfere
with Atrix's normal  operations or cause Atrix to violate or be in breach of any
confidentiality agreements with any Third Parties.

                                   ARTICLE XI

                              REGULATORY COMPLIANCE

     Section 11.01. MAINTENANCE OF MARKETING  AUTHORIZATIONS.  [**] will own all
Marketing  Authorizations in the Territory.  [**] agrees,  [**], to maintain the
Marketing Authorizations including obtaining any variations or renewals thereof,
including all fees and licenses, including user fees, related to the Manufacture
of the Products by Atrix.  Each Party agrees that neither it nor its  Affiliates
will do anything to adversely affect a Marketing Authorization.

     Section 11.02. ADVERSE DRUG EVENT REPORTING AND PHASE IV SURVEILLANCE.

          (a) Each Party, including its permitted sublicensees, shall advise the
     other Party,  by telephone or facsimile,  immediately but in no event later
     than the next  business  day after a Party,  or its  sublicensees,  becomes
     aware of any  potentially  serious or unexpected  adverse event  (including
     adverse  drug  experiences,  as  defined  in  Applicable  Laws) (an  "ADE")
     involving the Products or the  Professional  Samples.  Such advising  Party
     shall provide the other Party with a written report  delivered by confirmed
     facsimile  of any  adverse  reaction,  stating the full facts known to such
     Party,  including customer name, address,  telephone number, batch, lot and
     serial numbers,  and other  information as required by Applicable Laws. For
     so long as CollaGenex has an exclusive license to market,  promote and sell
     the Products the Territory for use in the Field, CollaGenex shall have full
     responsibility for data collection activities that occur between CollaGenex
     and the patient or medical  professional,  as  appropriate,  including  any
     follow-up inquiries which CollaGenex deems necessary or appropriate.  Atrix
     shall have  responsibility  for medical  monitoring  of, and final  medical
     sign-off on, ADEs.

          If Atrix  exercises  its right to co-market as set forth in Article V,
     then upon the  occurrence  of an ADE the Parties  shall  promptly  meet, in
     person or by  telephone,  as  appropriate,  to discuss and determine how to
     mutually handle and resolve any issues relating to or arising from any such
     ADE.

          (b) In the event either Party requires  information  regarding adverse
     drug  events with  respect to reports  required to be filed by it to comply
     with  Applicable  Laws,  including   obligations  to  report  ADEs  to  the
     Governmental Authorities,  each Party agrees to provide such information to
     the other on a timely  basis.  For the  avoidance of doubt,  Atrix shall be
     responsible  for all trend and ADE reporting to  Governmental  Authorities,


                                       25
<PAGE>

     and for the maintenance of the file of original ADE forms. CollaGenex shall
     have access on request to the worldwide  Atrix  database of ADEs related to
     the Products.

          (c)  Subject to Atrix's  exercise  of its  Co-Marketing  rights  under
     Article V, the  Parties  agree to follow  CollaGenex's  standard  operating
     procedure for reporting and identifying  adverse drug reactions (the "SOP")
     a copy of which is  attached  hereto as  Exhibit F. In the event the SOP is
     modified or amended  during the Term,  CollaGenex  shall provide Atrix with
     copies of any such  modification  or amendment to the SOP for Atrix's prior
     approval, which will not be unreasonably withheld,  conditioned or delayed,
     at  least  five  business  days  prior  to such  amendment  taking  effect.
     CollaGenex  shall designate a qualified  person under Applicable Laws to be
     responsible for ADE reporting in the Territory.  In order to facilitate the
     development of the customer  response  procedures  for the Products,  Atrix
     shall supply to CollaGenex: (i) all professional and patient materials used
     for responding to professional  and consumer  inquirers  (including but not
     limited  to  procedural,   standard  response  letters,  literature  search
     findings  and  references  used  in  the  evaluation,   documentation   and
     communication  with  healthcare  professionals  and  consumers),  (ii)  NDA
     summaries and general  technical  reports  relevant to the  processing  and
     response to customer inquiries, (iii) the historical electronic database of
     professional  and consumer  inquiries  and responses for the last 12 months
     (iv)  a copy  of the  responses  to  each  inquiry  and  (v) an  historical
     electronic database of Adverse Events, provided in each such case Atrix has
     Control of such information.

          (d) If the report of an ADE causes a Governmental Authority to request
     labeling  revision  as a result  of an ADE or that a Phase IV  surveillance
     program  be  conducted,   then  the  Parties  shall   promptly  enter  into
     discussions  and  shall  mutually  agree on all of the  material  terms and
     conditions  of such  labeling  revision or Phase IV  surveillance  program;
     provided,  however  the  costs  of  such  labeling  revision  or  Phase  IV
     surveillance  program  shall be borne 100% by Atrix.  Atrix  shall make all
     final decisions with regard to any labeling  revisions and the development,
     design and  implementation  of such Phase IV study.  CollaGenex agrees that
     should  Applicable Laws require that any such interim data and results from
     such Phase IV surveillance programs be prepared in written form, CollaGenex
     shall comply with such  requirements  and provide all such  information  in
     writing  to Atrix  and the  Governmental  Authorities  in  accordance  with
     Applicable Laws.  CollaGenex further agrees that Atrix shall have the right
     to incorporate,  refer to and  cross-reference  such results and underlying
     data in any regulatory  filing or any other filing or requirement  Atrix is
     required to undertake with respect to the Products.

     Section  11.03.  PHASE IV STUDIES.  In the event a  Governmental  Authority
requires  Atrix to conduct a Phase IV study,  Atrix  shall  develop,  design and
implement  such  Phase IV study  and the  costs  shall be borne  100% by  Atrix.
CollaGenex  shall pay 100% of the costs of any Phase IV study  conducted  solely
for marketing purposes; provided, however, that Atrix shall supply to CollaGenex
up to [**] to conduct a Phase IV seeding study, [**] (other than shipping costs)
to  CollaGenex.  In  exchange  for  providing  [**] to be used in such  Phase IV
seeding  study,  Atrix shall have the rights to use the results of such Phase Iv
seeding study outside of the Territory. Upon completion of such Phase IV seeding
study, CollaGenex shall provide Atrix with a detailed list of the number of [**]
used by CollaGenex in such Phase IV seeding study in the next Royalty Statement.
If  CollaGenex  used its  existing  inventory  of [**] to conduct  such Phase IV
seeding  study,  CollaGenex may offset the cost to CollaGenex for [**] excluding
shipping and handling  costs,  from future  payments to Atrix.  The costs of any
Phase IV study  conducted  solely for  marketing  purposes  shall be included in
CollaGenex's aggregate A&S expenditures for purposes of Section 14.04.


     Section 11.04.  ASSISTANCE.  Each Party shall provide reasonable assistance
to the other at the  other's  request,  in  connection  with  their  obligations
pursuant  to  this  Article  XI,  subject  to   reimbursement   of  all  of  its
out-of-pocket costs by the requesting Party.


                                       26
<PAGE>

     Section 11.05.  COMPLIANCE.  CollaGenex shall be responsible for compliance
with  Applicable Laws and the Government  Approvals  relating to the possession,
promotion,  marketing,  sale,  advertising and  distribution of the Products and
Units and distribution of the Professional Samples, as applicable, including (a)
obtaining all necessary permits, licenses and any other requirements relating to
the  sale  and  distribution  of the  Products  and  Professional  Samples,  (b)
arranging  for  the  warehousing  and   distribution  of  the  Products,   which
warehousing facility and distributor shall be reasonably  satisfactory to Atrix,
and (c) all billing and  collection  activities  with  respect to the  Products.
Atrix shall be responsible  for compliance  with  Applicable Laws and Government
Approvals  relating to the  Manufacture,  design and production of the Products,
Units and the Professional Samples, as applicable, and with cGMP relating to the
Manufacture  and  testing  of the  Products  and the  Professional  Samples,  as
applicable.  CollaGenex and Atrix shall comply with all  Applicable  Laws within
the  Territory  as set  forth in this  Agreement,  including  the  provision  of
information  by  CollaGenex  and  Atrix to each  other  necessary  for Atrix and
CollaGenex  to comply with any  applicable  reporting  requirements.  Each Party
shall  promptly  notify the other Party of any  comments,  responses  or notices
received  from, or  inspections  by, the FDA, or other  applicable  Governmental
Authorities, which relate to or may impact the Product or the Manufacture of the
Product or the sales and marketing of the Product, and shall promptly inform the
other Party of any responses to such comments, responses, notices or inspections
and  the  resolution  of any  issue  raised  by the  FDA or  other  Governmental
Authorities.

                                  ARTICLE XII

                             PATENTS AND TRADEMARKS

     Section  12.01.  MAINTENANCE OF PATENTS OR MARKS.  Atrix shall,  at Atrix's
expense, maintain and protect the Atrix Patent Rights and the Atrix Marks in the
Territory  for so long as  CollaGenex  markets the  Products  or has  provided a
marketing plan and forecast for Product  requirements;  provided  however,  that
upon  written  request  by Atrix,  CollaGenex  shall,  at no cost or  expense to
CollaGenex,  provide  such  assistance  as may be  necessary  to enable Atrix to
comply with the  administrative  formalities  necessary  to  maintain  any Atrix
Patent Rights or the Atrix Marks.

     Section  12.02.  COOPERATION.  CollaGenex  shall,  at no cost or expense to
CollaGenex,  make  available  to Atrix or its  authorized  attorneys,  agents or
representatives,  its employees,  agents or consultants necessary or appropriate
to enable Atrix to file, prosecute and maintain patent applications for a period
of time  sufficient  for  Atrix to  obtain  the  assistance  it needs  from such
personnel.

     Section 12.03. ATRIX TO PROSECUTE INFRINGEMENT. During the Term, each Party
shall give prompt  notice to the other of any Third Party act which may infringe
the Atrix Patent Rights and shall  cooperate  with each other to terminate  such
infringement without litigation. Atrix shall, at its sole expense, prosecute the
judicial or administrative  proceedings  against such Third Party  infringement.
CollaGenex  shall provide such  assistance  and  cooperation  to Atrix as may be
necessary to successfully  prosecute any action against Third Party infringement
at Atrix's expense and may deduct the expenses  thereof from any amounts payable
to Atrix under this Agreement.


                                       27
<PAGE>

     In the event Atrix fails to institute  proceedings  and terminate any Third
Party  infringement of the Atrix Patent Rights,  CollaGenex may take such action
as it deems appropriate,  including without limitation,  the filing of a lawsuit
against such Third Party.  In such event Atrix will provide such  assistance and
cooperation  to CollaGenex as may be necessary,  at  CollaGenex's  expense,  and
CollaGenex may deduct all costs and expenses of such actions  against any amount
payable to Atrix under this  Agreement  and retain all  amounts  awarded in such
action.  CollaGenex  may  settle  any such  claim  so long as the  terms of such
settlement do not impair Atrix's rights hereunder or Atrix's rights in the Atrix
Technology.

     Section 12.04.  INFRINGEMENT CLAIMED BY THIRD PARTIES. In the event a Third
Party  commences,  or  threatens  to  commence,  a  judicial  or  administrative
proceeding against a Party to this Agreement and such proceeding claims that the
Atrix  Technology or the Atrix Marks  infringes such Third Party's  intellectual
property  rights,  the Party  against  whom such  proceeding  is  threatened  or
commenced shall give prompt notice to the other Party.  Atrix shall, at its sole
expense,  defend such claims or proceedings  and  CollaGenex  shall provide such
assistance and cooperation to Atrix as may be necessary to  successfully  defend
any such claim or proceeding at Atrix's expense. Atrix may settle any such claim
so long as the  terms  of such  settlement  do not  impair  CollaGenex's  rights
hereunder,  or increase the costs to CollaGenex  hereunder.  Notwithstanding the
above,  if such  claim or  proceeding  relates  to or arises  from the  actions,
activities  or omissions of  CollaGenex  other than the use by CollaGenex of the
Atrix Technology or the Atrix Marks, then CollaGenex shall defend such claims or
proceedings,  at CollaGenex's sole expense, and CollaGenex shall indemnify Atrix
for  any  liabilities,   costs  and  expenses,  including,  without  limitation,
attorneys' fees, incurred with respect to such claim or proceeding.

                                  ARTICLE XIII

                    REPRESENTATIONS, WARRANTIES and COVENANTS

     Section 13.01.  CORPORATE POWER.  Each Party hereby represents and warrants
that such Party is duly  organized  and validly  existing  under the laws of the
state of its  incorporation  and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof.

     Section 13.02. DUE AUTHORIZATION. Each Party hereby represents and warrants
that such Party is duly  authorized to execute and deliver this Agreement and to
perform its obligations hereunder.

     Section  13.03.  BINDING  OBLIGATION.  Each  Party  hereby  represents  and
warrants that this Agreement is a legal and valid obligation binding upon it and
is  enforceable  in  accordance  with its terms.  The  execution,  delivery  and
performance  of  this  Agreement  by such  Party  does  not  conflict  with  any
agreement, instrument or understanding,  oral or written, to which it is a party
or by which it may be bound,  nor  violate any law or  regulation  of any court,
governmental body or administrative or other agency having authority over it.

     Section 13.04.  OWNERSHIP OF ATRIX PATENT RIGHTS. As of the Effective Date,
Atrix  represents and warrants that (a) it has all right,  title and interest in
and to the Atrix Patent Rights and the Atrix Marks necessary to grant CollaGenex
the licenses  hereunder;  (b) except for those


                                       28
<PAGE>

rights  granted to Block under the Eighth  Amendment  and except with respect to
CollaGenex,  it has not granted any license under the Atrix Patent Rights or the
Atrix Marks for any Product in the  Territory  for use in the Field to any Third
Party and is under no obligation  to grant any such license;  (c) except for the
security interest granted to Block in the Atrix Marks under the Eighth Amendment
and such  other  rights of Block  thereunder,  there are no  outstanding  liens,
encumbrances,  agreements or understanding of any kind, either written,  oral or
implied,  regarding  either the Atrix Patent Rights or the Atrix Marks which are
inconsistent or in conflict with this Agreement;  and [**] Atrix, [**] Atrix[**]
(ii) that  Block  shall  sell to Atrix all  unsold  Product  held by Block as of
October 31, 2001.

     Section 13.05. PATENT  PROCEEDINGS.  Atrix represents and warrants that (a)
no patent  application  within  the Atrix  Patent  Rights is the  subject of any
pending interference,  opposition, cancellation or other protest proceeding, and
(b) to the best of its  knowledge,  the Atrix  Technology  does not infringe the
intellectual property rights of any Third Party.

     Section 13.06.  ADVERSE  PROPERTIES.  Atrix represents and warrants that it
knows of no adverse effects or other  properties that may raise  objections from
the  FDA or  other  health  registration  authorities  or may  affect  the  use,
effectiveness or merchantability of the Products.

     Section 13.07.  PRESERVATION OF NAME AND REPUTATION.  During the Term, each
of the Parties  shall  endeavor to preserve the good name and  reputation of the
other Party and shall  conduct  itself in a manner as to maintain  the good name
and reputation of the other Party.

     Section  13.08.  DEBARMENT.  During the term,  neither of the Parties shall
utilize any employee, representative, agent, assistant or associate who has been
debarred  pursuant to the Act in  connection  with any of the  activities  to be
carried out under this Agreement.

     Section 13.09.  LIMITATION ON WARRANTIES.  Except as expressly set forth in
this  Agreement,  nothing  herein  shall be  construed  as a  representation  or
warranty by Atrix to  CollaGenex  that the Atrix  Technology is not infringed by
any Third  Party,  or that the  practice of such rights  does not  infringe  any
published  intellectual  property rights of any Third Party. Neither Party makes
any warranties, express or implied, concerning the success or commercial utility
of the Products.

     Section  13.10.  LIMITATION  OF LIABILITY.  EXCEPT FOR WILLFUL  MISCONDUCT,
GROSS  NEGLIGENCE OR INFRINGEMENT  OF THIRD PARTY  PROPRIETARY  RIGHTS,  NEITHER
PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL  OR PUNITIVE  DAMAGES IN  CONNECTION  WITH THIS  AGREEMENT  OR ANY
LICENSE GRANTED HEREUNDER.

                                  ARTICLE XIV

                        COVENANTS OF COLLAGENEX AND ATRIX

     Section 14.01. COVENANT NOT TO LAUNCH COMPETITIVE PRODUCT.

          (a)  CollaGenex  hereby  covenants  and shall cause its  Affiliates to
     agree  not  to  develop,  in-license,  market,  sell,  distribute  or  have
     marketed,  have sold or have


                                       29
<PAGE>

     distributed  any  Competitive  Product  in the  Territory  during  the Term
     without  the prior  written  approval  of Atrix,  such  approval  not to be
     unreasonably withheld.  Notwithstanding the foregoing, if CollaGenex or any
     Affiliate  acquires an entity or all or substantially  all of the assets of
     an entity and such entity  distributes or such assets include a Competitive
     Product,  CollaGenex  or such  Affiliate  shall  have  120 days in which to
     divest  itself  of  such   Competitive   Product  or  to  otherwise   cease
     distribution of such  Competitive  Product,  and CollaGenex shall not be in
     breach of this Section 14.01 if it or the Affiliate, as the case may be, so
     divests or ceases distribution within such 120 day period;

          (b) All of the  covenants in this Section  14.01 shall be construed as
     an agreement independent of any other provision in this Agreement,  and the
     existence  of any claim or cause of action of  CollaGenex,  its designee or
     its  Affiliates  against  Atrix,  whether  predicated on this  Agreement or
     otherwise,  shall not  constitute a defense to the  enforcement by Atrix of
     such covenants; and

          (c)  CollaGenex and Atrix hereby agree that the covenants set forth in
     this Section 14.01 are a material and substantial  part of the transactions
     contemplated by this Agreement.

     Section 14.02. LIMITATION TO THE TERRITORY.

          (a) CollaGenex  hereby  covenants that it will not,  without the prior
     written authorization of Atrix: (i) promote or actively solicit sale of the
     Products or advertise the Products,  outside of the Territory; (ii) contact
     any of Atrix's suppliers or vendors of the Products or components  relating
     to the Products (except as required by law); (iii) contact the Governmental
     Authorities  or other  entity  about the  Products,  except as  required by
     Applicable  Laws or as may be  necessary  or  appropriate  to carry out its
     obligations  hereunder;  (iv)  knowingly  sell or distribute for resale the
     Products  purchased  hereunder to a Third Party who intends to sell outside
     of the  Territory;  and (v) prior to October  31,  2001,  market,  promote,
     advertise, distribute,  commercialize or sell the Products to the customers
     set forth on the Block customer list provided to CollaGenex by Atrix.

          (b) to the extent allowed by Applicable  Laws, and except with respect
     to Atrix's  exercise of its  Co-Marketing  rights under Section 5.01, Atrix
     hereby covenants that any agreement under which it licenses the Products to
     a Third Party shall contain  provisions that prohibit such Third Party from
     directly or indirectly  selling or otherwise  distributing  the Products in
     the Territory.

     Section 14.03. MARKETING AND INSTRUCTIONAL MATERIALS. Atrix shall cooperate
with CollaGenex in the creation of instructional  materials for the customers of
CollaGenex to enable the customers of CollaGenex to use the Products  correctly.
Atrix also agrees to assist  CollaGenex  in the  training  of its Dental  Detail
Force. In addition,  on the Effective  Date,  Atrix shall transfer to CollaGenex
all marketing, promotional and advertising materials ("Marketing Materials") for
the Products in Atrix's  control.  The copyright for all materials  developed by
CollaGenex shall be owned exclusively by CollaGenex; however, Atrix shall retain
the exclusive  copyright to all Marketing  Materials  transferred to CollaGenex.
Upon (a)  termination  of this


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<PAGE>

Agreement,  (b) breach or default by CollaGenex  under this  Agreement or (c) in
the  event,  pursuant  to the  terms of this  Agreement,  Atrix has the right to
Manufacture and sell the Products to persons other than CollaGenex,  then to the
extent  required,  CollaGenex  hereby grants to Atrix a perpetual,  royalty-free
license to such copyrighted  materials in order that Atrix may use the substance
of such materials  (other than any tradename,  trademark or similar  device) for
use  in  instructional   materials   accompanying  the  Products.  In  addition,
CollaGenex grants Atrix a perpetual, royalty free license under such copyrighted
materials  in order that  Atrix may use such  materials  in all other  countries
outside the  Territory.  Atrix grants  CollaGenex a  non-exclusive  royalty free
license to use the Marketing Materials  transferred to CollaGenex by Atrix under
this Section 14.03 in the Territory during the Term.

     Section  14.04.  A&S SPENDING  LEVELS.  CollaGenex's  aggregate  direct A&S
spending level in the Territory for the fiscal year  beginning  January 1, 2002,
for all Products  shall be no less than  $2,000,000  which amount shall  include
CollaGenex's retention of additional representatives for its Dental Detail Force
specifically  for the  Products.  From the Effective  Date through  December 31,
2001,  CollaGenex  shall attend all major relevant  industry  recognized  dental
trade  shows,  immediately  commence  detailing  the  Products  to  Atrix's  and
CollaGenex's existing customers and make such other A&S expenditures as mutually
agreed to by the Parties.  For each fiscal year  commencing on and after January
1, 2003, CollaGenex's aggregate A&S spending level in the Territory shall:

          (a) for [**] be the lesser of 30% of CollaGenex's  Contribution Margin
     for [**] in the Territory or $4,000,000.00.

          (b)  for the  [**]  Products,  be the  lesser  of 30% of  CollaGenex's
     Contribution   Margin  for  the  [**]   Products   in  the   Territory   or
     $2,000,000.00.

          (c) Atrix  shall  have the right to review  CollaGenex's  plan for A&S
     spending levels prior to the implementation thereof; provided, however that
     final  approval  and  implementation  of such  plan  shall be  CollaGenex's
     responsibility.

     Section  14.05.  Variances.  In the event A&S  expenses in the  immediately
preceding  year are less than the minimum  required A&S  requirements  for that
year,  CollaGenex  shall  make up the  difference  by adding  the  amount of the
shortfall  to the minimum A&S  requirements  for the [**] and shall  satisfy the
revised minimum aggregate A&S expenditure amount in the [**].

     Section 14.06. Cash Alternatives.  In the event CollaGenex determines it is
advisable to spend less than the A&S  commitment as set forth in Section  14.04,
CollaGenex will notify Atrix of the proposed underspending whereupon Atrix shall
have the option of causing  CollaGenex  to spend the required  amount or receive
from CollaGenex in cash [**] of the amount proposed to be underspent.

     Section 14.07.  MINIMUM SIZE OF DETAIL FORCE.  On the Effective Date and at
all times  during  the first 24 months of the Term,  CollaGenex  shall  have and
maintain a Dental  Detail Force  consisting  of no less than 90 fulltime  Dental
Consultants calling on Dentists in the Continental United States.

     Section 14.08. DETAIL CALLS.

          (a) [**] will be the subject of [**].

          (b) [**] will be the subject of [**].

          (c)  Thereafter,  CollaGenex  will  make  [**]  Detail  Calls  in  the
     Continental  United States.  The Parties agree to renegotiate in good faith
     the number of Dental  Consultants and Detail Calls then required if adverse
     market   conditions   for  the  Products  make  the  current   numbers  not
     commercially viable.

     Section 14.09. ACCESS TO BOOKS AND RECORDS.  CollaGenex shall permit Atrix,
at Atrix's  expense and during normal business hours, to exercise the inspection
rights granted to Atrix by CollaGenex under Section 3.04.


                                       31
<PAGE>

     Section 14.10.  MARKETING EXPENSES.  CollaGenex  covenants and agrees that,
except as otherwise  specified  in this  Agreement,  CollaGenex  shall be solely
responsible for the cost and implementation of all marketing, sales, promotional
and related  activities  concerning  the  marketing,  sale and  promotion of the
Products and the distribution of the Professional Samples.

     Section 14.11. PROTECTION OF THE MARKS. The Parties covenant and agree that
neither Party nor their  Affiliates  shall publish,  employ nor cooperate in the
publication of, any misleading or deceptive  advertising material with regard to
the Parties, or the Atrix Marks or CollaGenex's trademarks for the Products.

     Section  14.12.   DISTRIBUTION  SYSTEM.  CollaGenex  shall  enter  into  an
arrangement with a Third Party, reasonably acceptable to Atrix, to warehouse and
distribute the Product on or prior to October 1, 2001.

     Section  14.13.  FURTHER  ACTIONS.  Upon  the  terms  and  subject  to  the
conditions  hereof,  each of the  Parties  hereto  shall  use  its  commercially
reasonable efforts to (a) take, or cause to be taken, all appropriate action and
do,  or cause to be done,  all  things  necessary,  proper  or  advisable  under
Applicable Law or otherwise to consummate  and make  effective the  transactions
contemplated by this  Agreement,  (b) obtain from  Governmental  Authorities any
consents,  licenses,  permits,  waivers,  approvals,  authorizations  or  orders
required  to be  obtained  or  made  by  the  Parties  in  connection  with  the
authorization,  execution and delivery of this Agreement and the consummation of
the  transactions  contemplated  by this  Agreement  and (c) make all  necessary
filings,  and thereafter  make any other required  submissions,  with respect to
this transaction  under (i) the Securities  Exchange Act of 1934, as amended and
the Securities Act of 1933, as amended, and the rules and regulations thereunder
and any other  applicable  federal or state  securities  laws and (ii) any other
Applicable Law. The Parties hereto shall cooperate with each other in connection
with the making of all such filings,  including by providing  copies of all such
documents to the other Party's counsel  (subject to appropriate  confidentiality
restrictions)  prior to filing and, if requested,  by accepting  all  reasonable
additions,  deletions or changes  suggested  in  connection  therewith.  Without
limiting the generality of the foregoing,  each Party shall take or omit to take
such action as the other Party shall reasonably  request to cause the Parties to
obtain any material  Governmental  Approvals and/or the expiration of applicable
waiting periods,  provided that the foregoing shall not obligate either Party to
take  or to  omit  to  take  any  action  (including,  without  limitation,  the
expenditure  of funds or any holding  separate and agreeing to sell or otherwise
dispose  of assets,  categories  of assets or  businesses)  as in the good faith
opinion of such Party, would cause a material adverse effect on a Party.

     Section  14.14.  EQUITABLE  RELIEF.  The Parties  understand and agree that
because of the  difficulty  of measuring  economic  losses to the  non-breaching
Party as a result of a breach of the  covenants  set forth in this  Article XIV,
and because of the  immediate and  irreparable  damage that may be caused to the
non-breaching Party for which monetary damages would not be a sufficient remedy,
the Parties agree that the non-breaching Party will be entitled to seek specific
performance, temporary and permanent injunctive relief, and such other equitable
remedies to which it may then be  entitled  against the  breaching  Party.  This
Article  XIV shall not limit any  other  legal or  equitable  remedies  that the
non-breaching  Party may have against the  breaching  Party for violation of the
covenants   set  forth  in  this  Article  XIV.  The  Parties   agree  that  the
non-breaching  Party  shall have the right to seek relief for any  violation  or
threatened  violation of this


                                       32
<PAGE>

Article XIV by the breaching  Party from any court of competent  jurisdiction in
any  jurisdiction  authorized  to grant the relief  necessary  to  prohibit  the
violation or  threatened  violation of this Article XIV.  This Article XIV shall
apply with equal force to the breaching Party's Affiliates.

                                   ARTICLE XV

                                 PRODUCT RECALL

     Section 15.01.  PRODUCT RECALLS OR WITHDRAWAL.  If at any time or from time
to time any Governmental Authority in the Territory requests a Party to recall a
Product or if a voluntary  recall of a Product is  contemplated  by either Party
(collectively,  a "Recall"),  then the Party to whom such request is made or the
Party  contemplating  such Recall, as the case may be, shall immediately  notify
the  other  Party.  Neither  Party  shall  carry out a  voluntary  Recall in the
Territory without the prior written approval of the other Party,  which approval
shall not be unreasonably withheld,  conditioned or delayed by either Party. Any
Recall in the Territory  shall be carried out by CollaGenex in as  expeditious a
manner as  reasonably  possible to preserve the goodwill and  reputation  of the
Product and the goodwill and reputation of the Parties.  CollaGenex shall in all
events  be  responsible  for  conducting  any  Recall in the  Territory,  market
withdrawals  or  corrections  with  respect to the  Products  in the  Territory.
CollaGenex  shall maintain  records of all sales and distribution of Product and
customers  sufficient to adequately  administer a Recall,  market  withdrawal or
correction for the period required by Applicable Law.

     Section 15.02. RECALL COSTS. CollaGenex shall be responsible for conducting
any  Recall  in the  Territory  and the cost and  expense  of a Recall  shall be
allocated as follows:

          (a) if such Recall is a voluntary  Recall or shall be due to tampering
     or other  cause,  other than a  manufacturer's  defect,  but not due to the
     negligence or  misconduct  of the Parties,  or the breach by a Party of its
     warranties or obligations  hereunder,  then CollaGenex and Atrix shall each
     bear 50% of the costs and expenses  incurred by  CollaGenex  in  connection
     with such Recall,  including,  without limitation,  all product credits and
     returns,  freight and shipping costs and product disposal expenses. In such
     event,  Atrix  agrees to pay  CollaGenex  within ten days after its receipt
     from  CollaGenex of any invoice(s)  assessing  Atrix its 50% share of these
     said costs, as listed above;

          (b) if  such  Recall  shall  be due to  manufacturer's  defect  or the
     negligence  or the  breach  by  Atrix  of  its  warranties  or  obligations
     hereunder or the misconduct of Atrix,  all such costs and expenses shall be
     borne and paid solely by Atrix and Atrix will reimburse  CollaGenex for any
     such costs and expenses paid by CollaGenex  within ten (10) days of receipt
     of an invoice for such costs and expenses  from  CollaGenex,  and if not so
     paid CollaGenex shall have the right to offset such amounts against amounts
     otherwise due by CollaGenex to Atrix hereunder; and

          (c)  if  such  Recall  is  due to the  negligence  or  the  breach  by
     CollaGenex of its warranties or obligations  hereunder or the misconduct of
     CollaGenex,  all such costs and expenses  shall be borne and paid solely by
     CollaGenex  and  CollaGenex  will  reimburse  Atrix for any such  costs and
     expenses  paid by  Atrix  within  30  days of  receipt  of an  invoice  and
     appropriate documentation for such costs and expenses from Atrix.


                                       33
<PAGE>

     Section  15.03.   NOTIFICATION  OF  COMPLAINTS.   Each  Party  agrees  that
throughout  the Term, and with respect to all Products or  Professional  Samples
supplied  or  purchased  under this  Agreement,  after the  termination  of this
Agreement,  it will (a)  notify the other  Party  immediately  of all  available
information  concerning  any  complaint,  Product  defect  reports,  and similar
notices  received by either Party with  respect to the Products or  Professional
Samples,  whether  or not  determined  to be  attributable  to the  Products  or
Professional  Samples and (b) with respect to an ADE, comply with the provisions
of Section  11.02.  CollaGenex,  in  consultation  with Atrix,  shall define and
implement  regulatory  compliance  procedures,  including,  without  limitation,
action plans and an SOP for Product defect reporting and will handle all Product
complaints in the Territory. In connection with any such Product complaint Atrix
shall cooperate as reasonably  requested by CollaGenex  including performing any
testing and follow-up investigations mutually agreed upon by the Parties, within
a commercially reasonable time frame.

     Section 15.04.  NOTIFICATION OF THREATENED ACTION.  Throughout the duration
of this  Agreement  and with  respect to all  Products or  Professional  Samples
supplied  or  purchased  under this  Agreement,  after the  termination  of this
Agreement,   each  Party  shall  immediately  notify  the  other  Party  of  any
information it receives  regarding any threatened or pending action,  inspection
or communication by or from a concerned  Governmental Authority which may affect
the  safety or  efficacy  claims of a Product  or  Professional  Samples  or the
continued  marketing of a Product or distribution of the  Professional  Samples.
Upon receipt of such  information,  the Parties shall consult with each other in
an effort to arrive at a mutually  acceptable  procedure for taking  appropriate
action.

                                  ARTICLE XVI

                          INDEMNIFICATION AND INSURANCE

     Section 16.01.  COLLAGENEX  INDEMNIFIED BY ATRIX. Atrix shall indemnify and
hold  CollaGenex  harmless  from and against  any  liabilities  or  obligations,
damages, losses, claims,  encumbrances,  costs or expenses (including attorneys'
fees) (any or all of the foregoing  herein  referred to as "Loss")  insofar as a
Loss or actions in respect  thereof,  whether existing or occurring prior to, on
or  subsequent  to the  Effective  Date,  arises out of or is based upon (a) any
misrepresentation  or breach of any of the  warranties,  covenants or agreements
made by  Atrix  in  this  Agreement;  (b)  the  Manufacture  of any  Product  or
Professional  Sample that is identifiable  as having been  Manufactured by or on
behalf of Atrix;  (c) any claims  that a Product  (as a result of the use of the
Atrix  Technology  therein) or its  Manufacture (as a result of the use of Atrix
Technology therein), use or sale infringes the patent,  trademark or proprietary
right of a Third Party.

     Section 16.02. ATRIX INDEMNIFIED BY COLLAGENEX.  CollaGenex shall indemnify
and hold  harmless  Atrix  from and  against  any Loss  insofar  as such Loss or
actions in respect  thereof  occurs  subsequent to the Effective  Date,  whether
existing or occurring prior to, on or subsequent to the date hereof,  arises out
of or is  based  upon  (a)  any  misrepresentation  or  breach  of  any  of  the
warranties,  covenants or agreements made by CollaGenex in this  Agreement;  (b)
CollaGenex's  use of  the  Marketing  Authorizations  in  the  marketing,  sale,
distribution  or  promotion  of the Products or the  Professional  Samples;  (c)
CollaGenex's  marketing,  sale, distribution or promotion of the Products or the
Professional  Samples  (except  if such  Loss  arises  as a  result  of


                                       34
<PAGE>

matters  described  in  Section  16.01);  (d) the use of  CollaGenex's  name and
trademark in the packaging and labeling of the Products or Professional  Samples
and in the  marketing,  sale,  distribution  or  promotion  of the  Products  or
Professional  Samples where it is alleged that such name or trademark  infringes
the proprietary rights of a Third Party.

     Section  16.03.  PROMPT  NOTICE  REQUIRED.  No  claim  for  indemnification
hereunder shall be valid unless notice of the matter which may give rise to such
claim is given in writing by the (the  "Indemnitee") to the persons against whom
indemnification   may  be  sought  (the  "Indemnitor")  as  soon  as  reasonably
practicable after such Indemnitee becomes aware of such claim; provided that the
failure to notify the Indemnitor  shall not relieve it from any liability  which
it may have to the Indemnitee otherwise than under this Article XVI. Such notice
shall state that the  Indemnitor is required to indemnify the  Indemnitee  for a
Loss and shall  specify the amount of Loss and  relevant  details  thereof.  The
Indemnitor shall notify Indemnitee no later than 60 days from such notice of its
intention to assume the defense of any such claim.  In the event the  Indemnitor
fails to give such  notice  within that time the  Indemnitor  shall no longer be
entitled to assume such defense.

     Section 16.04.  INDEMNITOR MAY SETTLE. The Indemnitor shall at its expense,
have the right to settle and defend, through counsel reasonably  satisfactory to
the  Indemnitee,  any action which may be brought in connection with all matters
for which indemnification is available. In such event the Indemnitee of the Loss
in question and any successor  thereto shall permit the Indemnitor full and free
access  to its  books  and  records  and  otherwise  fully  cooperate  with  the
Indemnitor in connection with such action;  provided that this Indemnitee  shall
have the right fully to  participate  in such  defense at its own  expense.  The
defense by the  Indemnitor  of any such actions  shall not be deemed a waiver by
the Indemnitor of its right to assert a claim with respect to the responsibility
of the Indemnitor  with respect to the Loss in question.  The  Indemnitor  shall
have the right to settle or compromise any claim against the Indemnitee  without
the consent of the Indemnitee  provided that the terms thereof:  (a) provide for
the  unconditional  release  of the  Indemnitee;  (b)  require  the  payment  of
compensatory  monetary  damages by Indemnitor only; and (c) expressly state that
neither the fact of settlement nor the settlement agreement shall constitute, or
be construed or  interpreted  as, an admission by the  Indemnitee  of any issue,
fact,  allegation or any other aspect of the claim being settled.  No Indemnitee
shall pay or  voluntarily  permit the  determination  of any liability  which is
subject to any such action while the  Indemnitor is  negotiating  the settlement
thereof or contesting the matter,  except with the prior written  consent of the
Indemnitor,  which consent shall not be unreasonably withheld or delayed. If the
Indemnitor  fails to give Indemnitee  notice of its intention to defend any such
action as  provided  herein,  the  Indemnitee  involved  shall have the right to
assume the  defense  thereof  with  counsel of its choice,  at the  Indemnitor's
expense, and defend, settle or otherwise dispose of such action. With respect to
any such  action  which  the  Indemnitor  shall  fail to  promptly  defend,  the
Indemnitor  shall  not  thereafter  question  the  liability  of the  Indemnitor
hereunder  to the  Indemnitee  for any Loss  (including  counsel  fees and other
expenses of defense).

     Section 16.05.  INSURANCE.  Each Party shall, at its sole cost and expense,
obtain and keep in force comprehensive  general liability  insurance,  including
any applicable  self-insurance  coverage, with bodily injury, death and property
damage limits of $5,000,000  per  occurrence  and  $10,000,000 in the aggregate,
including contractual  liability and product liability coverage.  Upon execution
of this  Agreement,  each Party shall  furnish the other with a  certificate  of
insurance


                                       35
<PAGE>

signed by an authorized  representative  of such Party's  insurance  underwriter
evidencing the insurance  coverage  required by this Agreement and providing for
at least 30 days prior  written  notice to the other Party of any  cancellation,
termination or reduction of such insurance coverage.

                                  ARTICLE XVII

                               DISPUTE RESOLUTION

     Section 17.01.  DISPUTES. The Parties recognize that disputes as to certain
matters  may from time to time  arise  during the Term,  which  relate to either
Party's rights and/or obligations hereunder.  It is the objective of the Parties
to establish  procedures to facilitate the resolution of disputes  arising under
this Agreement in an expedient  manner by mutual  cooperation and without resort
to litigation.  To accomplish  this  objective,  the Parties agree to follow the
procedures  set forth in this  Article  XVII if and when a dispute  arises under
this Agreement.

     Unless otherwise specifically recited in this Agreement, disputes among the
Parties will be resolved as recited in this Article XVII. Any disputes  relating
to the Collaboration hereunder shall be first referred to the Marketing Advisory
Board by either Party at any time after such dispute has arisen,  and such Party
believes that there has been sufficient  discussion of the matter at the current
level.  If the  Marketing  Advisory  Board is unable to  resolve  such a dispute
within 15 days of being  requested  by a Party to  resolve  the  dispute  or the
Marketing  Advisory Board is unable to resolve a dispute among its members,  the
matter  shall  be  presented  to the  chief  executive  officers  of  Atrix  and
CollaGenex, or their respective designees, for resolution. In the event that the
chief executive officers of Atrix and CollaGenex, or their respective designees,
cannot  resolve the  dispute  within ten days of being  requested  by a Party to
resolve a dispute,  either Party may, by written notice to the other, invoke the
provisions of Section 17.02.

     Section 17.02. MEDIATION. If a dispute under this Agreement is not resolved
in  accordance  with Section  17.01,  the Parties agree to submit the dispute to
mediation in  accordance  with the  Commercial  Mediation  Rules of the American
Arbitration Association.  The Parties will jointly appoint a mutually acceptable
mediator,  seeking  assistance  in such  regard  from the  American  Arbitration
Association,  if they have been unable to agree to upon such appointment  within
ten days from the  conclusion  of the  negotiation  period (as  provided in this
Agreement).  The Parties agree to participate in good faith in the mediation and
the  negotiations  related  thereto  for a period  of 30 days.  The costs of the
mediation, including fees and expenses, shall be borne equally by the Parties.

     Section  17.03.  TRIAL  WITHOUT  JURY.  If the Parties  fail to resolve the
dispute  through  negotiation and mediation in accordance with Sections 17.01 or
17.02,  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  Section
XVII.

     Section  17.04.  PERFORMANCE  TO  CONTINUE.  Each Party  shall  continue to
perform its  obligations  under this Agreement  pending final  resolution of any
dispute arising out of or related


                                       36
<PAGE>

to this Agreement;  provided,  however,  that a Party may suspend performance of
its  obligations  during any period in which the other Party fails or refuses to
perform its obligations.

     Section 17.05.  PROVISIONAL REMEDIES.  Although the procedures specified in
this Article XVII are the sole and exclusive  procedures  for the  resolution of
disputes  arising out of or related to this  Agreement,  either Party may seek a
preliminary  injunction  or  other  provisional  equitable  relief,  if,  in its
reasonable  judgment,  such action is  necessary  to avoid  irreparable  harm to
itself or to preserve its rights under this Agreement.

     Section 17.06.  DETERMINATION OF PATENTS AND OTHER  INTELLECTUAL  PROPERTY.
Notwithstanding  the foregoing,  any dispute  relating to the  determination  of
validity of claims,  infringement or claim interpretation  relating to a Party's
patents shall be submitted exclusively to federal court.

                                  ARTICLE XVIII

                                 CONFIDENTIALITY

     Section  18.01.  CONFIDENTIALITY.  During the Term and for a period of [**]
thereafter,  each Party shall maintain all Confidential Information of the other
Party as confidential and shall not disclose any such  Confidential  Information
to any Third Party or use any such  Confidential  Information  for any  purpose,
except (a) as expressly  authorized by this  Agreement,  (b) as required by law,
rule,  regulation or court order (provided that the disclosing Party shall first
notify the other Party and shall use commercially  reasonable  efforts to obtain
confidential treatment of any such information required to be disclosed), or (c)
to  its   Affiliates   and  its  employees,   agents,   consultants   and  other
representatives   ("Representatives")   to  accomplish   the  purposes  of  this
Agreement, so long as such persons are under an obligation of confidentiality no
less  stringent than as set forth herein.  Each Party may use such  Confidential
Information  only to the extent  required  to  accomplish  the  purposes of this
Agreement. Each Party shall use at least the same standard of care as it uses to
protect its own  Confidential  Information  to ensure that it and its Affiliates
and  Representatives  do not disclose or make any  unauthorized use of the other
Party's Confidential Information. Each Party shall be responsible for any breach
of this Agreement by its  Representatives.  Each Party shall promptly notify the
other Party upon  discovery of any  unauthorized  use or disclosure of the other
Party's Confidential Information.

     Section  18.02.  PUBLICITY  REVIEW.  The  Parties  agree  that  the  public
announcement  of the execution of this  Agreement  shall be in the form of press
releases  issued  by each of the  Parties  to be agreed  upon on or  before  the
Effective  Date and  thereafter  each Party shall be entitled to make or publish
any public  statement  consistent  with the contents  thereof.  Thereafter,  the
Parties will jointly discuss and agree,  based on the principles of this Section
18.02, on any statement to the public  regarding this Agreement or any aspect of
this Agreement, and the results of clinical studies conducted hereunder, subject
in each case to disclosure otherwise required by law or regulation as determined
in good faith by each Party.  When a Party elects to make any such  statement it
will give the other  Party at least  three days  notice to review and comment on
such statement. In the event of a public disclosure required by law prior to the
end of such three day period, the Party required to make such disclosure,  if it
legally may, shall give the other Party at least two business days to review and
comment on such disclosure. If a Party was not legally


                                       37
<PAGE>

able to give notice under the previous sentence, it will furnish the other Party
with a copy of its disclosure as soon as practicable  after the making  thereof.
The Parties  acknowledge  the importance of supporting  each other's  efforts to
publicly disclose results and significant  developments  regarding the Products.
The principles to be observed by Atrix and CollaGenex in such public disclosures
will be: accuracy,  the requirements  for  confidentiality  under Section 18.01,
compliance with FDA regulations and other FDA guidance documents,  the advantage
a competitor of Atrix or CollaGenex  may gain from any public  statements  under
this Section  18.02,  and the  standards  and customs in the  biotechnology  and
pharmaceutical  industries for such disclosures by companies comparable to Atrix
and  CollaGenex.  The terms of this  Agreement  may also be  disclosed  to:  (a)
government agencies where required by law, including filings required to be made
by law with the  United  States  Securities  and  Exchange  Commission  ("SEC"),
national securities exchanges or the Nasdaq Stock Market, (b) Third Parties with
the  prior  written  consent  of the other  Party,  which  consent  shall not be
unreasonably  withheld,  or (c) lenders,  investment bankers and other financial
institutions  of its choice  solely  for  purposes  of  financing  the  business
operations  of such Party,  so long as such  disclosure  in (b) and (c) above is
made  under  a  binder  of  confidentiality  at  least  as  restrictive  as  the
confidentiality  provisions in Section 18.01, so long as highly  sensitive terms
and  conditions  such as  financial  terms  are  extracted  from  the  Agreement
(including  in any  disclosure  required by law or the SEC) or deleted  upon the
request of the other Party, and so long as the disclosing Party gives reasonable
advance  notice  of  the  disclosure  under  the  circumstances   requiring  the
disclosure.

                                   ARTICLE XIX

                                  MISCELLANEOUS

     Section   19.01.   NO-SOLICITATION.   Neither  Party  nor  its   Affiliates
(collectively,   the  "Initiating   Group")  shall,   directly  or  through  its
representatives,  solicit for  employment  any  officer,  director,  employee or
consultant  of the other  Party or its  subsidiaries  or  controlled  affiliates
(collectively, the "Other Group") with whom the Initiating Group has had contact
in  connection  with,  or  who  otherwise   participates  in,  the  transactions
contemplated by this Agreement. The Initiating Group shall not be precluded from
hiring any such  person who has been  terminated  by the Other Group at least 90
days prior to commencement of employment discussions between such person and the
Initiating Group or its  representatives.  "Solicitation"  shall not include any
generalized  public  advertisement  or any other  solicitation by the Initiating
Group or its representatives  that is not specifically  directed toward any such
employee of the Other Group or toward any group of such  employees  of the Other
Group.

     Section  19.02.  COMMERCIALLY  REASONABLE  EFFORTS.  Each  Party  shall use
commercially  reasonable  and diligent  efforts to perform its  responsibilities
under this  Agreement.  As used herein,  the term  "commercially  reasonable and
diligent  efforts"  means,  unless the Parties  agree  otherwise,  those efforts
consistent  with the exercise of prudent  scientific and business  judgment,  as
applied to other products of similar scientific and commercial  potential within
the relevant product lines of the Parties.

     Section 19.03. NO RIGHT TO USE NAMES.  Except as otherwise provided herein,
no right,  express or implied,  is granted by the Agreement to use in any manner
the name "Atrix,"


                                       38
<PAGE>

"CollaGenex"  or any other  trade name or  trademark  of the other  Party or its
Affiliates in connection with the performance of the Agreement.

     Section 19.04.  NOTICES. All notices,  requests and other communications to
any party  hereunder  shall be in writing and shall be deemed to have been given
if delivered personally,  mailed by certified mail (return receipt requested) or
sent by cable,  telegram or recognized overnight delivery service to the parties
at the  following  addresses  or at such other  addresses  as,  specified by the
parties by like notice:

             If to CollaGenex:     Senior Vice President, Commercial Development
                                   CollaGenex Pharmaceuticals, Inc.
                                   41 University Drive
                                   Newtown, Pennsylvania 18940
                                   Facsimile: (215) 579-7388
                                   Telephone: (215) 579-8577

             With a copy to:       Hale and Dorr LLP
                                   650 College Road East
                                   Princeton, New Jersey 08540
                                   Facsimile: (609) 750-7700
                                   Telephone: (609) 750-7600
                                   Attention: David J. Sorin, Esq.

             If to Atrix:          Senior Vice President, Corporate Development
                                   Atrix Laboratories, Inc.
                                   2579 Midpoint Drive
                                   Fort Collins, Colorado 80525-4417
                                   Facsimile: (970) 482-9735
                                   Telephone: (970)-482-5868

             With a copy to:       Morrison & Foerster LLP
                                   370 Seventeenth Street, Suite 5200
                                   Denver, Colorado 80202
                                   Facsimile: (303) 592-1510
                                   Telephone: (303) 592-1500
                                   Attention: Warren L. Troupe, Esq.

     Notice so given shall be deemed  given and  received  (i) if by mail on the
fourth day after posting; (ii) by cable, telegram, telex or personal delivery on
the date of actual transmission,  with evidence of transmission  acceptance,  or
(as the case may be)  personal  or other  delivery;  and  (iii) if by  overnight
delivery  courier,  on the next  business day  following  the day such notice is
delivered to the courier service.

     Section 19.05.  SEVERABILITY.  Whenever possible,  each clause,  subclause,
provision or condition of this Agreement  shall be interpreted in such manner as
to be effective and valid under  applicable  law, but if any clause,  subclause,
provision or condition of this  Agreement  should be prohibited or invalid under
applicable  law,  such  clause,  subclause,  provision  or


                                       39
<PAGE>

condition shall be considered  separate and severable from this Agreement to the
extent of such  prohibition  or invalidity  without  invalidating  the remaining
clauses, subclauses, provisions and conditions of this Agreement.

     Section  19.06.  ENTIRE  AGREEMENT/MERGER.  This  Agreement  sets forth the
entire  agreement  between the Parties  hereto  pertaining to the subject matter
hereof and supersedes all  negotiations,  preliminary  agreements,  memoranda or
letters of proposal or intent,  discussions  and  understandings  of the Parties
hereto in connection with the subject matter hereof. All discussions between the
Parties have been merged into this  Agreement,  and neither Party shall be bound
by any definition, condition, understanding,  representation, warranty, covenant
or provision other than as expressly stated in or contemplated by this Agreement
or as  subsequently  shall  be set  forth  in  writing  and  executed  by a duly
authorized representative of the Party to be bound thereby.

     Section 19.07.  AMENDMENT.  No amendment,  change or modification of any of
the terms,  provisions or conditions of this Agreement shall be effective unless
made in  writing  and  signed  on  behalf of the  Parties  hereto by their  duly
authorized representatives.

     Section 19.08. COUNTERPARTS.  This Agreement may be executed in one or more
counterparts,  each of which shall be deemed to be an original document, but all
such separate  counterparts  shall  constitute only one and the same instrument.
This  Agreement  may be signed and  delivered  to the other  Party by  facsimile
signature; such transmission shall be deemed a valid signature.

     Section 19.09. NO WAIVER OF RIGHTS.  No waiver of any term,  provision,  or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances,  shall be deemed to be or construed as a further or continuing waiver
of any such term, provision, or condition of this Agreement.

     Section 19.10.  FORCE MAJEURE.  Neither Party shall be liable  hereunder to
the other Party nor shall be in breach for failure to deliver,  provided failure
to deliver is no greater than the delay in time caused by  circumstances  beyond
control for either Party,  including acts of God, fires,  floods,  riots,  wars,
civil disturbances,  sabotage, accidents, labor disputes, shortages,  government
actions (including  priorities,  requisitions,  allocations and price adjustment
restrictions)   and   inability  to  obtain   material,   equipment,   labor  or
transportation (collectively, "Force Majeure").

     Section 19.11.  FURTHER  ASSURANCES.  The Parties hereto shall each perform
such acts,  execute and deliver such  instruments  and documents and do all such
other things as may be  reasonably  necessary  to  accomplish  the  transactions
contemplated in this Agreement.

     Section 19.12.  ASSIGNMENT AND SUB-LICENSE.  Neither this Agreement nor any
of the rights,  interests,  options or  obligations  hereunder  may be assigned,
sublicensed  or  delegated  by either of the Parties  without the prior  written
consent of the other Party,  provided,  however, that either CollaGenex or Atrix
may, without such consent,  assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all of
its  business  pertaining  to this  Agreement,  or in the event of its merger or
consolidation  or  change in  control  or  similar  transaction.  Any  permitted
assignee  shall assume all  obligations of its assignor


                                       40
<PAGE>

under this  Agreement or that Party may assign or sublicense  any and all of its
rights,  interests,  options,  and delegate all  obligations  hereunder,  to any
Affiliate of such Party (and such  Affiliate  may further  assign or  sublicense
this  Agreement to such Party or any other  Affiliate of such Party) without the
consent of the other Party.  In the event of an  assignment  or sublicense to an
Affiliate,  the assigning Party shall guarantee the performance of such assignee
or sub-licensee.  The assignment or sublicense to an Affiliate shall not operate
to  discharge  the  assignor  or  sub-licensor  from any  obligation  under this
Agreement.  Any assignment which contravenes this Section 19.12 shall be void ab
initio.

     Section 19.13. EXPENSES. The Parties hereto shall each bear their own costs
and  expenses  (including  attorneys'  fees)  incurred  in  connection  with the
negotiation  and   preparation  of  this  Agreement  and   consummation  of  the
transactions contemplated hereby.

     Section  19.14.  BINDING  EFFECT.  This  Agreement,  and all of the  terms,
provisions and conditions  hereof,  shall be binding upon and shall inure to the
benefit of the Parties  hereto and their  respective  permitted  successors  and
assigns.

     Section  19.15.  GOVERNING  LAW.  This  Agreement  shall be  construed  and
interpreted accordance with the laws of the State of Delaware.

     Section 19.16.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All statements
contained   herein,   or  in  any  schedule   hereto,   shall  be  considered  a
representation,  warranty or covenant of the Party  making such  statement.  All
representations,  warranties,  covenants  contained  herein,  or in any schedule
hereto, shall survive the closing of this transaction.

     Section  19.17.  NO STRICT  CONSTRUCTION.  This Agreement has been prepared
jointly and shall not be strictly construed against either Party.

     Section  19.18.  INDEPENDENT  CONTRACTORS.  The status of the Parties under
this Agreement shall be that of independent contractor.  No Party shall have the
right to enter  into any  agreements  on behalf of the other  Party nor shall it
represent to any Person that it has such right or authority.



                                       41
<PAGE>

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


                             COLLAGENEX PHARMACEUTICALS, INC.


                             By: /s/ Brian M. Gallagher
                                 -----------------------
                                 Brian M. Gallagher, Ph.D., Chairman and Chief
                                 Executive Officer




                              ATRIX LABORATORIES, INC.


                              By: /s/ David R. Bethune
                                  --------------------
                                  David R. Bethune, Chairman and Chief Executive
                                  Officer






                                       42
<PAGE>




                                       A-1


                                    EXHIBIT A

                               ATRIX PATENT RIGHTS

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                                      A-1
<PAGE>



                                    EXHIBIT B

                        FORM OF CERTIFICATE OF COMPLIANCE


Issue Date:
            --------------------

                            CERTIFICATE OF COMPLIANCE

FOR
   -----------------------------------------------------------------------------
CUSTOMER
        ------------------------------------------------------------------------
         LOT NUMBER
                   -------------------------------------------------------------
FILL DATE                                         PREP/EX DATE
         -----------------------------------------            ------------------
DOSAGE
      --------------------------------------------------------------------------
QUANTITY OF RELEASABLE VIALS
                            ----------------------------------------------------

The batch  production  record for this product has been  reviewed for  accuracy,
completeness, and compliance with established written standard procedures and in
accordance with cGMP requirements. Any deviations/abnormal  occurrences from the
aforementioned  requirements have been appropriately  documented,  reviewed, and
approved.


Reviewed By:
         Batch Record Auditor

Date:
     ------------------------------------------

Approved By:
            -----------------------------------
       Acting Supervisor Manager, Documentation
Date:
     ------------------------------------------

cc: All Customers




                                      B-1
<PAGE>


                                    EXHIBIT C

                                 SPECIFICATIONS





                                      [**]



                                      C-1
<PAGE>



                                    EXHIBIT D

                             FORM OF STOCK PURCHASE







          [STOCK PURCHASE AGREEMENT FILED SEPARATELY AS EXHIBIT 10.2]





                                      D-1
<PAGE>


                                    EXHIBIT E

                                   ATRIX MARKS


                  Trademark Roster (01) (Grouped by Trademark)
<TABLE>
<CAPTION>
ATRIDOX

COUNTRY            CLASSES   APP. #       APP. DT        REG. #     REG. DATE   REGISTERED. OWNER             CURRENT STATUS
-------            -------   ------       -------        -------    ---------   -----------------             --------------
<S>                <C>       <C>          <C>            <C>        <C>         <C>                           <C>
Canada                       850,064      07/07/1997     530,394    21/07/2000  Block Drug Corporation*       Registered

United States      5         75080259     28/03/1996     2219251    19/01/1999  Block Drug Corporation*       Registered

ATRISORB

COUNTRY            CLASSES   APP. #       APP. DT        REG. #     REG. DATE   REGISTERED. OWNER             CURRENT STATUS
-------            -------   ------       -------        ------     ---------   -----------------             --------------

Canada                       824,209      25/09/1996     511,768    12/05/1999  Block Drug Corporation*       Registered

United States      10        75081223     29/03/1996     2135253    10/02/1998  Block Drug Corporation*       Registered

United States      5         74102606     02/10/1990     1912165    15/08/1995  Block Drug Corporation*       Sec. 8/15 Accepted
</TABLE>

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


     * On the Effective Date, Block will transfer and assign to Atrix all of its
     right,  title and  interest in these  trademarks.  Atrix will then file the
     appropriate  assignment form with United States Patent and Trademark office
     making Atrix the registered owner of these trademarks.


                                      E-1
<PAGE>



                                    EXHIBIT F

                   COLLAGENEX'S STANDARD OPERATING PROCEDURES



                    INFORMATION TO BE PROVIDED BY COLLAGENEX.


                                      F-1
<PAGE>


                                    EXHIBIT G

                          PRODUCT FIXED PRICE SCHEDULE

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                                      G-1