<PAGE>
                                                                   EXHIBIT 10.04

                   COLLABORATION, LICENSE AND SUPPLY AGREEMENT
                                     BETWEEN



                            ATRIX LABORATORIES, INC.

                                       AND

                            FUJISAWA HEALTHCARE, INC.













                             DATED: OCTOBER 15, 2001



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                                        TABLE OF CONTENTS

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

Article II COLLABORATION.........................................................................................12
   Section 2.01.   Objectives....................................................................................12
   Section 2.02.   Development Program...........................................................................12
   Section 2.03.   Atrix Obligations.............................................................................12
   Section 2.04.   Fujisawa Obligations..........................................................................13
   Section 2.05.   Availability of Resources; Cooperation........................................................13
   Section 2.06.   Joint Development Management Committee........................................................14
   Section 2.07.   Collaboration Guidelines......................................................................15
   Section 2.08.   Acne Product..................................................................................15
   Section 2.09.   New Indication................................................................................15
   Section 2.10.   Approval Process..............................................................................16

Article III LICENSE..............................................................................................16
   Section 3.01.   License Fee...................................................................................16
   Section 3.02.   License Terms.................................................................................16
   Section 3.03.   Trademarks....................................................................................17
   [                                                                                                            ]**

Article IV ADDITIONAL PAYMENTS...................................................................................18
   Section 4.01.   Research and Development Expenses.............................................................18
   Section 4.02.   Royalties.....................................................................................19
   Section 4.03.   License Fee for Product After Royalty Term....................................................20
   Section 4.04.   Product Milestone Payments....................................................................20
   Section 4.05.   Commercial Milestone Payments.................................................................20
   Section 4.06.   Payment of Royalties and Reports..............................................................21
   Section 4.07.   Non-Monetary Consideration....................................................................22

Article V COMMERCIALIZATION of the product.......................................................................22
   Section 5.01.   Fujisawa's Obligations........................................................................22

Article VI MANUFACTURE AND SUPPLY................................................................................24
   Section 6.01.   Agreement to Supply Product...................................................................24
   Section 6.02.   Manufacturing Specifications and Shelf Life...................................................24
   Section 6.03.   Atrix's Duties................................................................................25
   Section 6.04.   Second Manufacturing Source...................................................................26
   Section 6.05.   Failure to Supply.............................................................................27
   Section 6.06.   Allocation....................................................................................27
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Article VII PURCHASE AND SALE....................................................................................27
   Section 7.01.   Purchase Price and Payment....................................................................27
   Section 7.02.   Adjustment to Purchase Price/Audit............................................................28
   Section 7.03.   Labeling and Artwork..........................................................................28
   Section 7.04.   Purchase Forms................................................................................28
   Section 7.05.   Confirmation..................................................................................29
   Section 7.06.   Delivery......................................................................................29
   Section 7.07.   Forecasts and Orders..........................................................................29
   Section 7.08.   Professional Samples..........................................................................30

Article VIII WARRANTY, REJECTION AND INSPECTIONS.................................................................31
   Section 8.01.   Product Warranties............................................................................31
   Section 8.02.   Rejection of Product or Professional Samples for Failure to Conform to
                         Specifications..........................................................................31
   Section 8.03.   Fujisawa Inspections..........................................................................32

Article IX REGULATORY COMPLIANCE.................................................................................33
   Section 9.01.   Maintenance Of Marketing Authorizations.......................................................33
   Section 9.02.   Adverse Drug Event Reporting and Phase IV Surveillance........................................33
   Section 9.03.   Commercial Sale Testing And Reporting.........................................................34
   Section 9.04.   Assistance....................................................................................34
   Section 9.05.   Compliance....................................................................................34
   Section 9.06.   General Regulatory Matters....................................................................35

Article X PATENTS AND TRADEMARKS.................................................................................36
   Section 10.01.   Maintenance of Patents or Marks..............................................................36
   Section 10.02.   Cooperation..................................................................................36
   Section 10.03.   Atrix to Prosecute Infringement..............................................................36
   Section 10.04.   Infringement Claimed by Third Parties........................................................37

Article XI CONFIDENTIALITY.......................................................................................37
   Section 11.01.   Confidentiality..............................................................................37
   Section 11.02.   Publicity Review.............................................................................38

Article XII [                                                                ]**.................................38
   Section 12.01.   [                                                                                           ]**

Article XIII REPRESENTATIONS AND WARRANTIES......................................................................39
   Section 13.01.   Corporate Power..............................................................................39
   Section 13.02.   Due Authorization............................................................................39
   Section 13.03.   Binding Obligation...........................................................................39
   Section 13.04.   Ownership of Atrix Technology and Atrix Marks................................................39
   Section 13.05.   Patent Proceedings...........................................................................39
   Section 13.06.   Adverse Properties...........................................................................40
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   Section 13.07.   Preservation of Name and Reputation..........................................................40
   Section 13.08.   Debarment....................................................................................40
   Section 13.09.   Limitation on Warranties.....................................................................40
   Section 13.10.   Limitation of Liability......................................................................40

Article XIV INDEMNIFICATION and insurance........................................................................40
   Section 14.01.   Fujisawa Indemnified by Atrix................................................................40
   Section 14.02.   Atrix Indemnified by Fujisawa................................................................41
   Section 14.03.   Prompt Notice Required.......................................................................41
   Section 14.04.   Indemnitor May Settle........................................................................41
   Section 14.05.   Insurance....................................................................................42

Article XV ADDITIONAL COVENANTS OF THE PARTIES...................................................................42
   Section 15.01.   [                                                                                           ]**
   Section 15.02.   [                                                                                           ]**
   Section 15.03.   Limitation To The Territory..................................................................43
   Section 15.04.   Records and Audits...........................................................................43
   Section 15.05.   Marketing Expenses...........................................................................44
   Section 15.06.   Protection of the Marks......................................................................44
   Section 15.07.   Launch Quantities............................................................................44
   Section 15.08.   Further Actions..............................................................................45
   Section 15.09.   Inspections and Confidentiality of Third Parties.............................................45
   Section 15.10.   Licensed Technology..........................................................................45
   Section 15.11.   Equitable Relief.............................................................................45

Article XVI PRODUCT RECALL.......................................................................................46
   Section 16.01.   Product Recalls or Withdrawal................................................................46
   Section 16.02.   Recall Costs.................................................................................47
   Section 16.03.   Notification Of Complaints...................................................................47
   Section 16.04.   Notification Of Threatened Action............................................................47

Article XVII TERM AND TERMINATION................................................................................48
   Section 17.01.   Term.........................................................................................48
   Section 17.02.   Termination by Either Party..................................................................48
   Section 17.03.   Termination by Atrix.........................................................................48
   Section 17.04.   Termination by Fujisawa......................................................................48
   Section 17.05.   Effect of Termination........................................................................49
   Section 17.06.   Remedies.....................................................................................51
   Section 17.07.   License Following Expiration.................................................................51

Article XVIII DISPUTE RESOLUTION.................................................................................52
   Section 18.01.   Disputes.....................................................................................52
   Section 18.02.   Trial Without Jury...........................................................................52
   Section 18.03.   Performance to Continue......................................................................52
   Section 18.04.   Provisional Remedies.........................................................................52
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   Section 18.05.   Determination of Patents and Other Intellectual Property.....................................52

Article XIX MISCELLANEOUS........................................................................................53
   Section 19.01.   No-Solicitation..............................................................................53
   Section 19.02.   Assignment; Binding Effect...................................................................53
   Section 19.03.   Force Majeure................................................................................53
   Section 19.04.   Governing Law................................................................................53
   Section 19.05.   Waiver.......................................................................................54
   Section 19.06.   Severability.................................................................................54
   Section 19.07.   No Right to Use Names........................................................................54
   Section 19.08.   Notices......................................................................................54
   Section 19.09.   Independent Contractors......................................................................55
   Section 19.10.   Rules of Construction........................................................................55
   Section 19.11.   Entire Agreement; Amendment..................................................................55
   Section 19.12.   Counterparts; Facsimile......................................................................55

Exhibit A         Atrix Patent Rights...........................................................................A-1
Exhibit B         Development Program Outline...................................................................B-1
Exhibit C         Atrix Marks...................................................................................C-1
Exhibit D         Example of Atrix Manufacturing Cost Per Unit Determination....................................D-1
Exhibit E         Example of Adjustment to Purchase Price/Audit.................................................E-1
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                   COLLABORATION, LICENSE AND SUPPLY AGREEMENT

         This Collaboration, License and Supply Agreement (this "Agreement") is
made as of October 15, 2001 (the "Effective Date") by and between Atrix
Laboratories, Inc., a Delaware corporation having its offices at 2579 Midpoint
Drive, Fort Collins, CO, 80525-4417 ("Atrix"), and Fujisawa Healthcare, Inc., a
Delaware corporation having offices at Three Parkway North, Deerfield, IL
60015-2548 ("Fujisawa"). Atrix and Fujisawa are sometimes referred to
collectively herein as the "Parties" or singly as a "Party."

                                    RECITALS

         WHEREAS, Atrix possesses a proprietary solvent microparticle
("SMP(TM)") drug delivery technology and has substantial, resources, experience
and expertise in the discovery, design and development of proprietary drug
delivery systems for medical, dental and veterinary applications;

         WHEREAS, Fujisawa possesses substantial resources, experience and
expertise in the development, commercialization and marketing of pharmaceutical
products for dermatology applications;

         WHEREAS, Atrix wishes to grant to Fujisawa, and Fujisawa wishes to
obtain from Atrix, an exclusive license under the Atrix Technology to use,
market, advertise, promote, distribute, offer for sale, sell, export and import
the Product in the Territory for use in the Field on the terms and subject to
the conditions set forth herein; and

         WHEREAS, Fujisawa wishes Atrix to manufacture the Product to be sold in
the Territory by Fujisawa, subject to the terms and conditions herein.

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  (a) As used in this Agreement, the following terms shall have
         the meanings set forth below:

         "Acceptance for Filing" means Atrix's receipt of a letter issued by the
FDA indicating acceptance for filing of an NDA in the United States or
equivalent marketing application pursuant to Applicable Laws in other countries
in the Territory.

         "Acne Product" means []** and any other concentrations of the Product
that may be used for the treatment of acne vulgaris, depending on the decision
of the JDMC under Section 2.08(a).


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         [ ]**

         [ ]**

         "Act" means the Federal Food Drug and Cosmetic Act (21 U.S.C. Section
301 et seq.).

         "Affiliate" means an individual, trust, business trust, joint venture,
partnership, corporation, association or any other entity which owns, is owned
by or is under common ownership with, a Party. For the purposes of this
definition, the term "owns" (including, with correlative meanings, the terms
"owned by" and "under common ownership with") as used with respect to either
Party, shall mean the possession (directly or indirectly) of more than 50% of
the outstanding voting securities of a corporation or comparable equity interest
in any other type of entity.

         "Applicable Law(s)" means the Act, Regulations and all other applicable
laws, rules, regulations and guidelines within the Territory that apply to the
import, export, development, marketing, distribution or sale of the Product in
the Territory or the performance of either Party's obligations under this
Agreement (including disclosure obligations as required by the United States
Securities and Exchange Commission), to the extent applicable and relevant, and
including all cGMP or current Good Clinical Practices standards or similar
guidelines promulgated by the Competent Authorities, as well as U.S. export
control laws and the U.S. Foreign Corrupt Practices Act.

         "Approval Letter" means a letter issued by the FDA indicating approval
of a product for commercialization, as defined in 21 CFR Section 314.105.

         "A&S" means [ ]**

         "Atrix Billing Price/Unit" means [ ]**

         "Atrix Final Price/Unit" means [ ]** as adjusted pursuant to Section
7.02. (See Exhibits D and E for a further explanation).

         "Atrix Know-How" means any and all Know-How related to Atrix's
proprietary SMP(TM) technology or the Product and which is under the Control of
Atrix as of the Effective Date and any and all Improvements thereto, which is
not covered by the Atrix Patent Rights, but is necessary or useful to the use,
development, Manufacture, marketing, promotion, distribution, sale and/or
commercialization of the Product in the Territory for use in the Field.

         "Atrix Manufacturing Cost" means the actual cost of the Manufacture of
the Product by Atrix (including any subcontractor and Second Source) during each
calendar year during the Term, including the related quality assurance and
quality control activities as required by Applicable Laws, which actual cost
shall be determined in accordance with GAAP, and shall include direct labor,
direct material (including Raw Materials and Components), direct overhead (e.g.
depreciation of a packaging line solely dedicated to the Product) and the
allocable portion

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of the direct and indirect Manufacturing overhead directly attributable to the
Manufacture of the Product.

         The allocable portion of the manufacturing overhead shall be determined
by [ ]** The manufacturing overhead shall be allocated to the Product utilizing
an appropriate [ ]**

         Atrix Manufacturing Cost shall exclude selling, general and
administrative, research and development, interest expenses, any and all debt
service payments of Atrix, and any other costs not directly associated with the
Manufacture of the Product, other than direct and indirect manufacturing
overhead. The Parties agree that in no event shall Atrix Manufacturing Cost
include capital expenditures and improvements to or for Atrix's manufacturing
facility(ies) or those of the Second Source or any approved subcontractor,
except as directly or indirectly allocated through Manufacturing overhead.

         If any part of the Manufacturing is conducted by an approved
subcontractor, any Manufacturing costs incurred by such subcontractor and passed
on to FHI shall not exceed [    ]** of the Atrix Manufacturing Costs that would
have been incurred by Atrix if Atrix had conducted such part of the
Manufacturing.

         "Atrix Manufacturing Cost/Unit" shall be calculated on a
Product-by-Product basis by dividing actual Atrix Manufacturing Costs incurred
as set forth above by total units Manufactured during each calendar year during
the Term. []** does not []** the []** shall be []** Atrix Manufacturing
Cost/Unit []** Also, []** shall be subject []** during the period []** See
Exhibits D and E for a more detailed example.

         "Atrix Marks" means "SMP(TM)", "ATRISONE(TM)", and any New Trademark
and any and all additional trademarks selected by Atrix to describe the Atrix
Technology or the Product, alone or accompanied by any logo or design, service
marks, trade names and any foreign language equivalents in sound or meaning,
whether registered or not, associated therewith.

         "Atrix Patent Rights" or "Atrix Patent" means any and all Patent Rights
that claim Atrix's proprietary SMP(TM) technology or the Product which is under
the Control of Atrix as of the Effective Date and any and all Improvements
thereto, which are necessary or useful to the use, development, Manufacture,
marketing, promotion, distribution, sale and/or commercialization of the Product
in the Territory for use in the Field. The Atrix Patent Rights as of the
Effective Date are set forth on Exhibit A. Any Atrix Patent Rights after the
Effective Date shall be added to Exhibit A by the written mutual agreement of
the Parties.

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

         "Books and Records" means, in whatever media, any and all books and
records, reports and accounts in connection with or relative to the Atrix
Manufacturing Costs, Development Costs, Bulk Drug, Raw Materials and Components,
Products, and the Professional Samples, any costs Fujisawa or Atrix is obligated
to reimburse or pay to the other Party under this Agreement, Manufacturing
(including without limitation, yield reports and batch records), Testing,
Shipment, delivery or handling of the Bulk Drug, Raw Materials and Components,
the Professional

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Samples and/or the Product, production and quality control records, any
pre-clinical or clinical studies, as approved by the JDMC or as required by the
Competent Authorities as Phase IV commitments []** including any and all books,
records, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
and other graphic or written data generated in connection with the Development
Program []** as well as any other books and records as may be required from time
to time by Applicable Laws or this Agreement. Books and Records shall not
include any market research and competitive reports, marketing reports and data.

         "Bulk Drug" means Dapsone.

         "Business Day" means any day other than Saturday or Sunday and any day
other than a day on which banks in Chicago, Illinois and Denver, Colorado,
respectively, are required or authorized to be closed.

         "Certificate of Compliance" means the certificate of compliance in the
form mutually agreed to by the Parties and which shall contain the following
information (a) Fujisawa's product number(s); (b) description of the Product;
(c) lot number(s); (d) Product tested; (e) Specification limits; (f) Test
results for each lot delivered; (g) date of Manufacture; and (h) date of
release.

         "CFR" means the United States Code of Federal Regulations.

         "cGMP" means current good manufacturing practices as defined in 21 CFR
Section 110 et seq. and established under the Act and applicable Regulations.

         "Collaboration" means the activities of the Parties carried out in
performance of, and the relationship between the Parties established by this
Agreement.

         "Commercially Reasonable Efforts" shall mean, except as otherwise
explicitly set forth in this Agreement, those efforts consistent with the
exercise of prudent scientific and business judgement, as applied to products
having comparable market potential within the relevant products lines of that
Party and otherwise in accordance with generally accepted practices in the
pharmaceutical industry. "Comparable market potential" shall be fairly
determined by a Party in good faith and without limitation may be based upon
market size, price, competition, patent rights, product liability issues and
general marketing parameters.

         "Competent Authorities" means collectively the entities in each country
in the Territory responsible for the regulation of medicinal products intended
for human use, including without limitation the FDA, or any other successor
entities thereto.

         "Competitive Product" means any topical Dapsone product for any
indication for use in the Field.

         "Confidential Information" means any and all information (including
information related to the Atrix Technology) of a Party relating to any trade
secret, Specifications, Testing, Packaging, Labeling, Atrix Manufacturing Cost,
Development Costs, Books and Records, Available Information, process, method,
compound, research project, work in process, future development, scientific,
engineering, Manufacturing, marketing, sales, business plan, financial or

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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.

         "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.

         "Dapsone" means 4,4' diaminodiphenylsulfone and all salts, polymorphs
and isomers thereof.

         "Development Costs" means the directly allocable out-of-pocket and
internal costs of research and development (but not capital costs) incurred by
either Party in conducting the respective work under this Agreement and the
Development Program including, without limitation, costs associated with
preparation and filing of submissions for Governmental Approvals for the
Products, filing fees paid to Competent Authorities, and []** applicable to the
Product. The Parties shall keep such Books and Records as necessary to document
the inclusion of such out-of-pocket and internal costs within the Development
Costs including time sheets, invoices, etc.

         []**

         "Development Program Outline" means the outline and plan for the
Development Program for the Acne Product, including the [],** as set forth in
Exhibit B.

         "FDA" means the United States Food and Drug Administration, or any
successor entity thereto.

         "Field" means the topical treatment of skin in humans.


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         "First Commercial Sale" means (a) with respect to a country in the
Territory, the first sale for use, consumption or resale of the Product by
Fujisawa or its Affiliates in such country (excluding any sales for clinical
trials or sales of Professional Samples) and (b) with respect to the Territory,
the First Commercial Sale in any country within the Territory. []** In each
case, a sale to an Affiliate shall not constitute a First Commercial Sale unless
the Affiliate is the end user of the Product.

         "GAAP" means United States generally accepted accounting principles,
consistently applied.

         "Good Clinical Practices" means good clinical practices as defined in
21 CFR Section 50 et seq. and Section 312 et seq.

         "Governmental Approval(s)" means all permits, licenses and
authorizations, including Marketing Authorizations required by any Competent
Authority as a prerequisite to the manufacturing, packaging, marketing and
selling of the Product or the Units in the Territory; excluding however import
permits.

         "Improvements" means any and all Know-How, developments, enhancements,
modifications, inventions or discoveries in the Field relating to the SMP(TM)
technology or the Product for use in the Field and under the Control of Atrix or
developed, created or acquired by Atrix, at any time during the Term, whether
patentable or not, and shall include, but not be limited to, developments,
inventions or discoveries intended to enhance the safety or efficacy of the
Product and all intellectual property rights related thereto, in each case
limited to the Product in the Field.

         []**

         "Know-How" means any and all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods, formulas,
protocols, any and all pre-clinical and clinical data, and information, whether
or not patentable, which are not generally publicly known, including but not
limited to any and all chemical, biochemical, toxicological, and scientific
research information, whether in written, graphic or video form or any other
form or format.

         "Labeled" or "Labeling" means any and all labels and other written,
printed or graphic matter, including artwork, upon (a) the Product or any
container utilized with the Product or (b) Packaging.

         "Launch Quantity" means a quantity of Product determined by Fujisawa to
be adequate to meet the requirements set forth for the first six months of the
Initial Forecast.

         "Manufacture(d)," "Manufacturing" or "Manufacturing Process" means the
storage, handling, assembly, production, processing, Labeling, Testing,
disposition and Packaging of a Product, Bulk Drug, Raw Materials and Components,
and/or a Professional Sample, in accordance with this Agreement and Applicable
Laws.


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         "Marketing Authorization" means all necessary and appropriate
regulatory approvals, including Pricing and Reimbursement Approvals, where
applicable, to allow the Product to be marketed and sold in a particular country
in the Territory.

         []** means []** which among other things, []**

         []** means []** for the purpose of []**

         []** means []** for the purpose of []**

         "NDA" means a New Drug Application, and all amendments and supplements
thereto, for regulatory approval by the FDA as defined in 21 CFR Section 314.5
et seq., to commence commercial sale of a Product in the United States.

         "Net Sales" means collectively, the gross amount invoiced by Fujisawa
or its Affiliates []** sales of the Product to a Third Party or Parties, less
the following as they pertain to the Product:

                  (a) any and all []** of a Product []** which are []** in
         accordance with []** and []** including without limitation []**

                  (b) []** applicable to sales of the Product []**

                      The Product shall be considered "sold" when billed out or
         invoiced.

                      No deductions shall be made from Net Sales for items (a)
         or (b) above except to the extent of amounts for such items actually
         granted or paid with respect to the Product; provided that a Party may
         reconcile such amounts within a given calendar quarter.

                      No deductions shall be made from Net Sales for commissions
         paid to individuals whether they are with independent sales agencies or
         are regularly employed by a Party or its Affiliates or sublicensees and
         are on its or their payroll, or for the cost of collections.

                      Components of Net Sales shall be determined in the
         ordinary course of business using the accrual method of accounting in
         accordance with GAAP, provided that a Party may reconcile such amounts
         within a given calendar quarter.

                      In the event a Party transfers 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 a Party
         in an arm's length transaction with similar customers.

         "Packaging" means any and all containers, cartons, shipping cases,
inserts, package inserts or other similar material used in packaging or
accompanying the Product.

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         "Packaging List" means a list accompanying every Shipment of Product
which contains (a) Fujisawa's product number(s); (b) a description of the
Product; (c) the quantity with unit of measure; (d) lot number(s); (e) the
number of pallets in a particular Shipment; and (f) the Product expiration date.

         "Patent Rights" means any and 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 III Study" means a well-controlled study of sufficient size and
appropriate design to demonstrate the safety and efficacy of the Product for its
intended use.

         "Phase IV" means, as applicable, a study or program designed to obtain
additional safety or efficacy data, support for the Product or to determine
effectiveness for labeled indications under conditions of widespread usage,
which is commenced after Governmental Approval of the Product in the Territory
or any such study or program required by the FDA and/or any other Competent
Authority.

         "Pricing and Reimbursement Approvals" means any pricing and
reimbursement approvals which must be obtained before placing the Product on the
market in any country 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" means, individually or collectively, as the context requires,
the formulation comprised of Dapsone in an SMP(TM) delivery system, including
the Acne Product and any other current and future indication(s) []** for all
concentrations, sizes of volume, configurations and combinations of Dapsone in
an SMP(TM) delivery system for use in the Field.

         "Professional Samples" means Product that is used to demonstrate the
manner in which the Product is prepared and used, and is Labeled "professional
sample for trial purposes only, not for resale."

         "Raw Materials and Components" means any and all raw materials and
components (such as chemicals, containers, closures, Packaging, Labeling, etc.)
other than the Bulk Drug needed by Atrix to Manufacture, supply and sell the
Product to Fujisawa according to the terms and conditions of this Agreement.

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         "Regulations" means regulations, statutes, rules, guidelines and
procedures promulgated by the FDA or other Competent Authority pursuant to the
Act or other law, including without limitation, those regulations currently
contained in Title 21 of the CFR.

         "Royalty Term" means the period of time commencing on the First
Commercial Sale of a Product in a country in the Territory and ending on the
expiration of the last to expire of the Atrix Patent Rights containing Valid
Claims covering such Product in such country in the Territory; []** The Royalty
Term shall apply on a Product-by-Product and country-by-country basis.

         "Shipment," "Ship" or "Shipped" means each individual group of Product
received by Fujisawa from Atrix or the Second Source, as applicable.

         "SMP(TM) technology" or "SMP(TM) delivery system" means a technology
and delivery system consisting of a combination of a dissolved drug with a
microparticle suspension of the drug to allow a controlled amount of the
dissolved drug to permeate the epidermal layer of the skin. The SMP(TM)
technology includes, but is not limited to, topical formulations containing
Dapsone.

         "Specifications" means the specifications for the Product, Bulk Drug,
Labeling, Packaging and Raw Materials and Components, respectively, as mutually
agreed to by the Parties.

         "Territory" means the United States, Canada and Mexico, except as
otherwise expressly provided herein.

         "Test" or "Testing" means any inspection, examination, testing or
release by manufacturing or quality control personnel of any Bulk Drug, Raw
Materials and Components, work-in-progress and/or Product.

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

         []** means []** obtained by []** as determined by []** agreed to by the
Parties []** BY []** of the Acne Product []** as determined by []** agreed to by
the Parties.

         []** means []** for which []**

         []** means []** in accordance with and pursuant to []**

         "Unit" means the Product currently anticipated to be packaged in a []**
(or other sizes designated by Fujisawa) excluding Professional Samples. The
trade or sample package may be changed or reformulated by Atrix and Fujisawa
from time to time and the term Unit shall refer to the Product in such changed
or reformulated package.

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         "U.S." or the "United States" means the 50 states, the District of
Columbia, all territories, possession and commonwealths of the United States,
Puerto Rico, Guam and the U.S. Virgin Islands.

         "Valid Claim" means a claim of an issued and unexpired Atrix Patent
that, with respect to a specific country in the Territory, (a) has not been
revoked, declared unenforceable or unpatentable, or held invalid by a court or
other governmental agency of competent jurisdiction that is unappealable or
unappealed within the time allowed for appeal, (b) has not been admitted to be
rendered invalid or unenforceable through reissue, disclaimer or otherwise, and
(c) has not been finally cancelled, withdrawn, abandoned or rejected by any
governmental agency of competent jurisdiction.

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

<Table>
<S>                                                                                                 <C>
         ADE........................................................................................Section 9.02(a)
         Additional Amount.............................................................................Section 7.01
         Allowable Amount...........................................................................Section 7.07(b)
         []**
         Agreement.........................................................................................Preamble
         Atrix.............................................................................................Preamble
         Available Information......................................................................Section 2.09(a)
         Commercial Milestone..........................................................................Section 4.05
         Development Program...........................................................................Section 2.02
         Dispute......................................................................................Section 18.01
         Disputed Amount...............................................................................Section 7.01
         []**
         Effective Date....................................................................................Preamble
         5.01 Date..................................................................................Section 5.01(b)
         Force Majeure................................................................................Section 19.03
         Fujisawa..........................................................................................Preamble
         Indemnitee...................................................................................Section 14.03
         Indemnitor...................................................................................Section 14.03
         Independent Panel.........................................................................Section 17.04(d)
         Initial Forecast...........................................................................Section 7.07(a)
         Initiating Group.............................................................................Section 19.01
         Initiator..................................................................................Section 2.10(a)
         Inspection Notice.............................................................................Section 8.03
         JDMC.......................................................................................Section 2.06(a)
         []**
         License.......................................................................................Section 3.02
         Loss.........................................................................................Section 14.01
         Modification...............................................................................Section 6.03(j)
         NDA Decision Date..........................................................................Section 2.08(a)
         []**
</Table>


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<Table>
<S>                                                                                                <C>
         New Indication.............................................................................Section 2.09(a)
         New Trademark..............................................................................Section 5.01(c)
         []**
         []**
         Notice.....................................................................................Section 2.09(a)
         Other Group..................................................................................Section 19.01
         Parties...........................................................................................Preamble
         Party.............................................................................................Preamble
         Promotional Material.......................................................................Section 7.03(a)
         Purchase Order.............................................................................Section 7.07(c)
         Recall....................................................................................Section 16.01(c)
         Receiving Party............................................................................Section 4.06(d)
         Recipient..................................................................................Section 2.10(a)
         Representatives...........................................................................Section 11.01(c)
         []**
         ROI........................................................................................Section 2.09(a)
         Rolling Forecast...........................................................................Section 7.07(b)
         Royalty Rates..............................................................................Section 4.02(b)
         Royalty Statement..........................................................................Section 4.06(a)
         Second Source.................................................................................Section 6.04
         Second 17.04 Notice.......................................................................Section 17.04(d)
         SMP(TM)...........................................................................................Recitals
         SOP........................................................................................Section 9.02(c)
         Term.........................................................................................Section 17.01
         []**
</Table>



                  (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)
         "including" shall mean "including, without limitation"; (iv) references
         to Applicable Laws shall mean such Applicable Laws in effect during the
         Term (taking into account any amendments thereto effective at such time
         without regard to whether such amendments were enacted or adopted after
         the Effective Date); (v) references to "$" or "dollars" shall mean the
         lawful currency of the United States; (vi) 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); (vii) the meaning of
         the terms "domestic" and "foreign" shall be determined by reference to
         the United States; (viii) references to "days" shall mean calendar
         days; (ix) 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); (x) days, Business Days and
         times of day shall be determined by reference to local time in Denver,
         Colorado; (xi) the English language version of this Agreement shall
         govern all questions of interpretation relating to this Agreement,

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         notwithstanding that this Agreement may have been translated into, and
         executed in, other languages; and (xii) the terms "Product" and
         "Products" shall refer to each individual Product and all Products
         collectively, unless the context clearly indicates otherwise.

                                   ARTICLE II

                                  COLLABORATION

         Section 2.01. OBJECTIVES. Pursuant to the Development Program and under
the oversight of the JDMC, Atrix and Fujisawa shall conduct research and
development activities on a collaborative basis using the Atrix Technology to
develop the Product with an initial indication for the topical treatment of acne
and such additional indications as may be approved by the JDMC in accordance
with Section 2.09(a). Each Party shall use Commercially Reasonable Efforts to
carry out their respective responsibilities under this Agreement to develop,
Manufacture and market the Product.

         Section 2.02. DEVELOPMENT PROGRAM. Atrix and Fujisawa shall utilize the
Atrix Technology to conduct research and development activities necessary to
develop a Product with an initial indication for the topical treatment of acne
pursuant to a detailed development program (the "Development Program") approved
and adopted by the JDMC. The Parties agree that the Development Program for the
Acne Product shall be consistent with the intent expressed in the Development
Program Outline. []** shall include []** but shall not include []** The
Development Program can be modified during the Term only by the JDMC. The
Development Program and any changes to the Development Program, each as approved
or adopted in accordance with this Section 2.02 and Section 2.06, shall be as
adopted by the JDMC, and the Development Program and any amendments or changes
thereto, shall be deemed to and shall be incorporated into this Agreement as
though fully set forth herein and without requiring a formal amendment to this
Agreement; []** may only be []** and the []** shall not be []** unless mutually
agreed to by the Parties.

         Section 2.03. ATRIX OBLIGATIONS.

                  (a) Atrix will use Commercially Reasonable Efforts to timely
         complete in accordance with the timelines and other terms and
         conditions of the Development Program: (i) validation, formulation and
         development of the Product, (ii) animal toxicology and other
         pre-clinical studies required for commercial launch of the Product,
         (iii) scale-up and initial and ongoing stability studies in primary
         container/closure package system(s), (iv) Phase II study and/or Phase
         III Study, including the [];** (v) Phase IV commitments mandated by
         Competent Authorities, and (vi) all other tasks supporting the final
         formulation of the Product, including other information requested by
         the Competent Authorities, []** subject to reimbursement by Fujisawa as
         provided in Sections 2.04(a) and 4.01(a) and (b) []** Atrix shall
         promptly advise Fujisawa of any issues that materially or adversely
         affect Atrix's ability to develop the Product. In such


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<PAGE>
         event, senior executives of Fujisawa and Atrix shall meet and in good
         faith discuss what actions should be taken in light of such issues.

                  (b) Atrix shall use Commercially Reasonable Efforts to timely
         secure and maintain any and all Governmental Approvals in the Territory
         (except for those Governmental Approvals that are the responsibility of
         Fujisawa under Section 9.05(a)) in accordance with the timelines and
         other terms and provisions of the Development Program and shall own and
         maintain in good standing, []** all Governmental Approvals (except for
         those Governmental Approvals that are the responsibility of Fujisawa
         under Section 9.05(a)) and related information as provided herein.

                  (c) Atrix shall maintain Books and Records in connection with
         the Development Program and in accordance with Applicable Laws and
         otherwise in sufficient detail and in good scientific manner
         appropriate for patent and regulatory purposes, including to obtain
         Governmental Approvals, and shall properly reflect all work done and
         results achieved in the performance of the Development Program.
         Fujisawa has the right to inspect such Books and Records upon request
         and during normal business hours, and Atrix shall provide copies of
         such Books and Records directly related to the Product to Fujisawa
         (excluding financial information which may only be reviewed by
         Fujisawa's independent public accountants in accordance with Section
         15.04).

                  (d) In the event the JDMC approves a New Indication and elects
         to adopt []** Development Program in accordance with Section 2.09(a),
         Atrix shall use Commercially Reasonable Efforts to conduct each of the
         foregoing activities with respect to such []** Development Program.
         Atrix shall conduct clinical studies for the Product in material
         compliance with Applicable Laws.

                  (e) During the Term, []** and provide []**

         Section 2.04. FUJISAWA OBLIGATIONS.

                  (a) Fujisawa will use Commercially Reasonable Efforts to
         timely complete[]** (i) all Phase IV studies, except for those Phase IV
         Studies mandated by the Competent Authorities, []** (ii) all []** and
         (iii) subject to Atrix obtaining the required Governmental Approvals
         under Section 2.03(b), commercialization of the Product (including all
         sales and marketing activities, and market research, related to the
         Product).

                  (b) In the event []** Fujisawa []** with respect to []** in
         accordance with Applicable Laws []** Fujisawa shall []** Atrix []**
         only to the extent []** and Fujisawa []** provided, however, that []**
         including without limitation []** in the event that []**
         Notwithstanding, anything to the contrary in this Section 2.04(b), in
         the event []** in the case where Atrix []** in the case where Atrix
         []** upon receipt of []** Fujisawa shall []**

         Section 2.05. AVAILABILITY OF RESOURCES; COOPERATION. Each Party shall
maintain laboratories, offices or other facilities reasonably necessary to carry
out the activities to be

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performed by such Party pursuant to the Development Program. Upon reasonable
advance notice, each Party agrees to make its employees and non-employee
consultants reasonably available at their respective places of employment to
consult with the other Party on issues arising during the Collaboration and in
connection with any request from any Competent Authority, including regulatory,
scientific, technical and clinical testing issues.

         Section 2.06. JOINT DEVELOPMENT MANAGEMENT COMMITTEE.

                  (a) Creation of JDMC. Within 10 Business Days after the
         Effective Date, the Parties will form a Joint Development Management
         Committee ("JDMC") comprised of three representatives of each of Atrix
         and Fujisawa. Each Party may change its representatives on the JDMC at
         any time upon written notice to the other Party. []** shall select one
         member of the JDMC to act as the chairperson of the JDMC and []** shall
         select one member of the JDMC to act as the secretary of the JDMC.
         Except as provided in Section 2.02, the JDMC shall be responsible for
         (i) developing and overseeing the Development Program, (ii) making all
         decisions related to development, clinical trials and budgets in
         connection with development of the Product and/or the Development
         Program, (iii) managing the ongoing research conducted under the
         Development Program, (iv) approving New Indication(s) in accordance
         with Section 2.09(a), and (v) monitoring the progress and results of
         such work, all based on the principles of prompt, diligent and
         commercially reasonable development of the Products consistent with
         generally accepted practices in the pharmaceutical industry. In
         addition, for each New Indication approved by the JDMC under Section
         2.09(a), and where the JDMC has elected to proceed with [],** such []**
         Program shall be developed and approved by and under the oversight of
         the JDMC. []** The JDMC will also be responsible for overseeing any
         Phase IV commitments required by the Competent Authorities.

                  (b) Meetings of the JDMC. The JDMC shall meet on a quarterly
         basis or at such other frequency and at such time and place as agreed
         to by the members of the JDMC or upon the request of either Party.
         Within 15 days after each meeting, the JDMC secretary will provide the
         Parties with a written report describing, in reasonable detail, the
         status of the Development Program, a summary of the results and
         progress to date, the issues requiring resolution, clinical and
         regulatory efforts with respect to the Product []** and the agreed
         resolution of previously reported issues. Final minutes shall be
         approved by the Parties. A reasonable number of additional
         representatives of a Party may attend meetings of the JDMC in a
         non-voting observer capacity.

                  (c) Decisions of the JDMC. A quorum of the JDMC shall be
         deemed to be present at any meeting of the JDMC if at least two JDMC
         members or their designees of each Party are present at such meeting in
         person or by telephone. Subject to Section 2.06(d), if a quorum exists
         at any meeting, a majority vote of the members of the JDMC present at
         such meeting is required to take any action on behalf of the JDMC;
         provided that the affirmative vote of at least one member of each of
         Atrix and Fujisawa shall be required to take any such action.

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                  (d) Deadlock. If the JDMC is unable to decide or resolve an
         issue for which it has responsibility, the issue shall be submitted to
         the Chief Executive Officers, or their designees, of Atrix and
         Fujisawa. If the Chief Executive Officers, or their designees, of Atrix
         and Fujisawa are unable to resolve the issue within 10 days after being
         requested to do so, (or such longer period of time as mutually agreed
         to by the Parties in writing) then, notwithstanding anything to the
         contrary contained in this Agreement, []** and such []** shall be
         binding upon the Parties.

                  (e) Limitation of Powers. The JDMC shall not have the right to
         amend or interpret this Agreement. Issues regarding the interpretation
         of this Agreement shall be referred to the respective Chief Executive
         Officers of each Party in accordance with Section 18.01. The actions of
         the JDMC shall not substitute for either Party's ability to exercise
         any right set forth herein, nor excuse the performance of any
         obligation set forth herein.

                  (f) Liaisons. Each Party will designate an individual to serve
         as the liaison between the Parties to undertake and coordinate any
         day-to-day communications as may be required between the Parties
         relating to their respective activities under this Agreement. Each
         Party may change such liaison from time to time during the Term upon
         written notice thereof to the other Party.

         Section 2.07. COLLABORATION GUIDELINES. In all matters related to the
Collaboration, the Parties shall strive to balance as best they can the
legitimate interests and concerns of the Parties and to realize the economic
potential of the Products.

         Section 2.08. ACNE PRODUCT.

                  (a) []** the JDMC []** Such []** shall be based on []** and
         shall be made []** in accordance with generally accepted practices []**

                  (b) The objective of the Parties is that []** provided that
         Fujisawa []** If Atrix []** AND []** the JDMC, then Fujisawa shall []**
         If Fujisawa []** then the []** If Fujisawa elects []** it shall []**
         and Atrix shall []**

         Section 2.09. NEW INDICATION.

                  (a) Approval Process for New Indication. If either Atrix or
         Fujisawa desires to develop an additional indication or use for the
         Product in the Field (in either case, a "New Indication"), Atrix or
         Fujisawa, as the case may be, shall so inform the JDMC by written
         notice (the "Notice"). The Notice shall include any and all technical,
         scientific and commercial information reasonably available to Atrix or
         Fujisawa, as the case may be, regarding such New Indication, including
         a Party's reasonable estimate as to the likelihood of FDA approval, the
         estimated return on investment ("ROI") of the New Indication for both
         Atrix and Fujisawa and a proposed budget for the New Indication, which
         budget shall be prepared in accordance with generally accepted
         practices in the pharmaceutical industry (any and all such information
         shall be referred to as "Available Information"). Within []** after the
         JDMC's receipt of the Notice and Available Information, the JDMC shall
         decide whether or not to pursue development and


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         commercialization of the New Indication based on, among other things,
         market research, due diligence, financial analysis and available patent
         protection for the New Indication. If the JDMC []** the JDMC shall []**
         The JDMC will consider []** among other things, []** and a []** among
         other things, []** A []** shall be []** and at []**

                  (b) []** If the JDMC elects not to pursue commercialization of
         a New Indication []** within []** after its receipt of the Notice and
         Available Information or at any time thereafter, []** such New
         Indication []** and []** the JDMC []** provided that []** the JDMC
         shall be []** and []** and which []** shall be provided []** provided
         that if Fujisawa []** Fujisawa shall be []** Atrix acknowledges that
         []** if Fujisawa []** the Acne Product []** the Acne Product, []** The
         Parties acknowledge and agree that []** for which []** shall not be
         []** The Parties also acknowledge and agree that []** shall be
         considered []**

                  []**

         Section 2.10. APPROVAL PROCESS. Except as otherwise explicitly set
forth in this Agreement, where either Fujisawa or Atrix desires or is required
under this Agreement to seek the approval of the other Party hereunder, such
approval shall be sought in accordance with the provisions of this Section 2.10
as follows:

                  (a) The Party seeking approval (the "Initiator") shall provide
         the other Party (the "Recipient") with written notice giving details as
         appropriate for the matter for which such approval is sought.

                  (b) The Recipient shall then, within thirty calendar days of
         such notice, provide the Initiator written approval or disapproval with
         respect to the matter.

                  (c) In the event that the Recipient fails to respond to such
         notice within such thirty calendar days, the Recipient shall be deemed
         to have approved the matter for which such approval was sought, to the
         extent specifically sought in such notice.

                                  ARTICLE III

                                    LICENSE

         Section 3.01. LICENSE FEE. In partial consideration for the licenses
granted under Sections 3.02 and 3.03, Fujisawa shall pay to Atrix a one-time,
non-refundable license fee equal to []** on the Effective Date by wire transfer
of immediately available funds to an account designated in writing by Atrix to
Fujisawa prior to the Effective Date.

         Section 3.02. LICENSE TERMS. The terms and conditions of the exclusive
license (the "License") granted to Fujisawa shall be as follows:

                  (a) License Grant. Subject to the terms and conditions of this
         Agreement, Atrix hereby grants to Fujisawa an exclusive royalty-bearing
         license under the Atrix


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<PAGE>


         Technology to use, develop, market, advertise, promote, distribute,
         offer for sale, sell, export and import, but not Manufacture, the
         Product in the Territory for use in the Field, without the right to
         sublicense; provided Fujisawa shall have the right to grant a
         sublicense or otherwise enter into a marketing agreement with respect
         to the Product for Mexico and/or Canada, [
                                                       ]**; provided further
         that []** shall not be required with respect to a sublicense granted to
         Fujisawa Canada, Inc. Any Affiliate and/or sublicensee shall agree to
         be bound by the terms and conditions of this Agreement to the extent
         applicable. Fujisawa shall provide Atrix with a copy of such final
         sublicense or marketing agreement. This exclusive license can only be
         transferred by Fujisawa on the basis set forth in Section 19.02.

                  (b) Reservation of Rights. Fujisawa acknowledges that it shall
         have no right, title or interest in or to the Atrix Technology except
         to the extent set forth in the license granted to Fujisawa under
         Section 3.02(a) and Atrix reserves all rights to use the Atrix
         Technology except as otherwise expressly granted to Fujisawa pursuant
         to this Agreement. Nothing in this Agreement shall be construed to
         grant Fujisawa any rights or license to any intellectual property of
         Atrix other than as expressly set forth in Section 3.02(a).

                  (c) License Termination. Subject to Force Majeure, Fujisawa
         agrees to use Commercially Reasonable Efforts to begin distribution and
         marketing of a Product in each country in the Territory as soon as
         practicable, but in no event later than (i)[]** following receipt of
         written notice from Atrix that Governmental Approval has been received
         for such country []** for such Product []** following receipt of
         written notice from Atrix that Governmental Approval has been received
         for such country; provided that in such case Atrix has available Launch
         Quantities for such Product (excluding any failure caused by Fujisawa's
         non-compliance with Sections 7.07(a) and 15.07(b)). []** the Product
         []** then the []** Atrix shall have []** under this Agreement []** and
         []** for such Product.

         Section 3.03. TRADEMARKS.

                  (a) Subject to the terms and conditions of this Agreement,
         Atrix hereby grants to Fujisawa an exclusive, royalty-free license in
         the Field to use the Atrix Marks solely in connection with the use,
         promotion, marketing, distribution, offer for sale and sell of the
         Product, on a Product-by-Product and country-by country basis, in the
         Territory during the Royalty Term. After the expiration of the Royalty
         Term, such license shall continue for an additional []** years;
         provided that Fujisawa continues to purchase []** of its Product
         requirements from Atrix, or a Second Source if Atrix cannot supply []**
         of Fujisawa's Product requirements, meeting the Specifications,
         Government Approvals and Applicable Laws.

                  (b) Fujisawa acknowledges that it shall have no right, title
         or interest in or to the Atrix Marks except to the extent set forth in
         the license granted to Fujisawa under Section 3.03(a) and Atrix
         reserves all rights to use the Atrix Marks except as otherwise
         expressly granted to Fujisawa pursuant to this Agreement. Fujisawa
         shall use the Atrix Marks as


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<PAGE>


         depicted on Exhibit C or otherwise in the exact form designated by
         Atrix, including the "(R)" symbol or "(TM)" symbol, as applicable. 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 3.04. LICENSE TO THIRD PARTIES. Subject to the terms and
conditions of this Agreement, Atrix shall be free to license the Atrix
Technology to Third Parties to use, develop, market, advertise, promote,
distribute, offer for sale, Manufacture, sell, export and import the Product
outside the Territory for use in the Field. []** under this Agreement []** Atrix
agrees []** with respect to []** if []** Atrix will []** In no event, will Atrix
[]** In addition, []** shall be entitled to []** shall be []** pursuant to this
Agreement []** which was approved by Atrix []** in connection with []**

                                   ARTICLE IV

                               ADDITIONAL PAYMENTS

         Section 4.01. RESEARCH AND DEVELOPMENT EXPENSES.

                  (a) Fujisawa shall reimburse Atrix for []** of all Development
         Costs incurred by Atrix after []** If Fujisawa []** then Atrix shall
         []**

                  (b) Atrix shall []** provided, however, that if []** then
         Fujisawa shall []** provided []**

                  (c) Fujisawa shall reimburse Atrix for []** of all Development
         Costs incurred by Atrix within 30 days of its receipt of a reasonably
         detailed invoice setting forth such costs and expenses that have been
         incurred in accordance with this Agreement, the JDMC approved
         Development Program or as approved by the JDMC.

                  (d) Notwithstanding anything to the contrary contained in this
         Agreement, []** shall not []**

                      (i) with respect to the Acne Product, []** shall be []**

                      (ii) with respect to any New Indication []** shall be []**

         In the event the JDMC []** then Fujisawa shall []** and Fujisawa shall
         []** until []** In the event Fujisawa []** the []** shall be []**

                  (e) []** the Parties acknowledge and agree that []** do not
         []**


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         Section 4.02. ROYALTIES. During the Royalty Term, Fujisawa shall owe
and pay to Atrix a royalty based on the aggregate Net Sales during each calendar
year on a Product-by-Product and country-by-country basis as follows:

                  (a) Royalty for Product during Royalty Term:

                      (i)   for Products sold in the United States:

                            (A) []** of the first []** of Net Sales of the
                      Product during a calendar year;

                            (B) []** of Net Sales of the Product in excess of
                      []** but less than or equal to []** during a calendar
                      year; and

                            (C) []** of Net Sales of the Product in excess of
                      []** during a calendar year.

                      (ii)  for Products sold in Mexico:

                            (A) []** of the first []** of Net Sales of the
                      Product  during a calendar year;

                            (B) []** of Net Sales of the Product in excess of
                      []** but less than or equal to []** during a calendar
                      year; and

                            (C) []** of Net Sales of the Product in excess of
                      []** during a calendar year.

                      (iii) for Products sold in Canada:

                            (A) []** of the first []** of Net Sales of the
                      Product during a calendar year;

                            (B) []** of Net Sales of the Product in excess of
                      []** but less than or equal to $10,000,000 during a
                      calendar year; and

                            (C) []** of Net Sales of the Product in excess of
                      []** during a calendar year.

                  (b) Reduction in Royalty Rates for Third Party Products.
         Notwithstanding the provisions of Section 4.02(a), the royalty rates
         for a country in the Territory as set forth in Section 4.02(a) (the
         "Royalty Rates") shall be subject to reduction on a country-by-country
         and Product-by-Product basis as follows:

                           (i) []** the Royalty Rates []** shall be reduced []**
                  At the end of []** the Royalty Rates []** shall be calculated
                  []** as applicable []** reduction in the Royalty Rates []**
                  reduction in the Royalty Rates []** and []** reduction in the
                  Royalty Rates []**


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                           (ii) []** the Royalty Rates []** shall be reduced
                  []** At the end of []** the Royalty Rates []** shall be
                  reduced []** as applicable []** reduction in the Royalty Rates
                  []** reduction in the Royalty Rates []** and []** reduction in
                  the Royalty Rates []** reduction in the Royalty Rates []**

                           (iii) []** the Royalty Rates []** For example, (A) if
                  []** shall control []** (B) if []** shall apply []** and (C)
                  if []** the Royalty Rates []** shall apply []**

                           (iv) In the event that the Royalty Rates []** are
                  reduced []** agrees to []** the royalty payments []**
                  provided, however, that []** for a period of []** after the
                  date giving rise to such obligations []**

                  (c) Other Reductions in Royalty Rates. With respect to a
         country in the Territory in which a patent has not been issued at the
         time of the First Commercial Sale in that country, the Royalty Rates
         that would otherwise be in effect from time to time for such country
         under Sections 4.02(a) and/or (b), shall be reduced by []** in that
         country until such time, if ever, during the Royalty Term that a Valid
         Claim exists in such country, in which case the Royalty Rates for such
         country as set forth in Sections 4.02(a) and/or (b) shall apply.

         Any adjustments to the Royalty Rates under this Section 4.02 shall
become effective on the first day of the first calendar month or calendar year,
as applicable, after the event causing such reduction has occurred []**

         Section 4.03. LICENSE FEE FOR PRODUCT AFTER ROYALTY TERM. After the
expiration of the Royalty Term, Fujisawa shall have no further obligation to pay
royalties to Atrix; provided, however, that for a period of []** after the
expiration of the Royalty Term, Fujisawa shall pay Atrix a license fee of []**
The license fee under this Section 4.03 shall not be subject to reduction for
any reason under this Agreement except for [].**

         Section 4.04. PRODUCT MILESTONE PAYMENTS. Fujisawa shall pay to Atrix,
as licensing fees, the following non-refundable milestone payments within 15
calendar days after Fujisawa receives (i) notice from Atrix of the occurrence of
the specified milestone event with respect to a Product and (ii) a copy of the
applicable letter or notice received by Atrix from the FDA:

                   []**

         Section 4.05. COMMERCIAL MILESTONE PAYMENTS. Fujisawa shall pay to
Atrix, as an additional licensing fee, a one-time non-refundable payment of []**
when cumulative Net Sales of the Products in the Territory []** (the "Commercial
Milestone"). Such payment will be made within 15 calendar days following the end
of the calendar quarter in which the Commercial Milestone is achieved.

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         Section 4.06. PAYMENT OF ROYALTIES AND REPORTS.

                  (a) Payment and Reports. Within 45 days of the end of each
         calendar quarter following the First Commercial Sale, Fujisawa shall
         provide Atrix with a written report, accompanied by full payment of all
         royalties accrued and owing to Atrix during such quarter, of (i) Net
         Sales of Products in the Territory during such quarter; (ii) deductions
         from Net Sales; (iii) withholding taxes, if any, required by Applicable
         Laws to be deducted with respect to such sales; (iv) the dates of the
         First Commercial Sales of any Product in any country in the Territory
         during the reporting period; and (v) the exchange rates, if any used to
         determine the amount of United States dollars (collectively, the
         "Royalty Statement"). The Royalty Statement shall be in reasonably
         specific detail and on a Product-by-Product and country-by-country
         basis. In the event []** Royalty Rates []** then the Parties agree []**
         If such []** Atrix shall []** In the event such []** Atrix shall []**
         In the event that []** the Parties agree []**

                  (b) Exchange Rate; Manner and Place of Payment. All payments
         hereunder shall be payable in United States dollars. With respect to
         each calendar quarter, whenever conversion of payments from any foreign
         currency shall be required, such conversion shall be made at the rate
         of exchange reported in The Wall Street Journal on the last Business
         Day of the applicable calendar quarter. All payments owed under this
         Agreement shall be made by wire transfer to a bank account designated
         in writing by Atrix, unless otherwise specified in writing by Atrix.

                  (c) Late Payments. In the event that any payments due
         hereunder are not made when due, each such payment shall accrue
         interest from the date due until paid at the Prime Rate of Interest,
         wherein the Prime Rate of Interest shall not exceed []** per month. The
         payment of such interest shall not limit or otherwise be deemed to be
         in satisfaction of a Party exercising any other rights it may have
         under this Agreement arising from the other Party's failure to make
         such payment when due.

                  (d) Taxes. All taxes levied on account of the payments
         accruing to either Party (the "Receiving Party") under this Agreement
         shall be paid by the Receiving Party for its own account, including
         taxes levied thereon as income to the Receiving Party. If provision is
         made under Applicable Laws for withholding, such tax shall be deducted
         from the payment made by the other Party paid to the proper taxing
         authority and a receipt of payment of the tax secured and promptly
         delivered to the Receiving Party. Each Party agrees to assist the other
         Party in claiming exemption from such deductions or withholdings under
         any double taxation or similar agreement or treaty from time to time in
         force.

                  (e) Prohibited Payments. Notwithstanding any other provision
         of this Agreement, if either Party is prevented from paying any
         payments by virtue of the Applicable Laws of the country from which the
         payment is to be made, then such payment may be paid by depositing
         funds in the currency in which it accrued to the Receiving Party's
         account in a bank acceptable to the Receiving Party in the country
         whose currency is involved.

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         Section 4.07. NON-MONETARY CONSIDERATION. In the event Fujisawa, or its
Affiliates or sublicensees []** receives any non-monetary consideration in
connection with the sale of Products, the Net Sales of such Product shall be
calculated based on the fair market value of such other consideration. In such
case, such Party shall disclose the terms of such arrangement to the other Party
and the Parties shall endeavor in good faith to agree on such fair market value
as promptly as possible.

                                   ARTICLE V

                        COMMERCIALIZATION OF THE PRODUCT

         Section 5.01. FUJISAWA'S OBLIGATIONS.

                  (a) Marketing Efforts. The Parties agree that Fujisawa shall,
         []**: (i) have the exclusive right, at its cost, to commercialize the
         Product in the Field in the Territory []** (ii) be solely responsible
         for the marketing, promotion, sale and distribution of the Product in
         the Field in the Territory; and (iii) have the sole responsibility and
         decision making authority over any and all aspects of the marketing,
         promotion, sale and distribution of the Product, including all
         marketing plans, marketing strategy, pricing decisions, and the nature
         and type of marketing materials. Fujisawa agrees to use Commercially
         Reasonable Efforts to timely promote the sale, marketing,
         commercialization and distribution of the Product in the Territory.
         Fujisawa shall promptly advise Atrix of any issues that materially and
         adversely affect Fujisawa's ability to market the Product in the
         Territory. In such event, senior executives of Fujisawa and Atrix shall
         meet and in good faith discuss what actions should be taken in light of
         such issues.

                  (b) Detail Calls. During the Royalty Term for the United
         States, Fujisawa agrees to make []** detail calls with respect to the
         Acne Product to dermatologists as verified by []** as mutually agreed
         to by the Parties. In the event the Parties are unable to reach
         agreement, the dispute shall be submitted to the Chief Executive
         Officers of Atrix and Fujisawa, respectively, or their delegates for
         joint resolution. If the dispute is not resolved by the Parties' Chief
         Executive Officers, or their respective delegates, within []** after
         the submission thereto (such date is referred to as the "5.01 Date"),
         then the dispute shall be submitted to an independent panel of industry
         experts experienced in the sales and marketing of pharmaceutical
         products for its determination as to which entity or system shall be
         responsible for verifying the number of detail calls made by Fujisawa.
         Each Party shall select one such expert within []** after the 5.01 Date
         and the two selected experts shall then select a third expert within
         five Business Days thereafter. Such independent panel shall make its
         decision within []** after the date it receives all relevant
         information from the Parties. The Parties agree to use their
         Commercially Reasonable Efforts to get all such relevant information to
         such independent panel as promptly as possible. The decision of such
         independent panel shall be binding and conclusive upon the Parties. The
         costs of such independent panel shall be borne equally by the Parties.


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                  (c) Trademarks. If Fujisawa desires that the Product
         subsequently be sold under a different name, or if any Competent
         Authority requires that Product be sold under a different name, the
         following provisions shall apply: (i) the different name (the "New
         Trademark") must be reasonably acceptable to Atrix, (ii) the New
         Trademark must be legally available to Atrix in each jurisdiction where
         the New Trademark is sought; (iii) the New Trademark must be acceptable
         to the Competent Authority in each jurisdiction in which a change is
         being sought; (iv) all costs (including reasonable attorneys' fees) for
         obtaining any change to a Marketing Authorization and for obtaining the
         right to use the New Trademark in each jurisdiction will be paid by (A)
         Fujisawa, if Fujisawa requested the New Trademark, and (B) []** by
         Fujisawa and []** by Atrix, if a Competent Authority required the New
         Trademark; and (v) any New Trademarks obtained or authorized shall be
         owned by and be the sole property of []**

                  (d) Packaging. Packaging and Labeling of the Product, the
         Units and the Professional Samples shall comply with the Specifications
         and Applicable Laws in the countries in the Territory where such
         Product is to be distributed for sale. Atrix, in consultation with
         Fujisawa, shall be responsible for assuring that such Packaging and
         Labeling conform with all Applicable Laws in the countries in the
         Territory where such Product is to be distributed for sale. All
         additional incremental costs resulting from changes to the
         Specifications for Packaging or Labeling, required to export the
         Product to countries in the Territory on a country-by-country basis
         under Applicable Laws shall be borne by Fujisawa. Once the primary
         stability studies to support an NDA have been initiated, all costs and
         expenses related to or arising from any changes to the Specifications
         for Packaging or Labeling made at the request of Fujisawa or the JDMC
         shall be solely borne by Fujisawa. Once the Product has been launched
         in a given country, all costs and expenses related to or arising from
         any changes in the Packaging or Labeling (in accordance with Section
         7.03) made at the request of Fujisawa or the JDMC shall be solely borne
         by Fujisawa.

                  (e) Annual Marketing Update. []** following receipt of an
         Approval Letter from the FDA or an equivalent letter from a Competent
         Authority for the Product, Fujisawa shall provide Atrix on a []** basis
         during the Term (every February 1 and August 1) with reports describing
         all of Fujisawa's material marketing efforts with respect to the
         Products []** during the immediately preceding []** period and
         forecasts and plans for such efforts for the immediately following []**
         period. Such reports will be provided to Atrix commencing 90 days after
         the first Approval Letter with the next such report to be provided on
         the []** deadline next following the initial report (provided that if
         this would result in the second report being provided within less than
         []** Fujisawa may deliver the second report at the next applicable
         deadline). The Parties shall meet once annually to review all such
         reports.

                  (f) Inventory Reports. Fujisawa shall supply to Atrix
         quarterly, an inventory report of the finished Product. Such reports
         shall include without limitation description, quantity of units on
         hand, lead time for ordering, and minimum order quantity.


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                                   ARTICLE VI

                             MANUFACTURE AND SUPPLY

         Section 6.01. AGREEMENT TO SUPPLY PRODUCT. Subject to the terms and
conditions of this Agreement, Fujisawa agrees to purchase Product exclusively
from Atrix, and Atrix agrees to exclusively Manufacture or cause to be
Manufactured for, and sell exclusively to Fujisawa on a country-by-country and
Product-by-Product basis during the Royalty Term, Fujisawa's total requirements
for the Product and the Professional Samples in each such country in the
Territory. Thereafter for the remainder of the Term, Atrix agrees to Manufacture
for and sell to Fujisawa, on a non-exclusive basis, Fujisawa's total requirement
of the Product and Professional Samples in each such country in the Territory on
the terms and conditions set forth herein. Atrix may subcontract any part of the
Manufacturing Process for the Product and the Professional Samples to Third
Parties provided the Product, the Professional Samples and the facilities of any
such Third Parties continue to meet the terms and conditions of this Agreement,
[]** shall be []** with respect to []** then []** shall be []** provided,
however, that []** Atrix will bear any and all costs in connection with any such
subcontracting and Fujisawa shall not have to pay any costs or expenses in
connection with any such subcontracting, []** If Atrix subcontracts any part of
the Manufacturing Process or causes the Product to be Manufactured by a Third
Party, Atrix shall cause such Third Parties to comply with the terms and
conditions of this Agreement.

         Section 6.02. MANUFACTURING SPECIFICATIONS AND SHELF LIFE.

                  (a) Manufacturing. Atrix shall Manufacture the Product in
         accordance with the Specifications, Applicable Laws and Governmental
         Approvals. The Parties may mutually agree to alter the Specifications
         from time to time by written agreement without the necessity of
         amending this Agreement.

                  (b) Shelf Life. The Acne Product when Manufactured shall have
         an expiration date of not less than []** With respect to Product, other
         than the Acne Product, the required shelf life shall be mutually
         determined by the Parties. Unless otherwise agreed to by Fujisawa in
         writing, the Product Manufactured by Atrix (or Atrix's selected
         subcontractor or Second Source) shall have a remaining shelf life,
         measured as of the date of delivery of finished goods inventory at
         least equal to the shelf life set forth in the applicable
         Specifications minus two months; provided, however, such remaining
         shelf life requirement shall not apply if the Product does not meet the
         Specifications for the release of such Product and Atrix needs to
         perform additional Testing, which additional Testing shall not exceed
         two months, unless otherwise mutually agreed to by the Parties.

                  (c) Change to Specifications. If a Competent Authority
         requires any change to the Specifications or Atrix's quality assurance
         procedures that would render Atrix unable to supply the Product or
         Professional Samples in accordance with the terms of this Agreement,
         Atrix shall promptly (but in no event more than five Business Days
         after receipt of notice whether verbal or written) notify Fujisawa in
         writing of any changes required. Any such notice to Fujisawa shall be
         accompanied by any relevant supporting

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         documentation and copies of reports, communications and correspondence
         from or to any such Competent Authority. The Parties agree to develop
         and execute an appropriate action plan in such situation. Any
         additional costs or expenses in connection with a required change (i)
         to Atrix's quality assurance procedures, shall be borne []** and (ii)
         to the Specifications for Packaging or Labeling, shall be borne []**
         Any other changes to Specifications not required by a Competent
         Authority shall be mutually agreed to by the Parties and any costs in
         connection with any such change shall be borne []**

         Section 6.03. ATRIX'S DUTIES. Atrix agrees to furnish to Fujisawa with
each Shipment the following: (i) a written fully executed Certificate of
Compliance that confirms conformity of the Product and the Professional Samples
to the Specifications and (ii) a Packaging List. Fujisawa shall analyze each
Shipment promptly upon receipt in accordance with Section 8.02. In addition,
Atrix shall:

                  (a) provide Fujisawa with copies of the written sampling and
         Testing procedures used by Atrix to assure that the Product and the
         Professional Samples conform to the Specifications;

                  (b) retain a sample of each batch of Product and the
         Professional Samples, including stability samples, for the period
         required by Applicable Laws. Upon the request of Fujisawa, Atrix shall
         make such samples available to Fujisawa for inspection. The retained
         sample shall be sufficient in size to allow Fujisawa to perform Testing
         to determine whether the Product and the Professional Samples meet the
         Specifications. Atrix shall store the retained sample in accordance
         with the Specifications and Applicable Laws [];**

                  (c) maintain Books and 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 Books and Records pertaining to the
         Manufacture of each batch of Product and the Professional Samples for
         the period required by Applicable Laws. Atrix shall []** Atrix shall,
         []** in accordance with Applicable Laws. Atrix shall []**

                  (e) []** in accordance with the terms and conditions of this
         Agreement. []** shall []** Atrix shall []**

                  (f) provide Fujisawa with notice within 72 hours of Atrix's
         receipt of a regulatory letter or notification of any inspection or
         audit by any Competent Authority of (i) Atrix's facilities used to
         Manufacture and/or Ship the Product, Raw Materials and Components, Bulk
         Drug and/or Professional Samples, (ii) or Books and Records related
         thereto, (or of the facilities or Books and Records of any Second
         Source or any subcontractor being utilized by Atrix to Manufacture
         and/or Ship all or any portion of the Product, Raw Materials and
         Components, Bulk Drug and/or the Professional Samples). Atrix shall
         inform such Competent Authority that Fujisawa may desire to be present
         at such inspection or audit; provided that Fujisawa's right to be
         present is subject to approval by such Competent Authority and subject
         to Fujisawa being available at the time and date

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         established by such Competent Authority. Atrix shall use Commercially
         Reasonable Efforts to secure a time and date for such inspection that
         is reasonably acceptable to Fujisawa and shall consult with Fujisawa in
         regard thereto; and provided further that Atrix alone shall have the
         right to make the final decision on all such matters with respect to
         any such inspection or audit. Atrix shall []** and []** in connection
         with []** The Parties will notify and cooperate with each other with
         respect to any inspection or request for information from any Competent
         Authority and any other interactions with any Competent Authority. []**
         Atrix shall deliver to Fujisawa copies of any and all inspection
         reports, notices, claims, sanitation audits or any other audits by any
         Competent Authority affecting or relating to the Product, Bulk Drug,
         Raw Materials and Components, Professional Samples and Atrix's
         facilities and any other facilities where any of the foregoing is
         Manufactured, Shipped or otherwise handled (including without
         limitation the Second Source and any such subcontractor).

                  (g) maintain, at its sole cost and expense, any and all
         licenses, permits and consents (including without limitation, facility
         licenses and permits required by Applicable Laws or by the Competent
         Authorities) necessary and/or required for Atrix to Manufacture and
         Ship (except for those licenses required to be obtained by Fujisawa
         under Section 9.05(a)) the Product and/or Professional Samples and
         otherwise perform its obligations under this Agreement.

                  (h) []** the Product []** Atrix shall []** the Product.

                  (i) Atrix shall []** the Product.

                  (J) []** Atrix will []** Atrix shall []** Atrix shall []**
         under this Agreement, to the extent allowed by Applicable Laws. Atrix
         will []** Atrix shall []**

         Section 6.04. SECOND MANUFACTURING SOURCE. Atrix shall validate,
qualify and obtain all Governmental Approvals for a Third Party as a second
source (the "Second Source") to Manufacture and Ship the Product and/or
Professional Samples for sale in the Territory in accordance with the terms and
conditions of this Agreement, []** which []** shall []** and SHALL not []**and
[]** then Fujisawa shall []** The Parties acknowledge and agree if Fujisawa []**
then []** No later than []** after the date of the Approval Letter for each
Product from the FDA or equivalent letter from any other Competent Authority,
Atrix shall file a supplement or variation to the Marketing Authorization for
each Product in the Territory with the Competent Authorities to request approval
by such Competent Authorities for such Second Source to Manufacture each such
Product and Professional Samples for sale or use in the Territory. After such
filing, Atrix shall use Commercially Reasonable Efforts to obtain final approval
by the Competent Authorities for such Second Source to Manufacture each such
Product and Professional Samples including modifying the variation to the
Marketing Authorization if required by a Competent Authority. Fujisawa and Atrix
shall mutually agree on a budget and the costs and expenses required to validate
and qualify and obtain all Government Approvals for any Second Source. Fujisawa
shall reimburse Atrix for []** of such costs and expenses incurred by Atrix
promptly

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upon receipt of a reasonably detailed invoice setting forth such costs and
expenses that are in accordance with such mutually agreed budget. Atrix shall
cause the Second Source to comply with the terms and conditions of this
Agreement relating to the Manufacture and Shipment of the Product and/or the
Professional Samples.

         Section 6.05. FAILURE TO SUPPLY.

                  (a) Atrix shall immediately notify Fujisawa if Atrix is unable
         to fill any Purchase Order placed by Fujisawa pursuant to Section 7.07
         for any reason, including Force Majeure or non-conforming Product, and
         advise Fujisawa of the revised delivery date. Fujisawa shall then have
         the option of terminating any such Purchase Order without obligation of
         payment or of accepting the revised delivery date. []** and []** Atrix
         shall, []** and []** provided, however, []** under this Section 6.05(a)
         []**

                  (b) Notwithstanding the foregoing, Atrix shall not be deemed
         to be unable to fill any Purchase Order placed by Fujisawa if Atrix's
         inability to fill any Purchase Order is due to such Purchase Order
         being []** In such event, the portion of any such Purchase Order for
         such Product which Atrix cannot Manufacture as provided in this Section
         6.05(b) shall be supplied by the Second Source and []** shall pay the
         cost of the Product charged by the Second Source (including any
         incremental costs which result by reason of the use of the Second
         Source under this Section 6.05(b)), provided that Atrix has first
         notified Fujisawa of the cost of such Product and []** thereof. Atrix
         shall use Commercially Reasonable Efforts to limit any such agreement
         to as short of period of time as commercially reasonable after giving
         effect to the period of time Atrix believes it can again Manufacture
         the quantity of Product requested by Fujisawa.

         Section 6.06. ALLOCATION. If Atrix exercises its rights to []** and if
Atrix is unable to supply all of the requirements of the Product and/or
Professional Samples, and quantities ordered by Fujisawa in accordance with
Section 7.07, then Atrix shall allocate the resources available to it so that
Fujisawa receives at least its proportional share of available supplies as
determined based on the Rolling Forecast (taking into consideration past sales
and sales performance against forecast) of Fujisawa and the rolling forecast of
Atrix. Upon []** Atrix shall []** and Fujisawa shall []** provided that []**

                                  ARTICLE VII

                                PURCHASE AND SALE

Section 7.01. PURCHASE PRICE AND PAYMENT. Atrix shall sell, and Fujisawa shall
purchase during each calendar year, each Product at a price equal to the Atrix
Billing Price/Unit. Atrix shall invoice Fujisawa with each Shipment and payment
shall be due []** days from the receipt of each invoice provided that if payment
is not received by Atrix within such []** day period then Atrix shall []**
Fujisawa shall []** shall not []** which is []** Further, Fujisawa shall []**
shall be []** by the Parties []** provided, however, if []** of the Parties []**
then []** If []** is not []** then Atrix


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shall be entitled []** In no event will []** unless otherwise agreed in writing
by the Parties. Further, Fujisawa may []** Atrix shall []**

         Section 7.02. ADJUSTMENT TO PURCHASE PRICE/AUDIT.

                  (a) Within 60 days following the end of each calendar year
         during the Term, Atrix shall calculate, on a Product-by-Product basis,
         the Atrix Final Price/Unit for the preceding calendar year and complete
         an adjusting invoice on a Product-by-Product basis adjusting the prior
         calendar year's Atrix Billing Price/Unit to the Atrix Final Price/Unit.
         (See Exhibits D and E for a further explanation).

                  (b) In addition to the adjustment of the Atrix Billing
         Price/Unit to the Atrix Final Price/Unit as set forth in Section
         7.02(a), in the event the preceding calendar year's Atrix Final
         Price/Unit is less than the prior calendar year's Atrix Final
         Price/Unit, Atrix shall be entitled to []** of such reduction applied
         to the preceding calendar year's purchases in determining the amount
         payable by or payable to Fujisawa in the adjusting invoice. Such
         information shall accompany the adjusting invoice and calculated on a
         Product-by-Product basis. []**

         Section 7.03. LABELING AND ARTWORK.

                  (a) After execution of this Agreement, both Parties will
         approve all Labeling and any proposed Labeling change. Fujisawa shall
         have the right to review and comment upon any Labeling and proposed
         changes to the Labeling and to participate in any discussions or
         communications with the Competent Authorities concerning any Labeling
         or proposed Labeling change. []** the Parties shall []** Atrix shall
         make the final decision with regard to any Labeling or proposed
         Labeling changes. []** and otherwise in accordance with generally
         accepted practices in the pharmaceutical industry. Fujisawa shall []**
         and shall []**

                  (b) Both Parties will approve all artwork developed for
         inclusion in the Product Packaging, which approval will not be
         unreasonably withheld, conditioned or delayed by either Party. If
         Fujisawa wishes to institute changes in the artwork both Parties will
         develop a mutually acceptable implementation schedule. The actual cost
         of implementing such change will be at []**, including any materials
         made obsolete by Fujisawa's changes to the artwork. Neither Party shall
         alter, change or in any way modify the artwork, that 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 and Governmental Approvals.

         Section 7.04. 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

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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 7.05. CONFIRMATION. Atrix shall confirm each Purchase Order
within []** Business Days from the date of receipt of a Purchase Order and shall
supply the Product and/or Professional Samples within a maximum of []** days
from the date of acceptance of a Purchase Order, or later if so specified in any
such Purchase Order. Failure of Atrix to confirm any Purchase Order shall not
relieve Atrix of its obligation to supply Product and/or Professional Samples
ordered by Fujisawa in conformity with this Agreement. []** Atrix shall []**

         Section 7.06. DELIVERY. Delivery terms for Product and Professional
Samples shall be []** Atrix shall ship Product and Professional Samples in
accordance with Fujisawa's Purchase Order form or as otherwise directed by
Fujisawa in writing. Title to any Product or Professional Samples purchased by
Fujisawa shall pass to Fujisawa 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 or the loading dock of
the Second Source's facilities, as applicable, to Fujisawa or its agent.

         Section 7.07. FORECASTS AND ORDERS.

                  (a) Within []** Fujisawa will provide Atrix with a 12 month
         forecast of Fujisawa's requirement of each Product, on a
         Product-by-Product basis, including Professional Samples, and on a
         country-by-country basis (the "Initial Forecast"). This Initial
         Forecast will be based on standard production planning parameters,
         including sales forecasts, sales demand forecasts, promotional
         forecasts, Launch Quantities and inventory requirements. Atrix
         acknowledges that such quantities are estimates only.

                  (b) Within []** after the date Fujisawa receives notice from
         Atrix that Atrix has received an Approval Letter from the FDA (or
         equivalent Governmental Approval from any other Competent Authority)
         for a Product, and []** to the beginning of each month thereafter,
         Fujisawa shall update and provide to Atrix a rolling forecast ("Rolling
         Forecast"), showing Fujisawa's estimated requirements for the Product
         and/or Professional Samples as of the start of the following month. The
         Rolling Forecast is to be set up by month and shall include the next 12
         months of which []** shall be a binding forecast reflected by a
         Purchase Order. Each month, a new month shall be added and the previous
         month deleted from the Rolling Forecast, and months []** of the prior
         months Rolling Forecast []** may be revised. The Parties acknowledge
         and agree that the Rolling Forecast is an estimate only and not binding
         on the Parties, except for the first []** covered by the Purchase Order
         and provided that the second []** will be allowed to be flexed from the
         previous forecast by plus or minus []** until fixed by the subsequent
         forecast, unless otherwise agreed to by Atrix; provided that the
         aggregate adjustment from the quantity set forth in the previous
         forecast for such []** period shall not exceed []** in the aggregate
         during that []** period (the "Allowable Amount"). For example, if

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         Fujisawa's forecast []** was for []** and its forecast for []** was for
         []** the maximum number []** would be []** The Allowable Amount and the
         binding obligations of Fujisawa under the Rolling Forecast shall not
         apply with respect to the initial stock-up Purchase Orders made by
         Fujisawa with respect to a Product and/or Professional Samples.

                  (c) Fujisawa shall place with Atrix a firm purchase order (the
         "Purchase Order") each month based upon manufacturing yields for
         sufficient quantities of the Product and/or Professional Samples to
         equal the estimated demand for the Product and/or Professional Samples
         and consistent with the Rolling Forecast. The Purchase Order shall
         specify quantities of Product and/or Professional Samples and such
         other reasonable and customary instructions that Fujisawa may include,
         including delivery instructions. Atrix shall use Commercially
         Reasonable Efforts to fill completely any Purchase Orders placed by
         Fujisawa.

                  (d) All Product and/or Professional Samples shall be Shipped
         in accordance with the instructions included in the applicable Purchase
         Order. Shipments shall be routed by Atrix in accordance with the
         applicable Purchase Order, this Agreement or as otherwise directed by
         Fujisawa in writing.

                  (e) It is understood that Atrix []** will produce Product or
         Professional Sample upon receipt of that portion of the Rolling
         Forecast reflected by a Purchase Order.

                  (f) Fujisawa agrees to use its Commercially Reasonable Efforts
         to purchase a sufficient amount of Product and/or Professional Samples
         to enable Fujisawa to carry sufficient inventory to allow for
         reasonably anticipated fluctuations in sales demand so as to allow
         Atrix reasonable lead time to meet increased demand. Atrix will use
         Commercially Reasonable Efforts to meet any increase in demand in
         excess of the Allowable Amount, []** The Initial Forecast and all
         Rolling Forecasts will be made by Fujisawa to Atrix in good faith. 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.

                  (g) []** in accordance with generally accepted practices in
         the pharmaceutical industry []** agreed to by the Parties []** The
         Parties may []** Each Party shall []**

         Section 7.08. PROFESSIONAL SAMPLES. Within []** after the Effective
Date, Fujisawa shall provide Atrix with the amount of the Product, in grams, to
be contained in each Professional Sample. Pursuant to the provisions of Section
7.07 above, and provided Fujisawa retains a license pursuant to Sections 3.02
and 3.03 in the specific country in the Territory where the Professional Samples
are to be used, Atrix shall supply to Fujisawa such quantities of Professional
Samples as Fujisawa may reasonably request to be used solely for promotional
purposes (and not for sale). []** shall be []** Fujisawa shall not use the
Professional Samples for any purpose other than as set forth in this Section
7.08.

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                                  ARTICLE VIII

                       WARRANTY, REJECTION AND INSPECTIONS

         Section 8.01. PRODUCT WARRANTIES. Atrix represents, warrants and/or
covenants to Fujisawa that the Products and Professional Samples Manufactured
and/or Shipped pursuant to this Agreement by Atrix or a Second Source shall
comply with the Specifications, Governmental Approvals and Applicable Laws
(including compliance with Applicable Laws related to adulterated or misbranded
Products) and conform to the Certificate of Compliance for each such Product and
Atrix shall otherwise perform its obligations under this Agreement in compliance
with the Specifications, Governmental Approvals and Applicable Laws.

         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 PRODUCT AND PROFESSIONAL SAMPLES FOR ANY PURPOSE, AND ATRIX
EXPRESSLY DISCLAIMS ANY SUCH OTHER WARRANTIES WITH RESPECT TO THE PRODUCT AND
PROFESSIONAL SAMPLES, EITHER EXPRESSED OR IMPLIED.

         Section 8.02. REJECTION OF PRODUCT OR PROFESSIONAL SAMPLES FOR FAILURE
TO CONFORM TO SPECIFICATIONS. Fujisawa shall have 45 days after the receipt of
any Shipment to determine conformity of the Shipment to the Specifications,
Governmental Approvals and Applicable Laws, except for hidden defects. A "hidden
defect" shall mean a defect in the Product not discovered by Fujisawa during its
Testing of the Product and/or Professional Samples in accordance with generally
accepted practices in the pharmaceutical industry and which would not be a
defect reasonably expected to be discovered in accordance with such Testing. If
Testing of such Shipment shows a failure of the Shipment to meet the
Specifications, Governmental Approvals and Applicable Laws, Fujisawa 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 Fujisawa within 45 days of Fujisawa's
receipt of said Shipment. Fujisawa shall have the right to request that Atrix
provide to Fujisawa, within 30 days after such notice is received by Atrix,
Product and/or Professional Samples that meet the Specifications, Governmental
Approvals and Applicable Laws or to promptly provide Fujisawa with full credit
for the Atrix Billing Price/Unit or the Atrix Final Price/Unit, as applicable,
paid by Fujisawa for the returned Product and/or Professional Samples. In case
of a hidden defect, Fujisawa shall have the right to request that Atrix provide
to Fujisawa, within 30 days after a notice concerning a hidden defect is
received by Atrix, Product and/or Professional Samples that meets the
Specifications, Governmental Approvals and Applicable Laws or to promptly
provide Fujisawa with full credit for the Atrix Billing Price/Unit or the Atrix
Final Price/Unit, as applicable, paid by Fujisawa for the returned Product
and/or Professional Samples. In either case, the cost of freight and handling to
return or replace any such Product and/or Professional Samples shall be at the
expense of Atrix. If Fujisawa 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,
Governmental Approvals and Applicable Laws, except for hidden defects.
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
Atrix Billing Price/Unit or



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<PAGE>


the Atrix Final Price/Unit, as applicable, in the event of any failure or defect
in the Product or Professional Samples. Should there be a discrepancy between
Fujisawa's Test results and the results of Testing performed by Atrix to
determine whether any such Product and/or Professional Samples is
non-conforming, such discrepancies shall be finally resolved by Testing
performed by an independent Third Party mutually agreed upon by Fujisawa and
Atrix. The costs of such Testing shall be borne by the Party against whom the
discrepancy is resolved. In the event Product and/or Professional Samples have
been previously returned to Atrix and an independent Third Party determines that
the Product or Professional Samples meet the Specifications, Governmental
Approvals and Applicable Laws, Fujisawa shall be responsible for all costs of
freight and handling for such return. The determination of such Third Party
shall be binding and conclusive on the Parties.

         Section 8.03. FUJISAWA INSPECTIONS. Atrix shall upon reasonable (but
not less than 10 days) prior written notice by Fujisawa ("Inspection Notice")
and during normal business hours, allow Fujisawa []** to inspect and audit
Atrix's facilities (and any approved subcontractor or Second Source, as
applicable) used to develop, Manufacture and/or Ship the Product and/or the
Professional Samples and any Books and Records directly related to the
Manufacture of the Product or otherwise necessary for Fujisawa to conduct a cGMP
audit of Atrix's facilities (and any approved subcontractor or Second Source, as
applicable) used to Manufacture the Product (excluding financial information,
which may only be reviewed by Fujisawa's independent public accountants in
accordance with Section 15.04), no more than twice annually, to confirm that the
Manufacturing Process, Atrix's facilities (and any approved subcontractor or
Second Source as applicable) and the equipment, personnel and operating and
Testing procedures used by Atrix (and any subcontractor or Second Source as
applicable) in the Manufacturing Process are in compliance with the
Specifications, Applicable Laws and Governmental Approvals; provided that such
inspections do not interfere with Atrix's (and any approved subcontractor or
Second Source as applicable) normal operations or cause Atrix to violate or,
subject to Section 15.09, be in breach of any confidentiality agreements with
Third Parties. If any of the Manufacturing Process is conducted by a
subcontractor approved in accordance with Section 6.01 or by the Second Source,
then Atrix shall cause any such subcontractor or Second Source to comply with
the terms and conditions of this Section 8.03 and Atrix, at its sole cost and
expense, may have a representative(s) accompany Fujisawa's representative(s) on
any such inspection or audit. Notwithstanding anything to the contrary contained
in this Agreement, []** (i) Atrix []** or (ii) of any []** In the event of any
of the foregoing events, []** shall []** provided that []** If []** Atrix,


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[]** shall []** Atrix shall []** If the Parties []** the Parties shall []**
shall be []** and []** shall be []**

                                   ARTICLE IX

                              REGULATORY COMPLIANCE

         Section 9.01. MAINTENANCE OF MARKETING AUTHORIZATIONS. Atrix will own
all Marketing Authorizations for each country in the Territory. Atrix agrees,
[]** to maintain the Marketing Authorizations including obtaining any variations
or renewals thereof, []** Each Party agrees that neither it nor its Affiliates
will do anything to adversely affect a Marketing Authorization.

         Section 9.02. 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 72 hours after a Party, its Affiliates or
         sublicensees, becomes aware of any potentially serious or unexpected
         adverse event (including adverse drug experiences or events, as defined
         in Applicable Laws) (an "ADE") involving the Product or the
         Professional Samples. Such advising Party shall provide the other Party
         with a written report delivered by confirmed facsimile of any ADE,
         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 Fujisawa has
         an exclusive license to market, promote and sell the Product in any
         country in the Territory for use in the Field, Fujisawa shall have full
         responsibility for (i) monitoring such ADEs; and (ii) data collection
         activities that occur between Fujisawa and the patient or medical
         professional, as appropriate, including any follow-up inquiries which
         Fujisawa deems necessary or appropriate. Atrix will be responsible for
         meeting the requirements of the Competent Authorities including the
         submission of ADE individual reports and periodic reports.

                  If Atrix exercises its right to co-market the Product as set
         forth in Section 12.01 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
         ADEs with respect to reports required to be filed by it in order to
         comply with Applicable Laws, including obligations to report ADEs to
         the Competent Authorities, each Party agrees to provide such
         information to the other, []** in sufficient time to enable each Party
         to report such ADEs to the Competent Authorities in accordance with
         Applicable Laws. []** agrees to provide []** with []**

                  (c) Subject to the last paragraph of Section 9.02(a), the
         Parties agree to follow Fujisawa's standard operating procedure for
         reporting and identifying ADEs (the "SOP"), a copy of which will be
         provided by Fujisawa to Atrix 12 months prior to the date of submission
         of an NDA. In the event the SOP is modified or amended during the Term,

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         Fujisawa shall provide Atrix with copies of any such modification or
         amendment to the SOP prior to amending or modifying the same. Atrix
         shall also timely provide Fujisawa with copies of any and all ADE
         reports for any Atrix New Indication in accordance with the terms and
         conditions of this Agreement. Fujisawa shall designate a qualified
         person under Applicable Laws to be responsible for ADE reporting in
         each country in the Territory.

                  (d) If the report of an ADE causes a Competent Authority to
         request a Labeling revision and/or any other corrective action, or if
         either Party believes it is necessary to conduct a Phase IV
         surveillance program as a result of an ADE, then the Parties shall
         determine all of the material terms and conditions of such Labeling
         revision, corrective action or Phase IV surveillance program in
         consultation with the applicable Competent Authority. The Parties will
         cooperate with one another with respect to any of the foregoing. The
         costs of such Labeling revision, corrective action or Phase IV
         surveillance program shall be borne []** In the event the Parties do
         not mutually agree on any such Labeling revision, corrective action or
         surveillance program, such disagreement shall be resolved in the manner
         set forth in Section 7.03(a). Fujisawa agrees that should Applicable
         Laws require that any such interim data and results from such Phase IV
         surveillance programs be prepared in written form, Fujisawa shall
         comply with such requirements and provide all such information in
         writing to Atrix and the Competent Authorities in accordance with
         Applicable Laws. Fujisawa further agrees that Atrix shall have the
         right to incorporate, refer to and cross-reference the results and
         underlying data from any such Phase IV surveillance program in any
         regulatory filing or any other filing or requirement Atrix is required
         to undertake with respect to such ADE. Atrix, in consultation with
         Fujisawa, shall submit or file any necessary documentation, reports or
         forms to the Competent Authority.

         Section 9.03. COMMERCIAL SALE TESTING AND REPORTING. If, after the date
of First Commercial Sale in any country in the Territory, a Competent Authority
requires (a) additional testing, modification or communication related to the
Product or (b) Atrix to conduct a Phase IV study as a condition to receiving a
Marketing Authorization, then the JDMC shall design and Atrix shall implement
any such testing, modification or communication for the Product and the costs
shall be borne []**

         Section 9.04. ASSISTANCE. Each Party shall provide reasonable
assistance to the other at the other's request, in connection with their
obligations pursuant to this Article IX, subject to reimbursement of all of its
reasonable out-of-pocket costs by the requesting Party.

         Section 9.05. COMPLIANCE. Subject to the other terms and conditions of
this Agreement, the Parties agree to the following general compliance
provisions:

                  (a) Except for the maintenance of the Marketing Authorizations
         and other requirements of a Competent Authority as the holder of the
         Marketing Authorizations, Fujisawa shall be responsible for compliance
         in all material respects with Applicable Laws and the Government
         Approvals relating to the storage, promotion, marketing, sale,

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         advertising and distribution of the Products and Units and distribution
         of the Professional Samples, as applicable, including obtaining and
         holding all necessary permits, tariffs, licenses and any other
         requirements relating to the import, export, sale and distribution of
         the Products and Professional Samples. Fujisawa shall be entitled to
         submit to the Competent Authorities Promotional Materials as required
         by Applicable Laws (and prior to any such submission, provide a copy of
         such Promotional Materials to Atrix) []** Atrix further agrees that
         []** Atrix shall []** shall be []** Atrix shall be entitled to attend
         any and all meetings with the Competent Authorities related to such
         Promotional Materials; provided that Atrix's right to be present is
         subject to approval by such Competent Authority and subject to Atrix
         being available at the time and date established by such Competent
         Authority. Fujisawa shall use Commercially Reasonable Efforts to secure
         a time and date for such meeting that is reasonably acceptable to
         Atrix; and provided further that Fujisawa alone shall have the right to
         make the final decision on all such matters. Fujisawa shall provide
         Atrix with copies of the Promotional Materials []** shall make []**

                  (b) Atrix shall be responsible for compliance in all material
         respects with Applicable Laws and Government Approvals relating to
         conducting clinical trials to be conducted by Atrix, development of the
         Product in accordance with the Development Program adopted by the JDMC,
         the Manufacture of the Products, Units and the Professional Samples, as
         applicable, and with cGMP relating to the Manufacture of the Products,
         the Professional Samples, Bulk Drugs and Raw Materials and Components,
         as applicable, for sale or use in the Territory.

                  (c) If Atrix []**, then Atrix shall be []**

                  (d) Fujisawa and Atrix shall comply in all material respects
         with all Applicable Laws within the Territory, including the provision
         of information by Fujisawa and Atrix to each other necessary for Atrix
         and Fujisawa to comply with any applicable reporting requirements and
         Governmental Approvals. During the Term, each Party agrees to execute
         and deliver to the other Party any certifications that may be required
         by Applicable Laws, including any debarment certification.

                  (e) Each Party shall promptly notify the other Party of any
         written notices received from, or inspections by, the FDA, or other
         Competent Authority, which materially 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
         written notices or inspections and the resolution of any issue raised
         by the FDA or other Competent Authority.

         Section 9.06. GENERAL REGULATORY MATTERS. Fujisawa shall be entitled
[]** including without limitation []** provided that []** Atrix shall use
Commercially Reasonable Efforts []** that is []** and shall []** and provided
further that []** Atrix shall make all reasonable efforts to provide Fujisawa
copies of any materials relating to any regulatory matter prior to their

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presentation to the FDA or any other Competent Authority, so that Fujisawa shall
have an opportunity to review and comment thereon and Atrix shall []**
Notwithstanding the foregoing and in addition to Fujisawa's rights set forth in
this Section 9.06, in the event any []** the Parties agree that []** Atrix
agrees that []** Any interaction with the FDA needs to be promptly documented
and a copy sent to the other Party within three business days.

                                   ARTICLE X

                             PATENTS AND TRADEMARKS

         Section 10.01. MAINTENANCE OF PATENTS OR MARKS. Atrix shall, at Atrix's
expense, maintain and protect the Atrix Patent Rights and the Atrix Marks in all
countries in the Territory in which Fujisawa markets the Product; provided
however, that upon written request by Atrix, Fujisawa shall, at no cost or
expense to Fujisawa, 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. In the event Atrix intends to abandon the
prosecution or maintenance of all or any part of Atrix Patent Rights or the
Atrix Marks, Atrix shall notify Fujisawa no later than 120 days prior to the
date it intends to abandon the prosecution or maintenance, as applicable, of any
such Atrix Patent Rights or Atrix Marks. Fujisawa shall notify Atrix within such
120 day period that Fujisawa wishes to assume the responsibility for prosecuting
and maintaining such Atrix Patent Rights or Atrix Marks, as applicable,
whereupon Atrix shall permit Fujisawa, at Fujisawa's expense, to take over such
prosecution and/or maintenance, as applicable and Atrix shall cooperate in any
such transfer of responsibilities. []** Atrix shall have []** with respect to
[]** and Fujisawa shall have []**

         Section 10.02. COOPERATION. Fujisawa shall 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 the Products for a reasonable period of time
sufficient for Atrix to obtain the assistance it needs from such personnel.
Atrix shall reimburse Fujisawa for its reasonable expenses incurred in making
its attorneys, agents, representatives or consultants available as well as any
reasonable out of pocket expenses incurred by Fujisawa in making any of its
employees available.

         Section 10.03. 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 cost
and expense, prosecute the judicial or administrative proceedings against such
Third Party infringement. Fujisawa 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 all costs and expenses
thereof from any amounts payable to Atrix under this Agreement. Atrix may settle
any such claim so long as the terms of such settlement do not impair Fujisawa's
rights hereunder, increase the costs to Fujisawa hereunder or Fujisawa's rights
in the Atrix Technology for the Product in the Territory or with Fujisawa's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed.

         In the event Atrix fails to institute proceedings and terminate any
Third Party infringement of the Atrix Patent Rights within 90 days of the later
of: (a) receiving notification

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from Fujisawa of any such infringement or (b) sending notice to Fujisawa of such
action, Fujisawa may take (but shall have no obligation to do so) such action as
it deems appropriate, including the filing of a lawsuit against such Third
Party. In such event Atrix will provide such assistance and cooperation to
Fujisawa as may be necessary, at Fujisawa's cost and expense, and Fujisawa may
deduct all costs and expenses in connection with any such actions against any
amounts payable to Atrix under this Agreement until such costs and expenses are
fully recovered by Fujisawa and retain all amounts awarded in such action.
Fujisawa may settle any such claim so long as the terms of such settlement do
not impair Atrix's rights hereunder, Atrix's rights in the Atrix Technology,
increase the costs to Atrix hereunder or with Atrix's prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed.

         Section 10.04. 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
cost and expense, defend such claims or proceedings and Fujisawa, at Atrix's
cost and expense, shall provide such assistance and cooperation to Atrix as may
be necessary to successfully defend any such claim or proceeding. []** may []**
in connection with []** under this Agreement []** Atrix may settle any such
claim so long as the terms of such settlement do not impair Fujisawa's rights
hereunder, Fujisawa's rights in the Atrix Technology for the Product in the
Territory, increase the costs to Fujisawa hereunder or with Fujisawa's prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed. []** shall be []** Notwithstanding the above, to the extent such
claim or proceeding relates to or arises from the actions, activities or
omissions of Fujisawa other than the use by Fujisawa of the Atrix Technology or
the Atrix Marks in accordance with the terms and conditions of this Agreement,
then Fujisawa shall defend such claims or proceedings, at Fujisawa's sole cost
and expense, and Fujisawa shall indemnify Atrix for any Loss incurred with
respect to such claim or proceeding in accordance with Article XIV.

                                   ARTICLE XI

                                 CONFIDENTIALITY

         Section 11.01. CONFIDENTIALITY.

                  (a) 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 (i) as expressly authorized by this Agreement or with
         the prior written consent of the other Party, which consent shall not
         be unreasonably withheld, (ii) as required by Applicable Laws or court
         order of a court of competent jurisdiction (provided that the
         disclosing Party shall first notify the other Party to afford the other
         Party, for a period of 10 Business Days, an opportunity to seek
         whatever

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         protective relief it deems appropriate, and the disclosing Party shall
         use Commercially Reasonable Efforts to obtain confidential treatment of
         any such information required to be disclosed) or (iii) 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.

                  (b) 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 11.02. PUBLICITY REVIEW. The Parties agree that the public
announcement of the execution of this Agreement shall be in the form of a press
release to be mutually agreed upon by the Parties 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, except as allowed in
the preceding sentence, the Parties will jointly discuss and agree, based on the
principles of this Section 11.02, 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
Applicable Laws. When a Party elects to make any such statement it will give the
other Party at least five Business Days notice to review and comment on such
statement. In the event of a public disclosure required by Applicable Law prior
to the end of such five Business 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 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
terms of this Agreement may also be disclosed to government agencies where
required by Applicable Law, including filings required to be made by Applicable
Law with the United States Securities and Exchange Commission, national
securities exchanges or the Nasdaq Stock Market, with redaction of financial
information not otherwise required to be disclosed under Applicable Laws in
which event the disclosing Party shall provide in advance of submission a copy
of such redactions made to this Agreement.

                                  ARTICLE XII

                                      []**

         Section 12.01. []**

                  (a) []** If Fujisawa should fail to comply with its
         obligations under []** in each case during any calendar year during the
         Royalty Term commencing with the first full calendar year after the
         calendar year in which the First Commercial Sale occurred in such
         country, then Atrix shall have the right and option, exercisable in its
         sole discretion, by written notice to that effect delivered by Atrix to
         Fujisawa within 60 days after such

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         notice to []** Notwithstanding the foregoing, []** shall have []** and
         shall []** Any such []** shall be []** If Atrix exercises its right to
         []** in accordance with this Section 12.01(a) the following shall
         occur, to the extent allowed by Applicable Laws: (i) Fujisawa shall
         grant Atrix an []** or [],** as the case may be; (ii) []** or [],** as
         the case may be, and []** or [],** as the case may be; (III) []** and
         (iv) Fujisawa's obligations to Atrix under Sections []** with respect
         to the Acne Product in the Territory or [],** as the case may be, shall
         terminate.

                  (b) []** If Atrix elects to exercise []** under Section
         12.01(a), Atrix []** such that, []** would have []** Atrix shall []**
         in accordance with the following []** during the Term.

                                  ARTICLE XIII

                         REPRESENTATIONS AND WARRANTIES

         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 to the best knowledge of each Party violate any
Applicable Laws.

         Section 13.04. OWNERSHIP OF ATRIX TECHNOLOGY AND ATRIX MARKS. As of the
Effective Date, Atrix represents and warrants that (a) it is the sole owner of
all right, title and interest in and to the Atrix Technology and the Atrix
Marks, other than the New Trademarks, (b) it has not granted and will not grant
after the Effective Date any license under the Atrix Technology and/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, except to Fujisawa,
and (c) there are no outstanding liens, encumbrances, agreements or
understanding of any kind, either written, oral or implied, regarding either the
Atrix Technology or the Atrix Marks which are inconsistent or in conflict with
this Agreement.

         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, (b)
to the best of its knowledge, the Atrix Technology and Atrix Marks do not
infringe the intellectual property rights of any Third Party; (c) to the best of
its knowledge, the practice of the Atrix Patent Rights in the Territory would
not infringe any

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intellectual property rights of any Third Party; (d) to the best of its
knowledge, there have been no lapse of any claims within the Atrix Patents in
the Territory; and (e) as of the Effective Date, Atrix has not received any
notices or communications that the development, Manufacture, use, sale,
importation or exportation of the Product would infringe any 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 a Competent Authority with respect to the use, effectiveness or
merchantability of the Product.

         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. Atrix further represents and warrants that, to
the best of its knowledge, none of the entities, laboratories or clinical sites
participating in the clinical studies prior to the Effective Date have been
debarred.

         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 Fujisawa 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 of the Development
Program, the success of the marketing and commercialization of the Product or
the commercial utility of the Product.

         Section 13.10. LIMITATION OF LIABILITY. 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

                          INDEMNIFICATION AND INSURANCE

         Section 14.01. FUJISAWA INDEMNIFIED BY ATRIX. Atrix shall indemnify,
defend and hold Fujisawa, its Affiliates, permitted sublicensees, harmless from
and against any third party 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, occurred subsequent to the Effective Date, arises out of or is based
upon (a) any misrepresentation or breach of any of the warranties, covenants,
obligations or agreements made by Atrix in this Agreement or any warranty,
covenant, or agreement required to be followed by any approved subcontractor or
Second Source; (b) the Manufacture and Shipment of any Bulk Drug, Raw Materials
and Components, Product and/or Professional Sample that is identifiable as any
of the foregoing having been done or completed by or on



                                       40
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behalf of Atrix, any approved subcontractor or the Second Source; (c) any claims
that the Atrix Marks, Product (as a result of the use of Atrix Technology
therein) or its Manufacture (as a result of the use of the Atrix Technology
therein), use, marketing, sale, promotion, distribution, Manufacture, Shipment
or sale infringes the patent, trademark or proprietary right or any other
intellectual property right of a Third Party; and/or (d) []** Atrix's
obligations to indemnify Fujisawa hereunder shall not apply to the extent any
such Loss arises out of or is based on the: (i) inactions or actions of
Fujisawa, its Affiliates, sublicensees or Representatives for which Fujisawa is
obligated to indemnify Atrix under Section 14.02 or (ii) the negligence or
wrongdoing of Fujisawa, its Affiliates, sublicensees or Representatives.

         Section 14.02. ATRIX INDEMNIFIED BY FUJISAWA. Fujisawa shall indemnify,
defend and hold harmless Atrix from and against any Loss insofar as such Loss or
actions in respect thereof occurred subsequent to the Effective Date, and arises
out of or is based upon (a) any misrepresentation or breach of any of the
warranties, covenants, obligations or agreements made by Fujisawa in this
Agreement or any warranty, covenant or agreement required to be followed by any
Affiliate or sublicensee of Fujisawa; (b) Fujisawa's use of the Marketing
Authorizations in the marketing, sale, distribution or promotion of the Product
or the Professional Samples; (c) Fujisawa's, its Affiliates', sublicensees' or
agents' use, marketing, sale, distribution, storage or promotion of the Product
or the Professional Samples; []** Fujisawa's obligations to indemnify Atrix
hereunder shall not apply to the extent any such Loss arises out of or is based
on the: (i) inactions or actions of Atrix, its Affiliates, sublicensees,
subcontractors, Representatives or Second Source for which Atrix is obligated to
indemnify Fujisawa under Section 14.01 or (ii) the negligence or wrongdoing of
Atrix, its Affiliates, sublicensees, subcontractors, Representatives or the
Second Source.

         Section 14.03. 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 indemnitee (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. Such
notice shall state that the Indemnitor is required to indemnify the Indemnitee
for a Loss and shall specify the amount of Loss, if available, and relevant
details thereof. The Indemnitor shall notify Indemnitee no later than 30 days
from such notice of its intention to assume the defense of any such claim.
Failure of the Indemnitee to notify Indemnitor within such notice period shall
not relive Indemnitor of any liability hereunder, except to the extent the
Indemnitor reasonably demonstrates that the defense of such Third Party claim is
prejudiced by such failure.

         Section 14.04. 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 the
Indemnitee shall have the right to fully 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

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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, conditioned 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 that 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 reasonable counsel fees and other reasonable expenses of
defense). If Fujisawa is the Indemnitee in such case, Fujisawa shall be entitled
to deduct its reasonable expenses of defending, settling or otherwise disposing
of any such action from any monies due to Atrix hereunder.

         Section 14.05. INSURANCE. Each Party shall, at its sole cost and
expense, obtain and keep in force during the Term and for a period of not less
than []** years after termination, cancellation or expiration of this Agreement
the following insurance: (a) general liability insurance, including blanket
contractual liability coverage with bodily injury, death and property damage
limits of []** per occurrence and []** in the aggregate; (b) clinical studies
and product liability insurance with bodily injury death and property damage
limits of not less than []** per occurrence and []** in the aggregate; and (c)
workers' compensation insurance with limits to satisfy statutory requirements
and employers' liability insurance with limits of []** per occurrence, including
contractual liability and product liability coverage. Upon execution of this
Agreement, and upon the other Party's request thereafter, each Party shall
furnish the other with a certificate of insurance 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. Each Party []** under this Agreement []** and []**

                                   ARTICLE XV

                       ADDITIONAL COVENANTS OF THE PARTIES

         Section 15.01. []**

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

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         Section 15.02. []**

         []**

         Section 15.03. LIMITATION TO THE TERRITORY. Fujisawa hereby covenants
that it will not, without the prior written authorization of Atrix: (a) promote
or actively solicit the sale of the Product or advertise the Product, outside of
the Territory; (b) purchase or cause to be purchased Product which Fujisawa has
represented, directly or indirectly, as being for the purpose of sale in a
specific country in the Territory for sale in any other country outside the
Territory; (c) contact any of Atrix's suppliers or vendors of the Product, Bulk
Drug or Raw Materials and Components for the purpose of causing the Product to
be sold outside the Territory; (d) contact the Competent Authorities or other
entity about the Product, except as required by Applicable Laws or as may be
necessary or appropriate to carry out its obligations hereunder; and (e)
knowingly sell or distribute for resale the Product purchased hereunder to a
Third Party who intends to sell the Product outside of the Territory.

         Section 15.04. RECORDS AND AUDITS.

                  (a) Each Party shall keep or cause to be kept true, accurate
         and complete Books and Records as are required to determine, in a
         manner consistent with accrual method of accounting in accordance with
         GAAP, any sums or credits due under this Agreement during the Term and
         for a period of three years thereafter or as otherwise required to
         comply with Applicable Laws. Without limiting the generality of the
         foregoing, the Parties agree that such Books and Records shall include
         without limitation the following:

                           (i) Fujisawa shall keep such Books and Records to
                  permit Atrix to confirm the completeness and accuracy of (A)
                  the information presented in each Royalty Statement and all
                  payments due hereunder; (B) the calculation of A&S only in the
                  event of a royalty reduction under Section 4.02(b); (C) the
                  calculation of Net Sales; (D) the number of Product detail
                  calls made by Fujisawa under Section 5.01(b); and (E) any
                  payments due Atrix under this Agreement. Fujisawa shall []**

                           (ii) Atrix shall keep such Books and Records to
                  permit Fujisawa to confirm the completeness and accuracy of
                  (A) Development Costs; (B) Atrix Billing Price/Unit or the
                  Atrix Final Price/Unit, as applicable, and Atrix Manufacturing
                  Cost (including costs of any subcontractors or Second Source);
                  (C) the costs and expenses to qualify the Second Source as
                  described in Section 6.04; (D) []** if []** and (E) any []**

                  (b) Subject to the provisions of Section 2.04(b), at the
         request (and expense) of the requesting Party, the other Party shall
         permit an independent certified public accountant selected by such
         Party and reasonably acceptable to the other Party to audit and/or
         inspect only those Books and Records of the other Party as may be
         necessary to determine, with respect to any calendar year ending no
         more than three years prior to such Party's request, the completeness
         and accuracy of any reports made and/or any sums

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         or credits due under this Agreement. Any such independent accounting
         firm shall be subject to the confidentiality provisions of this
         Agreement. Such inspection shall be conducted during the Party's normal
         business hours, no more than once in any 12 month period and upon at
         least 30 days prior written notice by the requesting Party. If such
         accounting firm concludes that such payments were underpaid during the
         periods reviewed by such accountants, the Party shall pay the other
         Party the amount of any such underpayments, plus interest at a rate
         equal to the Prime Rate of Interest, within 30 days of the date the
         requesting Party delivers to the other Party 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, the Party shall pay to the other Party the amount of any such
         overpayments, without interest, within 30 days of the date the
         requesting Party delivers to the other Party such accounting firm's
         report so concluding that such payments were overpaid. The requesting
         Party 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, the other Party shall bear the full cost of
         such audit.

                  (c) In the event the non-requesting Party does not agree with
         the conclusions of such accounting report (whether such payments were
         underpaid or overpaid), then such Party shall notify the other Party
         within 30 days after receipt of the requesting Party's accountant's
         report. Thereafter, the Parties shall in good faith try and resolve
         such differences. If the Parties are unable to reach a mutual agreement
         within 15 days after the date of notice then independent auditors of
         each Party shall meet and select an independent accounting firm (being
         an accounting firm not used by either Party) to make the final
         determination within 15 days thereafter. The determination of such
         independent accounting firm shall be binding and conclusive on the
         Parties, and the cost of such firm shall be borne by the Party against
         whom the determination by such firm is made.

         Section 15.05. MARKETING EXPENSES. Fujisawa covenants and agrees that,
except as otherwise specified in this Agreement, Fujisawa shall be solely
responsible for the cost and implementation of any and all marketing, sales,
promotional and related activities concerning or related to the marketing, sale,
distribution and promotion of the Product. Fujisawa shall not be responsible for
any such costs incurred []** under Section 12.01, which costs shall be borne
solely by Atrix.

         Section 15.06. 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 Atrix Marks.

         Section 15.07. LAUNCH QUANTITIES. Each Party covenants and agrees to
the other as follows:

                  (a) that Atrix shall Manufacture and supply to Fujisawa Launch
         Quantities of the Product and Professional Samples, in accordance with
         the Specifications and the other terms and conditions of this Agreement
         prior to the launch date of the Product;

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                  (b) that Fujisawa shall timely provide to Atrix its forecast
         of Fujisawa's requirement of Product, on a Product-by-Product and
         country-by-country basis, including Professional Samples (in accordance
         with Sections 7.07(a), (b) and (c), of this Agreement), in order to
         enable Atrix to timely provide Launch Quantity of the Product to
         Fujisawa.

         Section 15.08. FURTHER ACTIONS. Upon the terms and subject to the
conditions hereof, each of the Parties 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, or advisable under Applicable Laws or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, (b) obtain from Competent 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, to the extent required 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 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 such Party.

         Section 15.09. INSPECTIONS AND CONFIDENTIALITY OF THIRD PARTIES. If a
Third Party requires a confidentiality restriction that may impact either
Party's rights to conduct inspections under this Agreement, each Party shall use
its Commercially Reasonable Efforts, in good faith, to obtain a waiver from any
such Third Party upon receipt of an inspection notice. Atrix further agrees that
with respect to any inspection of Atrix's facilities by Fujisawa or by Third
Parties at the request of Fujisawa, any such inspection shall be subject to the
confidentiality provisions of Article XI.

         Section 15.10. LICENSED TECHNOLOGY. Fujisawa hereby covenants that it
will use and practice the Atrix Technology in accordance with the terms and
conditions of this Agreement and in material compliance with Applicable Laws. In
addition, Fujisawa shall cause its Affiliates and any sublicensee to comply with
the applicable terms and conditions of this Agreement and Applicable Laws.

         Section 15.11. 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 Sections 11.01,
15.01, 15.02, 15.03 or 15.06, and because of the immediate and irreparable
damage that may be caused to the non-breaching Party for which monetary



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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 Section 15.11 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 Sections
11.01, 15.01, 15.02, 15.03 or 15.06. The Parties agree that the non-breaching
Party shall have the right to seek relief for any violation or threatened
violation of Sections 11.01, 15.01, 15.02, 15.03 or 15.06, 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
Sections 11.01, 15.01, 15.02, 15.03 or 15.06. This Section 15.11 shall apply
with equal force to the breaching Party's Affiliates.

                                  ARTICLE XVI

                                 PRODUCT RECALL

         Section 16.01. PRODUCT RECALLS OR WITHDRAWAL. If at any time or from
time to time during the Term: (a) any Competent Authority of any country in the
Territory requests a Party to recall or withdraw the Product; (b) a court of
competent jurisdiction issues an order or directive for the Product to be
recalled or withdrawn; or (c) if a voluntary recall or withdrawal of the Product
is contemplated by either Party (individually or 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. The Parties acknowledge and understand due to the
immediacy of any recall situation, such approval should be given in 48 hours.
Any Recall in the Territory shall be carried out by Fujisawa 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. Fujisawa shall in all
events be responsible for conducting any Recall in the Territory, market
withdrawals or corrections with respect to the Product in the Territory.
Fujisawa 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. Atrix shall cooperate as
reasonably requested by Fujisawa in connection with any such Recall and shall
cause any approved subcontractor or Second Source to cooperate as well. Atrix
will be responsible for complying with all Applicable Laws and Governmental
Approvals during the Recall and will be responsible for all interactions with
appropriate Governmental Authorities such as the FDA Office of Compliance and
the appropriate FDA local district office(s). Fujisawa shall be entitled to
participate in any and all meetings, conference calls and any other interactions
with the FDA and/or any other Competent Authority in the event of any Recall;
provided that Fujisawa's right to be present is subject to approval by such
Competent Authority and subject to Fujisawa being available at the time and date
established by such Competent Authority. Atrix shall use Commercially Reasonable
Efforts to secure a time and date for such meeting, telephone call or other
interaction that is reasonably acceptable to Fujisawa and consult with Fujisawa
with respect thereto; and provided further that Atrix shall have the right to
make the final decision on all such matters. The Parties will cooperate and work
together in the event of any Recall. Atrix, in consultation with Fujisawa, shall
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reports any other documentation required by the Competent Authorities in
connection with any such recall.

         Section 16.02. RECALL COSTS. Fujisawa 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 voluntary or is required by a court of
         competent jurisdiction or by a Competent Authority, but is not due to a
         manufacturer's defect or the negligence or misconduct of the Parties
         including a breach, then Fujisawa and Atrix shall []** including,
         without limitation, []** In such event, []** agrees []** and, if []**
         SHALL []**

                  (b) If such Recall shall be due to failure to Manufacture the
         Product in accordance with the Specifications and the terms and
         conditions of this Agreement (whether by Atrix, any approved
         subcontractor or Second Source), manufacturer's defect (whether by
         Atrix, any approved subcontractor or Second Source) or the negligence
         or the breach by Atrix (or any approved subcontractor and/or Second
         Source) of its representations, warranties, covenants, agreements or
         obligations hereunder or the misconduct of Atrix (or any approved
         subcontractor or Second Source or its sublicensee in the event Atrix
         exercises []** shall be []** and Atrix will []** and, if []** Fujisawa
         shall []**

                  (c) If such Recall is due to the negligence or the breach by
         Fujisawa of its representations, warranties, covenants, agreements or
         obligations hereunder or the misconduct of Fujisawa or its sublicensee
         or Affiliates, all such costs and expenses shall be []**

         Section 16.03. NOTIFICATION OF COMPLAINTS. During the Term and, with
respect to all Product or Professional Samples supplied or purchased under this
Agreement, and for a period of four years after the termination, expiration or
cancellation of this Agreement, each Party agrees to (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
Product or Professional Samples, whether or not determined to be attributable to
the Product or Professional Samples and (b) with respect to an ADE, comply with
the provisions of Section 9.02. Fujisawa, 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 Fujisawa including
performing any Testing and follow-up investigations mutually agreed upon by the
Parties. Atrix, at its sole cost and expense, will have the responsibility for
preparing and submitting any reports to the Competent Authorities, []**.

         Section 16.04. NOTIFICATION OF THREATENED ACTION. During the Term and,
with respect to all Product or Professional Samples supplied or purchased under
this Agreement, for a period of four years after the termination, expiration or
cancellation of this Agreement, each Party agrees to immediately notify the
other Party of any information it receives regarding any threatened or pending
action, inspection or communication by or from a concerned Competent Authority

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which may affect the safety or efficacy claims of the Product or Professional
Samples or the continued marketing of the 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 XVII

                              TERM AND TERMINATION

         Section 17.01. TERM. This Agreement shall become effective on the
Effective Date and shall expire on a country-by-country and Product-by-Product
basis []** after the expiration of the last to expire Atrix Patents containing a
Valid Claim that covers that Product in each such country in the Territory (the
"Term"), unless earlier terminated as provided in Sections 17.02, 17.03 and
17.04 below.

         Section 17.02. TERMINATION BY EITHER PARTY. Either Party may terminate
this Agreement prior to the expiration of the Term upon the occurrence of any of
the following:

                  (a) upon or after the cessation of operations of the other
         Party or the bankruptcy, insolvency, dissolution or winding up of the
         other Party (other than dissolution or winding up for the purposes or
         reconstruction or amalgamation); or

                  (b) upon or after the breach of any material provision of this
         Agreement by the allegedly breaching Party if the allegedly breaching
         Party has not cured such breach within 60 days after written notice
         thereof by the non-breaching Party, the non-breaching Party may, at its
         sole option, terminate this Agreement with respect to the particular
         Product in the particular country in the Territory that is the subject
         of such breach, and this Agreement shall remain in effect as it applies
         to all other Products and all other countries; provided, however, that
         if such breach occurs in the United States, the non-breaching Party may
         terminate this Agreement in its entirety.

         Section 17.03. TERMINATION BY ATRIX. Atrix may terminate this Agreement
prior to the expiration of the Term with respect to any country in the Territory
and, at its discretion, on a Product-by-Product basis, upon the failure by
Fujisawa to pay any milestone payments or license fees, or portion thereof,
pursuant to Article IV, within 15 days after receipt of notice thereof from
Atrix.

         Section 17.04. TERMINATION BY FUJISAWA. Fujisawa may terminate this
Agreement in its entirety, or on a country-by-country and/or Product-by-Product
basis, as follows:

              (a) []** Product, []** upon []**

              (b) []**

              (c) in accordance with []** of this Agreement; or


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              (d) upon []**

                    (i)  []** in the event the []** and

                    (ii) []** as determined by []** from []**

         provided, however, that []** it shall []** The Parties agree []** Each
         Party shall []** shall []** The Parties agree []** shall be []** shall
         be []**

         Section 17.05. EFFECT OF TERMINATION.

                  (a) Termination by Fujisawa.

                           (i) If Fujisawa terminates this Agreement under
                  Sections 17.04(a) or under Section 17.04(b) for []** Fujisawa
                  shall []** including any []** shall be []** In the event []**
                  then in such event: []** shall []** shall []**

                           (ii) If Fujisawa terminates this Agreement in its
                  entirety or on a country-by-country and/or Product-by-Product
                  basis under Section 17.04(b) []**

                           (iii) If Fujisawa terminates this Agreement under
                  Sections 17.04(c) or 17.04(d) []**

                           (iv) If Fujisawa terminates this Agreement under
                  Section 17.04(b) other than:

                                (A) []** or

                                (B) []**

                           []** shall []** In addition, if []** shall []**
                  provided,  however, that []**

                           (v) if Fujisawa terminates this Agreement pursuant to
                  Section 2.08(b), []**

                           (vi) All amounts payable pursuant to this Section
                  17.05(a) will be paid no later than 45 days after the date of
                  termination.

                  (b) Termination by Either Party. In addition to the
         requirements of Section 17.05(a), upon termination of this Agreement by
         Atrix pursuant to Sections 17.02 or 17.03 or by Fujisawa pursuant to
         Sections 17.02 or 17.04 the following shall occur:

                           (i) Subject to Section 17.07, Fujisawa 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 Fujisawa under Sections
                  3.02 and 3.03 shall automatically terminate. In

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                  the event any such termination relates solely to one or more
                  Products or any one or more countries in the Territory, then
                  this Agreement and the licenses contained in Sections 3.02 and
                  3.03 shall only be terminated to the extent it applies to such
                  Product(s) and/or such country or countries in the Territory
                  and this Agreement shall remain in effect as it applies to all
                  other Product(s) and all other countries in the Territory;

                           (ii) notwithstanding subsection (i) of this
                  subsection (b), Fujisawa may, in its sole discretion, elect to
                  sell off or distribute, as applicable, its existing inventory
                  of Product and Professional Samples to which the termination
                  pertains in accordance with the terms set forth in subsection
                  (iii) below, after the effective date of termination, 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, as the case may be.
                  Any such existing inventory of Product and Professional
                  Samples shall comply with the Specifications and the other
                  terms and conditions of this Agreement.

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

                                    (A) continue to comply with its payment
                           obligations for the Product or Professional Samples
                           to Atrix under Article IV;

                                    (B) continue to sell off or distribute, as
                           applicable, existing inventory of Product and
                           Professional Samples for six months after the
                           applicable notice of termination. At the expiration
                           of such six month period Fujisawa shall, at Atrix's
                           election, either (i) sell all existing inventory of
                           Product and Professional Samples to Atrix or (ii)
                           destroy all remaining inventory of Product and
                           Professional Samples in accordance with Applicable
                           Laws and provide Atrix with written proof of
                           destruction sufficient to comply with Applicable
                           Laws. In either case, Atrix shall pay to Fujisawa the
                           full amount of the actual cost paid by Fujisawa to
                           Atrix for such remaining inventory of Product and
                           Professional Samples;

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

                                             (aa) sell all existing inventory of
                                    Product and Professional Samples to Atrix at
                                    Fujisawa's actual cost of acquisition; or

                                             (bb) destroy all remaining
                                    inventory of Product and Professional
                                    Samples in accordance with Applicable Laws
                                    and provide Atrix with written proof of
                                    destruction sufficient to comply with
                                    Applicable Laws. In either case, Atrix shall
                                    pay to Fujisawa the full amount of the
                                    actual cost paid by Fujisawa to Atrix for
                                    such remaining inventory of Product and
                                    Professional Samples;



                                       50
<PAGE>


                                    (D) if Fujisawa sells any inventory of
                           Product or Professional Samples to Atrix pursuant to
                           this subsection (iii), it shall warrant that such
                           inventory of Product and Professional Samples has
                           been stored in material compliance with the
                           Specifications, Governmental Approvals and all
                           Applicable Laws, has not been adulterated within the
                           meaning of Applicable Laws and has otherwise been
                           maintained by Fujisawa according to the
                           Specifications, Governmental Approvals and Applicable
                           Laws;

                                    (E) any sales of Product or Professional
                           Samples made by Fujisawa to Atrix pursuant to this
                           subsection (iii) shall be made by Fujisawa 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 insurance, freight and duties
                           and all reasonable costs of reworking the Product so
                           that such Product is in saleable form, shall be []**
                           Amounts owed by either Party to the other pursuant to
                           this subsection (iii) for the Product or Professional
                           Samples shall be paid by such Party within 10 days
                           after receipt by a Party of a reasonably detailed
                           invoice from the other Party for the amount so owing
                           to it by the other Party under this subsection (iii).

                           (iv) 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 Articles XI, XIV, XVI, XVIII and XIX and this
                  Article XVII and Sections 10.03, 10.04, 13.09 and 13.10 shall
                  survive expiration or termination of this Agreement.

                           (v) subject to the provision of Section 17.07, 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, except for such
                  Confidential Information which the receiving Party is required
                  to keep under Applicable Laws, in which event such
                  Confidential Information shall be held subject to the terms
                  and conditions of Article XI.

         Section 17.06. 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 17.07. LICENSE FOLLOWING EXPIRATION. Upon expiration of the
Term and provided all Atrix Patents with a Valid Claim(s) covering the Product
have expired in the

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Territory, Fujisawa shall thereafter have an irrevocable, non-exclusive,
royalty-free license, with the right to sublicense, to market, advertise,
promote, distribute, offer for sale, sell, export and import, but not
Manufacture, the Product in the Territory. Upon request by Fujisawa, Atrix shall
continue to sell the Product to Fujisawa upon terms mutually agreeable to the
Parties pursuant to a separate supply agreement to be negotiated in good faith
between the Parties. []**

                                 ARTICLE XVIII

                               DISPUTE RESOLUTION

         Section 18.01. 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 or obligations hereunder or to the interpretation,
performance, breach, or termination of this Agreement, (a "Dispute"). It is the
objective of the Parties to establish procedures to facilitate the resolution of
a Dispute 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 XVIII if and when a Dispute arises under
this Agreement. []**

         Unless otherwise specifically set forth in this Agreement, a Dispute
among the Parties will be resolved as recited in this Article XVIII. Any
Disputes relating to this Agreement shall be presented to the Chief Executive
Officers of Atrix and Fujisawa, or their respective designees, for resolution.
In the event that the Chief Executive Officers of Atrix and Fujisawa, or their
respective designees, cannot resolve the dispute within []** (or such other
period of time as mutually agreed to by the Parties in writing) of being
requested by a Party to resolve a dispute, either Party may, by written notice
to the other, invoke the provisions of Section 18.02.

         Section 18.02. TRIAL WITHOUT JURY. If the Parties fail to resolve a
Dispute through negotiation in accordance with Section 18.01, 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 XVIII.

         Section 18.03. 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 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 18.04. PROVISIONAL REMEDIES. Although the procedures specified
in this Article XVIII are the sole and exclusive procedures for the resolution
of a Dispute 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 18.05. 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 the federal
courts.

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<PAGE>
                                  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 Affiliates (collectively,
the "Other Group") with whom the Initiating Group has contact in connection
with, or who otherwise is known by the Initiating Group to participate in, the
transactions contemplated by this Agreement for a period of two years after the
Effective Date. The Initiating Group shall not be precluded from hiring any such
person who has been terminated by the Other Group 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. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the Parties hereto (whether by operation of Applicable Laws or otherwise)
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
either Party may sell, transfer or assign its rights under this Agreement to any
Third Party, in the case of Atrix, as part of a sale or transfer of
substantially all of its assets and, in the case of Fujisawa, as part of a sale
or transfer of substantially all of its assets related to its dermatology
pharmaceutical business; provided that such Third Party agrees in writing to be
bound by the terms and conditions of this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective permitted successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the Parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.

         Section 19.03. FORCE MAJEURE. Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement (other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party,
including fire, floods, embargoes, war, acts of war (whether war be declared or
not), acts of terrorism, insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God (a "Force Majeure"); provided
that the Party whose performance is delayed or prevented shall provide prompt
notice of the Force Majeure to the other Party. Performance shall be excused so
long as the condition constituting Force Majeure continues and the
non-performing Party uses good faith diligent efforts to mitigate, avoid or end
such delay of failure in performance as soon as practicable.

         Section 19.04. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
except that no conflict of laws



                                       53
<PAGE>


provision shall be applied to make the laws of any other jurisdiction applicable
to this Agreement.

         Section 19.05. WAIVER. Except as specifically provided for herein, the
waiver from time to time by either of the Parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
continuing waiver of same or of any other of such Party's rights or remedies
provided in this Agreement.

         Section 19.06. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

         Section 19.07. 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," "Fujisawa" or any other trade name or trademark of the
other Party or its Affiliates in connection with the performance of the
Agreement.

         Section 19.08. NOTICES. All notices and other communications provided
for hereunder shall be in writing and shall be mailed by first-class, registered
or certified mail, postage paid, or delivered personally, by overnight delivery
service or by facsimile, computer mail or other electronic means, with
confirmation of receipt, addressed as follows:

         IF TO ATRIX:               Atrix Laboratories, Inc.
                                    2579 Midpoint Drive
                                    Fort Collins, CO 80525
                                    Attn: Charles P. Cox, Ph.D.
                                    Senior Vice President, Corporate Development
                                    Telephone: (970) 482-5868
                                    Facsimile: (970) 482-9735

         COPIES TO:                 Morrison & Foerster LLP
                                    5200 Republic Plaza
                                    370 17th Street
                                    Denver, CO 80202-5638
                                    Attn: Warren L. Troupe, Esq.
                                    Telephone: (303) 592-2255
                                    Facsimile: (303) 592-1510

         IF TO FUJISAWA:   Fujisawa Healthcare, Inc.
                                    Three Parkway North
                                    Deerfield, IL 60015-2548
                                    Attn: General Counsel
                                    with a copy to: the Chief Executive Officer,
                                    the Senior Vice President of Finance,
                                    the Vice President of New Product
                                    Planning and Licensing
                                    Telephone: (847) 317-8870
                                    Facsimile: (847) 317-7288

         Notice so given shall be deemed given and received (a) if by mail on
the fourth day after posting; (b) 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 (c)



                                       54
<PAGE>


if by overnight delivery courier, on the next Business Day following the day
such notice is delivered to the overnight delivery courier service.

         Section 19.09. INDEPENDENT CONTRACTORS. The activities and resources of
each Party shall be managed by such Party, acting independently and in its
individual capacity. It is expressly agreed that Atrix and Fujisawa shall be
independent contractors and that the relationship between the two Parties shall
not constitute a partnership or agency of any kind. Neither Atrix nor Fujisawa
shall have the authority to make any statements, representations or commitments
of any kind, or to take any action, which shall be binding on the other Party,
without the prior written consent of the other Party.

         Section 19.10. RULES OF CONSTRUCTION. The Parties hereto agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the Party drafting such agreement or
document.

         Section 19.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
the Exhibits attached hereto) sets forth all of the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto with respect to the subject matter hereof and supersedes and
terminates all prior agreements and understandings between the Parties. There
are no covenants, promises, agreements, warranties, representations conditions
or understandings, either oral or written, between the Parties other than as set
forth herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.

         Section 19.12. COUNTERPARTS; FACSIMILE. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
may be signed and delivered to the other Party by facsimile signature; such
transmission will be deemed a valid signature.


                                       55

<PAGE>


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



ATRIX LABORATORIES, INC.                    FUJISAWA HEALTHCARE, INC.





By:    /s/ David R. Bethune                 By:  /s/ Hideo Fukumoto
   ------------------------------------        --------------------------

Name:  David R. Bethune                     Name:  Hideo Fukumoto
Title: Chairman and Chief Executive         Title: President and Chief Executive
       Officer                                     Officer



                                       56
<PAGE>

                                    EXHIBIT A

                               ATRIX PATENT RIGHTS

                                 SMP(TM) PATENTS


                                      []**



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                                      A-1
<PAGE>



                                    EXHIBIT B

                           DEVELOPMENT PROGRAM OUTLINE

The Development Program for the Acne Product shall be consistent with the
following:

[]**



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<PAGE>



                                    EXHIBIT C

                                   ATRIX MARKS




SMP(TM)

Solvent Microparticle System(TM)

ATRISONE(TM)


                                      C-1
<PAGE>



                                    EXHIBIT D

                                EXAMPLE OF ATRIX
                   MANUFACTURING COST PER UNIT DETERMINATION
                                      []**


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                                      D-1
<PAGE>



                                    EXHIBIT E
                 EXAMPLE OF ADJUSTMENT TO PURCHASE PRICE/AUDIT

                                      []**


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                                      E-1