Document:

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                                                                       Form 10-Q

                                                                    Exhibit 10.7

                  SALARY DEFERRAL & SAVINGS RESTORATION PLAN

I.    PURPOSE

              The purpose of this Plan is to provide an eligible employee with
      the opportunity to defer, until termination of employment, receipt of
      salary that, because of compensation limits imposed by law, is ineligible
      to be considered in calculating benefits within the Company's
      tax-qualified defined contribution plan(s) and thereby recover benefits
      lost because of that restriction.

II.   ADMINISTRATION

              The administration of this Plan is vested in the Board of Benefits
      and Pensions appointed by Company. The Board may adopt such rules as it
      may deem necessary for the proper administration of the Plan, and may
      appoint such person(s) or group(s) as may be judged necessary to assist in
      the administration of the Plan. The Board's decision in all matters
      involving the interpretation and application of this Plan shall be final.
      The Board shall have the discretionary right to determine eligibility for
      benefits hereunder and to construe the terms and conditions of this Plan.

III.  ELIGIBILITY

              An employee of the Company who is participating in the Company's
     tax-qualified defined contribution plan(s) and whose annual base
     compensation exceeds the amount prescribed in Internal Revenue Code Section
     401(a)(17) shall be eligible to participate in this Plan (hereinafter
     "Participant").

              For purposes of this Plan, the term "Company" means E. I. du Pont
      de Nemours and Company, any wholly owned subsidiary or part thereof and
      any joint venture, partnership, or other entity in which E. I. du Pont de
      Nemours and Company has an ownership interest, provided that such entity
      (1) adopts this Plan with the approval of the E. I. du Pont de Nemours and
      Company and (2) agrees to make the necessary financial commitment in
      respect of any of its employees who become Participants in this Plan.

              Participation in this Plan is entirely voluntary.

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                                                                       Form 10_Q

IV.   PARTICIPANTS' ACCOUNTS

      (A) Participant Contributions. A Participant may elect to defer receipt of
      a percentage of annual base compensation in excess of the amount
      prescribed in Internal Revenue Code Section 401(a)(17), and have the
      dollar equivalent of the deferral percentage credited to a Participant
      Account under this Plan. The deferral percentage elected under this Plan
      shall not exceed that allowed in the Savings & Investment Plan of E. I. du
      Pont de Nemours and Company. Except as provided below, such deferral
      election will be made prior to the beginning of each calendar year and
      will be irrevocable for that calendar year.

          For purposes of a Participant's first year of participation in this
      Plan, the compensation deferral election must be made no later than 30
      days prior to the first day of the month for which compensation is
      deferred and will be irrevocable for the remainder of that calendar year.

      (B) Company Contributions. To the extent that a Participant makes a
      deferral election under the terms of subparagraph (A) above, the Company
      will credit to that Participant's Account in this Plan an amount
      equivalent to the company matching contribution that would be provided to
      that Participant under the terms of the Company's tax-qualified defined
      contribution plan(s) in which (s)he is participating.

      (C) Earnings Equivalents. Credits for Participant Contributions and
      Company Contributions shall be treated as having been invested in one or
      more of the investment options available for the ongoing deposit of new
      employee contributions in the Savings & investment Plan of E. I. du Pont
      de Nemours and Company. Additional credit (or debit) amounts will be
      posted to the Participant's Account in this Plan based on the performance
      of those investment options.

          The Participant shall have the right to:

          (1) designate which of the available investment options are to be used
              in valuing his/her Account under this Plan, subject to the rules
              governing investment direction in the Savings & Investment Plan of
              E.I. du Pont de Nemours and Company; and/or

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                                                                       Form 10-Q

IV.   PARTICIPANTS' ACCOUNTS - (Cont'd)

          (2)  change the designated investment options used in valuing his/her
               Account under this Plan, subject to the rules governing
               investment direction and/or transfers among funds in the Savings
               & Investment Plan of E. I. du Pont de Nemours and Company.

      (D) Credits to Accounts. Participant Contributions, Company Contributions
      and Earnings Equivalents shall be credited (or debited) to the
      Participant's Account under this Plan as unfunded book entries stated as
      cash balances, and will not be payable to Participants until such time as
      employment with the Company terminates. The cash balances in Participant
      Accounts shall be unfunded general obligations of the Company, and no
      Participant shall have any claim to or security interest in any asset of
      the Company on account thereof.

V.    VESTING

          Participant Contributions and Company Contributions and Earnings
      Equivalents shall be vested at the time such amounts are credited to the
      Participant's Account.

VI.   PAYMENT OF BENEFITS

          Amounts payable under this Plan shall be delivered in a cash lump sum
      as soon as practical after termination of employment unless the
      Participant irrevocably elects under rules prescribed by the Board of
      Benefits and Pensions to receive payments in a series of annual
      installments. All payments under this Plan shall be made by, and all
      expenses of administering this Plan shall be borne by, the Company.

VII.  NON-ASSIGNMENT

          No assignment or alienation of the rights and interests of
      participants, beneficiaries and survivors under this Plan will be
      permitted or recognized under any circumstances. Plan benefits can be paid
      only to participants, beneficiaries or survivors.

VIII. RIGHT TO MODIFY

          The Company reserves the right to change or discontinue this Plan in
      its discretion by action of the Compensation & Benefits Committee.

                                       3<PAGE>

                                                                   Exhibit 10.14

                       MANUFACTURE AND SUPPLY AGREEMENT

     This Manufacture and Supply Agreement (the "Agreement") is entered into as
of February 16, 2001 (hereinafter "Effective Date") by and between aaiPharma
Inc., a Delaware corporation with principal corporate offices located at 2320
Scientific Park Drive, Wilmington, North Carolina  28405  ("AAI") and OraPharma,
Inc., a Delaware corporation with principal corporate offices located at 732
Louis Drive, Warminster, Pennsylvania  18974 ("OraPharma").

                                   RECITALS

     OraPharma and AAI propose to enter into a manufacturing and supply
agreement in order to commercialize Arestin(TM) ("Arestin") (previously referred
to as minocycline periodontal therapeutic system or MPTS), a drug product
consisting of minocycline hydrochloride encapsulated in a bioresorbable polymer,
poly(glycolide-co-dl-lactide). OraPharma has completed phase 3 clinical trials
for Arestin and filed a new drug application ("NDA") for the product on February
17, 2000 and OraPharma received approval of the NDA from the Food and Drug
Administration to launch the product on February 16, 2001. AAI was the
manufacturer of clinical trial materials used in the Phase 3 clinical trials.
AAI and OraPharma agree that the most cost-effective commercialization of
Arestin is to scale-up the clinical manufacturing process at the AAI Wilmington
plant .

     NOW THEREFORE, the parties hereby agree as follows:

                            ARTICLE 1 - DEFINITIONS

     For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:

     1.01.  "Act" shall mean the United States Food, Drug and Cosmetic Act, as
amended from time to time, and the regulations promulgated thereunder.

     1.02.  "Affiliate" shall mean a corporation or any other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the designated party, but only
for so long as the relationship exists.  "Control" shall mean ownership of
shares of stock having at least fifty percent (50%) of the voting power entitled
to vote for the election of directors in the case of a corporation.

     1.03.  "Batch" shall mean the manufactured Product (i) having uniform
characteristics, (ii) manufactured during a single, continuous, homogeneous
processing run, and (iii) bearing the same lot number.
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     1.04.  "cGMP" shall mean those current Good Manufacturing Practices
required by the FDA to be followed in connection with the manufacture of
pharmaceutical products, as defined from time to time by the Act and related
regulations, or any successor laws or regulations governing the manufacture,
handling, storage, and control of the Product in the United States.

     1.05.  "Commercialize" shall mean the activities undertaken to market,
promote, and sell a pharmaceutical product.

     1.06.  "Diligent Efforts" shall mean the commercially reasonable efforts
that a prudent business person or company would expend in the normal course of
business to accomplish an important objective, but shall not mean efforts that
could, if carried out, have a significant negative impact on the party's
relevant business unit as a whole.

     1.07.  "FDA" shall mean the United States Food and Drug Administration or
any successor United States governmental agency performing similar functions
with respect to pharmaceutical products.

     1.08.  "Initial Manufacturing Cost" shall mean the Manufacturing Cost for
the initial [*] commercial Batches of Product.

     1.09.  "Manufacturing Cost" shall mean the price charged to OraPharma for
AAI to manufacture the Product for any calendar year, and expressed on a per
Batch basis.

     1.10.  "NDA" shall mean a New Drug Application submitted to the FDA for the
Product which OraPharma intends to Commercialize under the name Arestin(TM).

     1.11.  "Product" shall mean microencapsulated minocycline hydrochloride
(also known as minocycline PTS microspheres) manufactured according to the
Product Specifications (defined below).

     1.12.  "Product Specifications" shall mean the manufacturing, testing,
            storage, and quality control specifications for Product as set forth
            in the NDA as approved by the FDA (or any supplements thereto), plus
            any additional specifications agreed upon in writing by the parties
            and attached hereto as Appendix A.

     1.13   "Production Capacity" shall mean the ability to manufacture [*]
            Batches in a four-week period; provided, however, that the number of
            Batches will be amended to reflect the final equipment installed and
            qualified in the OraPharma Space.

     1.14.  "Regulatory Data" shall mean the manufacturing and other data
included within Technical Information required for, or included in any
governmental regulatory filing to obtain or maintain regulatory approval to
market the Product, including pre-approval and post-approval reports, filings,
submissions, amendments, and supplements.

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*Confidential Treatment Requested

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     1.15.  "Technical Information" shall mean know-how, trade secrets,
inventions, data (including Regulatory Data), technology, processes, and
information, including improvements and modifications to any thereof, the
disclosure or use of which is provided for or permitted under this Agreement and
which a party hereto has the lawful and contractual right to disclose to the
other party.  "Technical Information" shall include, without limitation,
processes and analytical methodology used in the development, testing, analysis
and manufacture and medical and other scientific data.

     1.16.  "Third Party" shall mean an entity or person which is not party to
this Agreement or an Affiliate of a party to this Agreement.

                               ARTICLE 2 - GRANT

     2.01.  Grant.  For the purpose set forth herein, OraPharma grants to AAI
            -----
during the term of this Agreement a nonexclusive, non-assignable world-wide,
royalty-free right to manufacture and supply Product under OraPharma's NDA
and/or equivalent international dossiers, and the right to use any and all
OraPharma Regulatory Data and/or Technical Information, in each case only for
the purpose of AAI carrying out its obligations hereunder, on the terms and
subject to the conditions of this Agreement.

     2.02.  Consideration.  In consideration for the grant set forth in Article
            -------------
2.01 herein, AAI agrees to use its Diligent Efforts to manufacture Product and
prepare for delivery of such Product to OraPharma's designated commercial
carrier, on the terms and subject to the conditions of this Agreement.

                     ARTICLE 3 - PURCHASE AND SALE; ORDERS

     3.01.  Purchase and Sale of Product.  Subject to the remainder of this
            ----------------------------
Agreement, and during the term hereof, AAI agrees to sell to OraPharma, and
OraPharma agrees to purchase from AAI, OraPharma's requirements of Product
ordered in accordance with this Agreement for sale in the United States.  Other
countries where the Product may be sold must be mutually agreed upon in writing.
AAI represents and warrants to OraPharma that it will maintain during the term
of this Agreement, an FDA - approved United States facility to manufacture and
test the Product for sale as contemplated by this Agreement.  AAI's obligation
to supply Product under this Agreement, and OraPharma's obligation to purchase
Product under this agreement, are only binding to the extent of AAI's Production
Capacity and the timely availability of raw materials.  In this regard, AAI will
dedicate approximately [*] square feet of space in its manufacturing facility at
1726 North 23rd Street, Wilmington, NC USA, to manufacture Product (the
"OraPharma Space").  The OraPharma Space is being upfitted, at OraPharma's
expense, for dedicated Product manufacturing.  The parties anticipate that the
OraPharma Space will be able to manufacture Product under cGMPs on [*].  Both
parties covenant to use Diligent Efforts to have the manufacturing operations
transferred into the OraPharma Space in an expeditious manner and acknowledge
that such transfer may create a disruption in AAI's ability to supply Product.
Once the OraPharma Space has been qualified to manufacture Product under

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* Confidential Treatment Requested

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     cGMPs, AAI shall lease the OraPharma Space to OraPharma under a separate
agreement for a monthly rental price of $[*].  In addition, OraPharma shall pay
during the lease term $[*] per quarter (due at the beginning of the applicable
quarter) to cover, among other things, maintenance, utilities and metrology
expenses (collectively, the "Lease Expenses") for the OraPharma Space.  The
Lease Expenses will be reviewed at the end of each calendar year and adjusted to
reflect any increase or decrease in applicable usage expenses.  Such lease
agreement will only terminate upon the due termination of this Agreement.  All
improvements to the OraPharma Space, excluding equipment purchased by OraPharma,
shall be owned by AAI and OraPharma shall not cause, either directly or
indirectly, any lien to be placed on the improvements to the OraPharma Space.

     3.02.  Forecasts. OraPharma has provided to AAI a forecast of OraPharma's
            ---------
launch quantities of Product and requirements on a monthly basis through January
2002.  OraPharma will provide to AAI rolling twelve-month forecasts of the
Product requirements on a monthly basis for use by AAI in material planning,
procurement and testing and employee staffing. The rolling forecast shall be
delivered to AAI no later than the twentieth day of each month. The rolling
forecast will not be binding on OraPharma, except that the first three months of
each forecast shall be a commitment by OraPharma to purchase over such three-
month period no less than [*] of the forecasted amount (the "Minimum
Requirement").  Any shortfall in the Minimum Requirement will be invoiced to
Orapharma.

     3.03.  Firm Purchase Orders.
            --------------------

            (a) OraPharma will place firm purchase orders for full Batches on a
monthly basis at least 90 days prior to the delivery date set forth in the
purchase order. The firm purchase order will specify the number of Batches of
Product to be shipped,  requested delivery dates (which delivery dates will be
no sooner than ninety (90) days after the date of the order), and the
destination of each shipment.  AAI will manufacture Product and satisfy any such
firm purchase orders, provided that AAI will use its Diligent Efforts, but will
not be obligated to, manufacture for delivery during any three-month period
quantities of the Product in excess of [*] of the quantities of Product
forecasted for such period, the ("Maximum Requirement").

            (b) Firm purchase orders submitted pursuant to Article 3.03(a) may
be decreased or canceled by OraPharma upon written notice to AAI; provided,
however, that OraPharma shall pay AAI, within 30 days after AAI's invoice, with
respect to the decreased or canceled order, the full amount (to the date of the
decrease or cancellation) of any AAI costs incurred in accordance with this
Agreement to the date of decrease or cancellation (including work in process)
and commitments made by AAI with respect to the canceled order or decreased
portion of the order which are not (or to the extent they are not) cancelable,
but in no case in excess of the purchase price for such canceled or decreased
portions of the order; provided, further, that amounts invoiced under this
Article 3.03 (b) shall be credited to OraPharma for purposes of any invoice
under Article 3.02 to the extent that the reduction or cancellation of a

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* Confidential Treatment Requested

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            firm purchase order causes OraPharma to fail to meet a Minimum
Requirement. If any material or work in process included in such decreased or
canceled order is subsequently utilized by AAI (and AAI shall use its Diligent
Efforts to use any such material and work in process), OraPharma shall receive
an appropriate credit or refund within thirty (30) days after such use.  AAI
shall use Diligent Efforts to minimize payments required to be made by OraPharma
under this Article 3.03(b).

            (c) OraPharma agrees that the firm purchase orders placed by it, net
of any decreases or cancellations of firm purchase orders in accordance with
Article 3.03(b)  will aggregate to at least the price of [*] Batches as
determined under Article 5.01 below for each full calendar quarter during the
Term that commences after the Effective Date and [*] Batches for each full
calendar year (the "Minimum Billings").  Subject to the foregoing, OraPharma
shall reimburse AAI for any shortfall in the Minimum Billings, except for any
shortfall attributable to Article 3.01 due to unavailability of raw materials,
limitation of AAI's Production Capacity or a disruption in AAI's ability to
supply product caused by the transfer of manufacturing operations.

     3.04.  Form.  Product supplied hereunder shall be supplied in accordance
            ----
with OraPharma's packaging specifications. Each shipment of Product shall be
accompanied by a Certificate of Analysis for testing performed under STM 110, as
may be amended from time-to-time.  All Product manufactured by AAI shall be
manufactured and tested in accordance with cGMP and all other applicable United
States laws and regulations, and all procedures set forth in the NDA.

     3.05.  Acceptance.  Firm purchase orders placed by OraPharma with AAI
            ----------
pursuant to the provisions of Article 3.03 shall be accepted by AAI in writing
within five business days after receipt, subject to the Maximum Requirement.
AAI shall ensure that Product ordered by OraPharma in accordance with this
Agreement is shipped in accordance with the delivery dates specified in
OraPharma's purchase order accepted by AAI, and AAI will notify OraPharma
promptly of any significant anticipated delay.

     3.06.  Purchase Order Terms.  The terms and conditions of this Agreement
            --------------------
shall be controlling over any terms and conditions included in the documents
used by OraPharma in ordering Product or by AAI in accepting or confirming
orders.

     3.07.  Product Shipments.  Packaging and preparation for shipment shall be
            -----------------
done by AAI in a manner designed to keep Product in a safe, chemically stable
and undamaged condition. Title to each shipment of Product, and the risk of loss
or damage with respect thereto, shall pass to OraPharma at shipping point upon
delivery to OraPharma's designated carrier.

     3.08.  Product Inspection.  OraPharma shall inspect or cause to be
            ------------------
inspected, upon receipt, each shipment of Product.  OraPharma may reject any
Batch for failure to meet the Product Specifications, the conditions of the NDA
or cGMP, by written notice to AAI specifying the reason for the rejection and
provide documentation supporting the rejection.

__________________________
* Confidential Treatment Requested

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     3.09.  Product Loss or Damage.  For Product shipped or caused to be shipped
            ----------------------
to OraPharma pursuant to this Agreement, OraPharma shall notify AAI or cause AAI
to be notified in writing, including all supporting documentation, of any loss
or damage of any shipment of Product not more than thirty (30) days following
receipt of Product.

     3.10.  Non-Conforming Product.  For Product shipped by AAI to OraPharma
            ----------------------
which both parties agree to be nonconforming as set forth herein, AAI shall
deliver to OraPharma's specified destination, as quickly as reasonably
practicable, but in no event beyond 90 days, and at no charge, the same quantity
of Product as the nonconforming Product duly rejected by OraPharma in accordance
with this Agreement.  AAI shall be solely responsible for all shipping expenses
associated with the return of such nonconforming Product from OraPharma to AAI,
and the shipment of replacement Product to OraPharma.  If the parties cannot
agree if Product is conforming or non-conforming, the dispute resolution set
forth in Article 4.03 below shall be utilized.  The remedy set forth in this
Article 3.10 shall be OraPharma's sole and exclusive remedy for the non-
conforming Product.

     3.11.  Raw Materials Procurement.  OraPharma shall be responsible for
            -------------------------
providing, at no cost to AAI, all cyclomethicone required to manufacture
Products under this Agreement.  In addition, OraPharma has contracted with third
parties for the supply of certain other raw materials required for the
manufacture of the Product and will provide AAI the authority to purchase such
raw materials under supply agreements between OraPharma and such third party
vendors. AAI shall place purchase orders with raw material suppliers approved by
OraPharma for those raw materials required to manufacture the Product.  Such
purchase orders will be placed in a timely fashion as to allow AAI to have
sufficient quantities of such raw materials to produce Product in accordance
with Article 3.03; provided, however, that firm purchase orders are placed in a
timely manner as provided in this Agreement to allow for the manufacture of
Product according to the launch forecast provided in Article 3.02.

                    ARTICLE 4 - QUALITY ASSURANCE; TESTING

     4.01.  Quality Control.  AAI shall manufacture the Product and perform
            ---------------
analytical testing of the manufactured Product in accordance with the NDA, cGMP
and the Act, and shall permit quality assurance and/or compliance
representatives of OraPharma to inspect periodically AAI's manufacturing
facilities and testing procedures for Product and the related Batch records upon
reasonable notice during normal business hours and on a confidential basis.
Without the consent of AAI, which consent shall not be unreasonably withheld,
inspections shall occur no more frequently than twice in any calendar year,
unless a significant problem is identified by OraPharma, in which case
inspections may occur more frequently until the problem has been corrected to
OraPharma's reasonable satisfaction. AAI shall respond to any OraPharma
findings, and take appropriate corrective action in accordance with cGMP, as
soon as practicable after notice from OraPharma of the finding. Stability
studies for Products manufactured under this Agreement   required to monitor
Product quality and to comply with cGMP are not included as

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     part of Manufacturing Costs, and shall be performed by AAI, as requested by
OraPharma, under a separate contract.

     4.02.  Release of Product.  OraPharma shall be responsible for the decision
            ------------------
to release Product for distribution and sale under this Agreement.

     4.03.  Disputes.  If, for any reason (i) OraPharma disagrees with AAI's
            --------
Certificate of Analysis, or believes that any Product was not manufactured in
accordance with cGMP or is adulterated; or (ii) OraPharma rejects any shipment
in accordance with Article 3.10 and AAI disagrees, OraPharma or AAI, as the case
may be, will promptly assert any such disagreement or rejection in writing,
setting forth the specifics of its disagreement or rejection. The parties will
attempt in good faith, within the thirty (30) day period following receipt by
one party of such a written notice, to resolve the dispute. If the parties fail
to agree during such time period, they will jointly choose an independent expert
within the following ten (10) business day period to determine whether the
Product in question meets the Product Specifications, was manufactured in
accordance with cGMP and was not adulterated by AAI or while under AAI's
control.  If such independent expert substantiates OraPharma's rejection or
disagreement, the Product in question shall be destroyed and replaced by AAI, at
AAI's expense. OraPharma shall not be obligated to pay for justifiably rejected
Product. If the independent testing does not substantiate OraPharma's rejection,
OraPharma shall accept the Product in question and pay AAI for the Product in
accordance with this Agreement. The results of the independent testing shall be
binding on the parties and nonappealable, and the costs of the independent
testing shall be borne by the party whose results were not substantiated by such
testing. If the parties cannot jointly appoint an independent expert within ten
(10) business days after they have failed to resolve the dispute as described
above, such expert shall be appointed by the American Arbitration Association.
The foregoing provisions of this Article 4.03 shall not limit OraPharma's rights
in respect of any breach by AAI of Article 7.01.

     4.04.  Complaints and Adverse Experience Reporting.  Any customer or
            -------------------------------------------
regulatory complaint or correspondence concerning the Product by a party during
the term hereof shall be addressed in the manner set forth below.

            (a) OraPharma shall investigate and monitor all customer or
regulatory complaints and/or correspondence concerning the use of the Product,
and if and to the extent requested by OraPharma, AAI shall investigate (or
assist OraPharma in the investigation of) all complaints concerning the
manufacture, packaging or cartoning of the Product. AAI shall, upon OraPharma's
request and at OraPharma's expense, do the physical testing required to
investigate such customer complaints. Either party shall notify the other party
in writing of all customer or other complaints not covered by paragraph (b)
below, by fax, within ten (10) days after receipt thereof.

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            (b) Each party shall notify the other party of all technical,
regulatory, or manufacturing complaints and/or material correspondence in
writing, by fax, within five (5) business days of receipt thereof, providing to
the other party, simultaneously with the fax, any written information received
by it in connection therewith.  Notwithstanding the foregoing, AAI shall advise
OraPharma of all complaints relating to incidents of serious and unexpected
adverse reactions (as defined below) to the Product as promptly as practicable
but not more than two (2) business days following the date AAI receives such
complaint. In addition, within ten (10) calendar days following the date AAI
receives such complaint, AAI shall provide OraPharma with a written report, by
fax, relating thereto.

            (c) For purposes of this Article 4.04, a reaction shall be deemed to
be "unexpected" if it is one that is not listed in the current package insert
for the Product provided by OraPharma; and a reaction shall be deemed to be
"serious" if it is fatal or life threatening, requires inpatient
hospitalization, prolonged hospitalization, is permanently disabling, is a
congenital anomaly or cancer, or results from an overdose, or requires
intervention to prevent impairment or damage.

            (d) OraPharma shall have the ultimate responsibility to file all
annual and other periodic reports required to be made to regulatory authorities
with respect to the Product, and all required Adverse Experience Reports.
OraPharma shall be responsible for responding to all inquiries raised by such
authorities in connection with any investigation arising out of any such report.
However, OraPharma shall promptly inform AAI of any such inquiries and AAI will
use its Diligent Efforts to respond to such inquiries as soon as is reasonably
practicable (including Adverse Experience Reports, and OraPharma's periodic
reports to the FDA), in each case within fifteen (15) days after submission by
OraPharma.  AAI will assist OraPharma in connection with all government
inquiries, and the preparation of all such reports, to the extent reasonably
requested by OraPharma by, among other things, providing such written materials
and other information and data as will enable OraPharma to respond or file, as
required.

     Notwithstanding OraPharma's obligation to respond to all customer
complaints and to address all reported adverse experiences, including the filing
of Adverse Experience Reports, OraPharma hereby contracts with AAI for AAI to
provide all responses to FDA inquiries, to draft and file, with OraPharma's
complete assistance, the Annual Report and all other reports and records, and to
conduct all other tests and regulatory services not specifically addressed
herein, which are required to maintain with the FDA a valid NDA.   Such
responses, reports, tests and services shall be at the sole expense of OraPharma
and AAI shall periodically provide to OraPharma an invoice, calculated at AAI's
standard, commercial rate for the work conducted by AAI under this Article
4.04(d).  The parties further agree to reasonably provide to the other party all
Regulatory Data and Technical Information required for the maintenance of the
NDA.

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     4.05.  Manufacturing Changes.  AAI will not make any material changes in
            ---------------------
its manufacturing or testing procedures with respect to the Product, or any of
its bulk drug substance suppliers for the Product, without OraPharma's prior
written consent. Material changes shall be those which would place the Product
outside the NDA and/or the Product Specifications (or cGMP) and which would not
be corrected through a deviation report, or which could interrupt supply of the
Product to OraPharma.

     4.06.  NDA Changes.  OraPharma will promptly notify AAI in writing of any
            -----------
amendments and/or supplements to the NDA to be filed by OraPharma with the FDA
relating to or requiring any change in AAI's manufacturing or testing processes
for the Product, at least thirty (30) days prior to OraPharma filing such
amendments and/or supplements. Any such changes (other than changes required by
regulatory authorities or by law or court order) shall require AAI's prior
written consent, which consent will not be unreasonably withheld.

     4.07.  Governmental Inspections.  During the term of this Agreement, each
            ------------------------
party shall advise the other party of any government visits to, or written or
oral inquiries about, any facilities or procedures for the manufacture, storage,
and/or handling of the Product, and/or the marketing, selling, promotion or
distribution of the Product within two (2) business days after notice of such
visit or inquiry (or if no advance notice is given to AAI, then within one (1)
business day after occurrence of such visit or inquiry). Each party shall
furnish to the other party, within three (3) business days after receipt of any
such inquiries, any report or correspondence issued by or provided to the
governmental authority in connection with such visit or inquiry, excluding any
trade secrets of such party that are unrelated to the activities under this
Agreement and any information that is unrelated to the Product. Each party shall
permit the relevant governmental authorities to inspect its facilities and
records in connection with the activities contemplated by this Agreement.

     4.08.  Compliance with Laws.  Each party agrees to use its Diligent Efforts
            --------------------
to comply with all laws and regulations applicable to it and affecting the
manufacture, packaging, labeling, promotion, use and/or sale of Product. Each
party represents that neither it nor any of its employees has been debarred or
subject to debarment proceedings by the FDA.  If any such proceedings are
commenced against a party hereto (or any of its employees) during the term of
this Agreement, such party shall notify the other party in writing within five
(5) business days of the commencement of such proceedings, and shall keep the
other party informed on a regular basis (subject to preservation of attorney-
client privileges) or the status of such proceedings.  AAI shall not knowingly
employ any persons or entities that have been debarred, or that are subject to
debarment proceedings, for any aspect of the development, manufacturing or
testing of the Product to be supplied hereunder.

                                      -9-
<PAGE>

                       ARTICLE 5 - FIRM PURCHASE ORDERS

     5.01.  Price of Product.  For the calendar year in which launch of the
            ----------------
Product in the United States occurs, the Initial Manufacturing Cost will be $[*]
per Batch; provided, however, that the price is subject to adjustment upward or
downward prior to commercialization for changes to the OraPharma Specification
and Test Procedures as set forth in Appendix C, including any changes to the
manufacturing process as set forth in AAI Master Batch Record M00129.RI. The
Initial Manufacturing Cost does not include the raw material cyclomethicone
After the first ten commercial Batches have been produced in the OraPharma
Space, the parties will review Batch yields and other quantitative efficiency
measures observed during manufacturing to determine if a reduction or increase
to the Initial Manufacturing Costs is warranted, including, but not limited to,
any efficiencies realized through use of clean-in-place equipment.   After such
review, the agreed upon Manufacturing Cost will be effective until December 31,
2001.  After December 31, 2001, the price may be adjusted on an annual basis for
labor cost changes or other production costs related to changes to the Product's
manufacturing process. AAI shall notify OraPharma of such increase not less than
ninety (90) days prior to the first day of each such subsequent calendar year,
and the price per Batch shall be increased by the designated amount; provided
that OraPharma shall have the right to meet with AAI management and inspect such
records as OraPharma may reasonably request to justify the applicable cost
changes ("Inspection Rights").  Each such increase shall be effective and
included in the price of Product ordered by OraPharma under this Agreement
during the next calendar year.  In addition, AAI shall provide notice to
OraPharma, as soon as reasonably practicable upon notice to AAI, of any
significant increase of the price of bulk drug substance and/or excipients used
for the manufacture of Product.  Each such increase shall be immediately
effective upon such notice and included in the price of Product ordered under
this Agreement, subject to OraPharma's Inspection Rights. The parties
acknowledge that after twenty (20) commercial Batches have been manufactured in
the OraPharma Space they will discuss the manufacturing process to determine if
this Agreement should be amended, pursuant to Article 12.01, to change the
Product pricing from a per-Batch basis to a per-kilo basis.

     5.02.  General Price Terms.  All prices determined hereunder are F.O.B.,
            -------------------
Wilmington, North Carolina.  Risk of loss shall pass to OraPharma upon delivery
of Product to OraPharma's reasonably designated common carrier by AAI.  Prices
under this Article 5 do not include federal, state, local, or any other tax, or
insurance or shipping costs, all of which shall be borne by OraPharma except for
the insurance to be carried by AAI under Article 8. The price of the Product set
forth in Article 5.01 above assumes the Product will be Commercialized only in
the United States.  If OraPharma receives approval to Commercialize the Product
in jurisdictions other than the United States, the price of the Product will be
amended to reflect any incremental costs incurred by AAI in manufacturing the
Product for foreign distribution.

________________________
* Confidential Treatment Requested

                                      -10-
<PAGE>

     5.03.  Payment for Product Supply.  Upon submission of each firm purchase
            --------------------------
order placed by OraPharma, OraPharma will pay AAI [*] of the amount due
therefor.  AAI shall not be required to honor any firm purchase order until it
receives such payment.  Payment by OraPharma for Product delivered for shipment
by AAI under this Agreement shall be in United States dollars and made (except
as set forth in the preceding sentence) within thirty (30) days after the date
of AAI's invoice.  Product shall be invoiced no sooner than the date of delivery
of Product to OraPharma's designated carrier.  The amount on all other invoices
submitted from one party to the other party hereunder shall be paid to the
submitting party by the receiving party within thirty (30) days of the date of
such invoice, and any and all invoices not paid within such thirty (30) day
period, including invoices for Product, shall accrue interest at a rate of [*]
per month; provided that invoices being disputed under Article 4.03 shall not be
required to be paid until 30 days after resolution of such dispute.

     5.04.  Manner of Payment.  All payments due hereunder shall be made in
            -----------------
United States dollars by check drawn on money center banks without any deduction
or withholding for or on account of, any taxes, duties, levies, fees or charges
except those taxes or duties levied against AAI which are legally required to be
withheld by OraPharma. All taxes levied on account of any payment accruing to
AAI under this Agreement which constitutes income to AAI shall be the obligation
of AAI, and, if provision is made in law or regulation for withholding, such tax
shall be deducted by OraPharma from any payment then due, OraPharma shall pay
such tax to the proper taxing authority, and receipt for payment of the tax
secured shall be promptly sent to AAI by OraPharma. However, AAI shall have the
right to appeal to the appropriate tax authority any such withholding and
payments of any such tax.

     Both parties acknowledge that certain bulk drug and/or excipient materials
have been sourced by OraPharma and that OraPharma has contracted directly with
Third Parties for such materials.  Further, the cost of the materials may be
subject to price discounts if ordered in sufficient quantity.  If (a) OraPharma
directly procures such raw materials to capture the price discount, or (b) AAI
purchases bulk quantities at OraPharma's request (in which case OraPharma shall
pay to AAI the cost of the materials prior to AAI becoming obligated to make
such bulk purchase) then the Manufacturing Costs will be reduced accordingly as
mutually agreed upon by the parties.

     After the Effective Date, AAI and OraPharma will take a physical inventory
of all raw materials purchased by OraPharma and still remaining as raw material
available for future production without modification.  Such physical inventory
will be adjusted to reflect any OraPharma inventory used by AAI and billed to
OraPharma in the period beginning with the first validation batch manufactured
by AAI pursuant to ORAP 1006 through the date of the physical inventory, and
thereafter, adjusted for any inventory rendered unusable due to shelf life or
other issues not caused by AAI.  AAI shall provide OraPharma with a credit in
the amount of $[*] per Batch for each Batch manufactured until the value of the
inventory is exhausted.

---------------
* Confidential Treatment Requested
                                      -11-
<PAGE>

                     ARTICLE 6 - DISCLOSURE OF INFORMATION

     6.01.  Disclosure.  Upon execution of this Agreement, and thereafter during
            ----------
the term hereof, at such times as the parties shall mutually agree, each party
shall disclose to the other, in confidence subject to Article 6.02 hereof,
relevant information, Regulatory Information, and Technical Information
(collectively hereinafter "Confidential Information"; provided such information
not included in the definition of Regulatory Information or Technical
Information is labeled as Confidential Information prior to disclosure to the
receiving party) necessary or useful to proceed with the activities contemplated
or permitted by this Agreement.  Confidential Information also includes
forecasts delivered under Article 3.02 and all firm purchase orders.  Each party
shall, at the reasonable request of the other party and on a confidential basis
subject to Article 6.02, allow personnel of the other party to consult with its
staff at mutually agreeable times to discuss and review such Confidential
Information.

     6.02.  Confidentiality.  Except as specifically authorized by this
            ---------------
Agreement, each party shall, for the term of this Agreement and for seven (7)
years after its expiration or termination for any reason, keep confidential, not
disclose to others, and use only for the purposes provided for or permitted
under this Agreement, all of the other party's Confidential Information, except
as provided for or permitted by this Agreement.  Notwithstanding the foregoing,
such information may be (i) disclosed to governmental agencies and others where
such information may be required to be included in regulatory filings permitted
under the terms of this Agreement or in patent applications filed with the
United States Patent and Trademark Office or corresponding international patent
offices; (ii) provided to third parties under appropriate terms and conditions
including confidentiality provisions substantially equivalent to those in this
Agreement, in connection with the receiving party's clinical or bioequivalence
testing, consulting, regulatory activities, manufacturing, and marketing
activities with respect to the Product undertaken pursuant to or as permitted by
this Agreement; (iii) disclose, if and to the extent such disclosure of the
other party's Confidential Information has been approved by  the other party; or
(iv) disclosed to the extent compelled by judicial process.  Either party
required to make any disclosure shall promptly notify the other party and shall
provide reasonable assistance, if requested by the disclosing party, to assist
the disclosing party in its attempts to prevent or limit the disclosure.  In the
event that a party is required by law or court order to provide a copy of this
Agreement to any Third Party (except in confidence as permitted by this
Agreement), such party shall redact Confidential Information from such document,
except as otherwise required by law.  Each party shall have the right to review
and approve each redacted document prior to its submission to a Third Party.  A
period of ten (10) days shall be allowed for review of a redacted document, with
the exception of the order of a court or regulatory agency, for which the
maximum reasonable amount of time shall be afforded.

     6.03.  Ownership of Confidential Information.  Ownership of Confidential
            -------------------------------------
Information shall remain with the disclosing party.  In addition, the parties
recognize that certain Confidential Information of AAI may be used in carrying
out its obligations hereunder, and nothing herein is intended to transfer the
ownership or restrict AAI's use of such Confidential Information.

                                      -12-
<PAGE>

                  ARTICLE 7 - WARRANTIES AND INDEMNIFICATIONS

     7.01.  AAI Warranties.  AAI represents and warrants to OraPharma that any
            --------------
Product supplied by it hereunder (i) shall be manufactured in accordance with
the NDA and the Product Specifications, and shall meet the Product Specification
as set forth in the NDA and in Appendix A; (ii) shall not, at the time of
shipment (or thereafter as a result of activities prior to shipment by or on
behalf of AAI or any of its suppliers) be or become adulterated or misbranded
within the meaning of the Act, or any applicable laws in which the definitions
of adulteration and misbranding are substantially the same as those contained in
the Act, as the Act and laws are constituted and effective at the time of
shipment of such Product to OraPharma; and (iii) shall be manufactured in
accordance with cGMP.  AAI represents and warrants to OraPharma that (a) AAI has
full legal right, power and authority to execute, deliver and perform its
obligations under this Agreement, (b) the execution, delivery and performance by
AAI of this Agreement do not contravene or constitute a default under any
provision of applicable law or of its articles or by-laws (or equivalent
documents) or of any agreement, judgment, injunction, order, decree or other
instrument binding upon AAI, (c) all licenses, consents, authorizations and
approvals required for the execution, delivery and performance by AAI of this
Agreement have been obtained and are in full force and effect and all conditions
thereof have been complied with, and no other action by or with respect to, or
filing with, any governmental authority or any other person or entity is
required in connection with the execution, delivery and performance by AAI of
this Agreement, (d) this Agreement constitutes a valid and binding agreement of
AAI, enforceable against AAI accordance with its terms, and (e) perform normal
and routine maintenance on the OraPharma equipment listed on Exhibit B.

     AAI'S WARRANTIES SET FORTH IN THIS ARTICLE 7.01 ARE ITS EXCLUSIVE
WARRANTIES TO ORAPHARMA WITH RESPECT TO THE PRODUCT, AND ARE GIVEN AND ACCEPTED
IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS AND
REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRODUCT, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. FURTHER, IT IS SPECIFICALLY UNDERSTOOD AND AGREED THAT AAI
HAS NOT PARTICIPATED IN BIOHAZARD OR TOXICITY STUDIES, AND HAS NOT REVIEWED DATA
INDICATING THE SAFETY OR EFFICACY OF THE ACTIVE INGREDIENTS OR THE PRODUCT;
THEREFORE, AAI MAKES NO REPRESENTATION WITH RESPECT TO THE SAFETY OR
EFFECTIVENESS OF THE PRODUCT OR ACTIVE INGREDIENTS. ALL SUCH INVENTION,
TOXICITY, SAFETY AND EFFICACY DECISIONS RELATED TO THE PRODUCT ACTIVE INGREDIENT
OR MATERIAL USED IN THE MANUFACTURE OF THE PRODUCT SHALL BE MADE SOLELY AND
EXCLUSIVELY BY ORAPHARMA.

     7.02.  OraPharma's Obligations.  Except as provided in Article 7.03,
            -----------------------
OraPharma agrees to indemnify and hold AAI harmless from and against any loss,
damage, liability or expense (including without limitation reasonable attorneys'
fees) arising out of or in connection with (i) any action, suit, claim, demand
or prosecution that may be brought or instituted against AAI

                                      -13-
<PAGE>

     based on or arising out of OraPharma's distribution of the Product, or
resulting from any defect in the materials supplied by OraPharma to AAI for use
in the Product and (ii) any recalls involving the Product. OraPharma's
obligation to indemnify or hold AAI harmless shall not apply to any loss,
expense or liability (i) caused by the gross negligence or willful misconduct by
AAI or (ii) caused by circumstances constituting a breach of Article 7.01.

     7.03.  AAI's Obligations.  AAI agrees to indemnify and hold OraPharma
            -----------------
harmless from and against any loss, damage, liability or expense (including
without limitation reasonable attorneys' fees) arising out of or in connection
with any action, suit, claim, demand or prosecution that may be brought or
instituted against OraPharma to the extent that such action is brought against
OraPharma as a result of AAI's gross negligence or willful misconduct in failing
to comply with applicable law and government regulations with respect to AAI's
responsibilities in the preparation of the product or because of circumstances
constituting a breach of Article 7.01.  In no event shall AAI's liability to
OraPharma pursuant to this indemnification clause or otherwise exceed the
insurance coverage required by Article 9.  Except as permitted by this Article
7.03, AAI shall not be liable to OraPharma for injuries sustained by third
parties, consequential damages proximately caused by a nonconforming Batch or
any cost associated with the Product's recall.

     7.04.  Notification of Action.  If any action suit, claim, demand or
            ----------------------
prosecution (collectively, an "Action") is brought against a party (the
"Indemnitee") in respect of which indemnity may be sought hereunder, the
Indemnitee shall promptly notify the party who is to indemnify (the
"Indemnitor") of such Action and shall extend to the Indemnitor a reasonable
opportunity to defend against and/or settle such Action, at the Indemnitor's
sole expense and through legal counsel reasonably acceptable to Indemnitee,
provided that the Indemnitor proceeds in good faith, expeditiously and
diligently. Indemnitee shall, at its option and expense, have the right to
participate in any defense undertaken by Indemnitor with legal counsel of its
own selection.  Indemnitee may make no settlement or compromise of any Action
without the prior written consent of Indemnitor.

     7.05.  OraPharma Warranties.  OraPharma represents and warrants to AAI that
            ---------------------
(a) OraPharma has full legal right, power and authority to execute, deliver and
perform its obligations under this Agreement, (b) the execution, delivery and
performance by OraPharma of this Agreement do not contravene or constitute a
default under any provision of applicable law or of its articles or by-laws (or
equivalent documents) or of any agreement, judgment, injunction, order, decree
or other instrument binding upon OraPharma, (c) all licenses, consents,
authorizations and approvals required for the execution, delivery and
performance by OraPharma of this Agreement have been obtained and are in full
force and effect and all conditions thereof have been complied with, and no
other action by or with respect to, or filing with, any governmental authority
or any other person or entity is required in connection with the execution,
delivery and performance by OraPharma of this Agreement, and (d) this Agreement
constitutes a valid and binding agreement of OraPharma, enforceable against
OraPharma in accordance with its terms.  For the avoidance of doubt, the terms
"perform its obligations under this Agreement"

                                      -14-
<PAGE>

     and "performance of its obligations under this Agreement", as used in this
Article, shall include the purchase of any Product by OraPharma pursuant to the
provisions hereof but shall not include any regulatory approvals for clinical
trials or the use, sale or other commercialization of the Product by OraPharma
in any medical device products and/or pharmaceutical/controlled release
medications.

                             ARTICLE 8 - INSURANCE

     Both parties agree to maintain and name the other party as an additional
insured under the following insurance policies:

          (a) Contractual liability to cover liability assumed under this
              Agreement; and

          (b) Products and completed operations liability insurance.

The limit of the liability for such insurance shall not be less than [*]
combined single limit per occurrence.

                           ARTICLE 9 - FORCE MAJEURE

     9.01.  Event of Force Majeure.  Neither party shall be responsible or
            ----------------------
liable to the other hereunder for the failure or delay in the performance of
this Agreement due to any war, fire, earthquake, accident or other casualty, or
any labor disturbance or act of God or the public enemy, or any other
contingency beyond the party's reasonable control. In the event of the
applicability of this Article 9.01, the party failing or delaying performance
shall use its Diligent Efforts to eliminate, cure and overcome any of such
causes and resume the performance of its obligations.

     9.02.  Notification.  Upon the occurrence of an event of force majeure, the
            ------------
party failing or delaying performance shall promptly notify the other party, in
writing, setting forth the nature of the occurrence, its expected duration and
how such party's performance is affected. The failing or delaying party shall
resume performance of its obligations hereunder as soon as practicable after the
force majeure event ceases.

                       ARTICLE 10 - TERM AND TERMINATION

     10.01. Term. The term of this agreement will be ten years, unless sooner
            ----
terminated as provided below, and shall begin on the Effective Date subject,
however, to renewal or extension for 5 years at the option of OraPharma and
thereafter by mutual agreement of OraPharma and AAI.

     10.02. Termination Upon Notice. At any time after February 16, 2002, either
            -----------------------
party may terminate this Agreement at any time upon three (3) years prior
written notice to the other party.

_______________________
* Confidential Treatment Requested

                                      -15-
<PAGE>

     10.03.  Immediate Termination: Either party shall have the right to
             ---------------------
immediately terminate this Agreement or any Purchase Order if: (i) the other
party files a petition in bankruptcy, or enters into an agreement with its
creditors, or applies for or consents to the appointment of a receiver or
trustee, or makes an assignment for the benefit of creditors, or suffers or
permits the entry of an order adjudicating it to be bankrupt or insolvent and
such order is not discharged within thirty (30) days; (ii) either party
materially breaches any of the provisions of this Agreement or any Purchase
Order and such breach is not cured within thirty (30) days after the giving of
written notice; (iii) the other party has been unable to perform its obligations
hereunder for thirty (30) days by reason of force majeure; or (iv) any required
material license, permit or certificate required of the other party to produce
and / or sell Arestin as contemplated by this Agreement is not approved and/or
issued, lapses, or is revoked, by any applicable agency.

     10.04.  Duties Upon Termination: In the event of any termination and
             -----------------------
completion of the Continuation of Manufacturing (as provided in Article 10.05),
AAI shall promptly return (i) any remaining inventory of materials received from
OraPharma or OraPharma's suppliers, (ii) all packaging components paid for by
OraPharma, (iii) all remaining inventories of the Product, (iv) any other
Product or material being stored for OraPharma, and (v) the OraPharma equipment
listed on Appendix B attached hereto, to OraPharma at OraPharma's expense.  AAI
shall have no obligation to return the foregoing until all outstanding invoices
sent by AAI to OraPharma have been paid in full unless such invoices are being
contested in good faith.  OraPharma shall also be required to pay, at the
applicable price set forth in Article 6, for completed but not yet shipped
Product in process pursuant to a firm purchase order and Product shipped but not
yet invoiced.  In the event OraPharma breaches or terminates this Agreement or
any Purchase Order (other than as a result of a breach of this Agreement or any
Purchase Order by AAI), OraPharma will also be required to pay AAI for its
direct cost of all materials purchased by AAI for Packaging, together with a
handling charge equal to [*] of such costs.  OraPharma shall specify the
location in the continental United States to which delivery, at OraPharma's
expense, of the foregoing is to be made.  Proprietary information exchanged
between OraPharma and AAI shall be promptly returned upon termination of the
Agreement.

     10.05.  Continuation of Manufacturing: In the event this Agreement is
             -----------------------------
terminated by AAI (except for termination under Article 10.03 (iv) above), then:

             (a) AAI shall be required to continue to manufacture the Product
pursuant to the terms of this Agreement notwithstanding such termination, unless
such termination is the result of OraPharma's failure to timely pay for Product
(the "Continuation of Manufacturing").  AAI's obligations under this article
shall continue until the earliest to occur of the following.

                 (i)   The mutual agreement of OraPharma and AAI;

                 (ii)  OraPharma obtaining an alternate manufacturing site for
the Product, including FDA approval of such source as and to the extent required
by applicable law, rule or regulation;

-----------------
* Confidential Treatment Requested
                                      -16-
<PAGE>

                 (iii) The third anniversary (i.e. 36 months) of the date of
termination; or

                 (iv)  Twenty-four (24) months after the date an alternate
manufacturing site is identified.

            (b)  AAI shall be required to identify for OraPharma potential
alternate suppliers of the Product.

            (c)  Under a separate contract, AAI shall assist in the transfer of
the manufacturing process to an alternate manufacturer as designated by
OraPharma. Such assistance shall include consultative services reasonably
requested pertaining to the development of a master batch record at the
alternate site.

            (d)  For the avoidance of doubt, a termination of this Agreement by
OraPharma under Article 10.02 shall not trigger AAI's obligations under this
Article 10.05.

                        ARTICLE 11 - DISPUTE RESOLUTION

     11.01.  Dispute Resolution.
             ------------------

             (a) Except as otherwise provided in subsection (d), all disputes or
claims which may arise under, out of or in connection with this Agreement (each,
a "Dispute") will be referred in writing by the party raising the Dispute to the
person designated in Article 12.04 herein for attempted resolution by good faith
negotiations. If that group is unable to resolve any Dispute within ten (10)
business days after the referral of such Dispute to it, the parties will submit
the Dispute to the next step in the dispute resolution process set forth in
subsection (b).

             (b) If any Dispute is not resolved in accordance with subsection
(a), the Dispute will be referred in writing to OraPharma's Chief Executive
Officer and AAI's Chief Executive Officer for attempted resolution by good faith
negotiations. If they are unable to resolve any Dispute within ten (10) business
days after the referral of such Dispute to them, the parties will submit the
Dispute to the next step in the dispute resolution process set forth in
subsection (c).

             (c) If any Dispute is not resolved in accordance with either of
subsections (a) and (b), the parties will submit the dispute to nonbinding
mediation. Center for Public Resources (located in New York City) will, in its
sole discretion and in accordance with its established procedures, appoint a
neutral mediator from its panel to conduct a nonbinding confidential mediation
in Wilmington, North Carolina.  The mediation fee will be divided equally
between the parties, and the parties will keep the fact and the terms of such
mediation confidential. If the parties are unable to resolve such Dispute within
sixty (60) days after the referral of the Dispute to mediation, the parties will
no longer be bound by the dispute resolution process set forth in

                                      -17-
<PAGE>

             this Article 11.01 (except with respect to the confidentiality of
the mediation) with respect to such Dispute.

             (d)  If either party desires to pursue any Dispute which is no
longer subject to the dispute resolution process as provided in subsection (c),
such party will submit the Dispute to the United States District Court in the
jurisdiction determined under Article 12.11, and each party hereby consents to
the jurisdiction and venue of such court.

             (e)  No Dispute under this Agreement will be the subject of formal
proceedings between OraPharma and AAI before following the dispute resolution
procedures set forth in this Article 11.01, except for an action to seek
injunctive relief.

             (f)  Notwithstanding anything to the contrary contained in this
Agreement, in the event of a Dispute arising out of, relating to or in
connection with termination of this Agreement pursuant to Article 10.02 herein,
the dispute resolution process set forth in this Article 11.01 is intended to
and will be concurrent with any cure periods and any notice periods set forth in
Article 10.02.

                          ARTICLE 12 - MISCELLANEOUS

     12.01.  Waiver and Amendment.  Any waiver by any party hereto of a breach
             --------------------
of any provisions of this Agreement shall not be implied and shall not be valid
unless such waiver is recited in writing and signed by such party. Failure of
any party to require, in one or more instances, performance by the other party
in strict accordance with the terms and conditions of this Agreement shall not
be deemed a waiver or relinquishment of the future performance of any such terms
or conditions or of any other terms and conditions of this Agreement. A waiver
by either party of any term or condition of this Agreement shall not be deemed
or construed to be a waiver of such term or condition for any other term. All
rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be a limitation of any
other remedy, right, undertaking, obligation or agreement of either party. This
Agreement may not be amended except in a writing signed by both parties.

     12.02.  Relationship of the Parties.  For all purposes of this Agreement,
             ---------------------------
AAI and OraPharma shall be deemed to be independent entities.  Furthermore,
nothing in this Agreement shall constitute any party hereto an employee or
agent, legal or otherwise, of the other party for any purposes whatsoever.
Neither party hereto is authorized to make any statements or representations on
behalf of the other party or in any way obligate the other party, except as
expressly authorized in writing by the other party.

     12.03.  Headings.  The headings set forth at the beginning of the various
             --------
Articles of this Agreement are for reference and convenience and shall not
affect the meanings of the provisions of this Agreement.

                                      -18-
<PAGE>

     12.04.  Notices. Notices required under this Agreement shall be in writing
             -------
and sent by registered or certified mail, postage prepaid, or by telex or
facsimile and confirmed by registered or certified mail and addressed as
follows:

             If to OraPharma:             OraPharma, Inc.
                                          732 Louis Drive
                                          Warminster, PA 18974
                                          Facsimile:  215-443-9531
                                          Attention:  Chief Financial Officer

             With a copy to:              James Lebovitz, Esq.
                                          Dechert
                                          4000 Bell Atlantic Towers
                                          1717 Arch Street
                                          Philadelphia, PA 19103
                                          Facsimile:  215-994-5720

             If to AAI:                   aaiPharma Inc.
                                          2320 Scientific Park Drive
                                          Wilmington, NC  28405
                                          Attention:  Office of General Counsel
                                          Facsimile:  910 815-2340

All notices shall be deemed to be effective five days after the date of mailing
or upon receipt if sent by telex or facsimile (but only if followed by certified
or registered confirmation). Either party may change the address at which notice
is to be received by written notice pursuant to this Article 12.04.

     12.05.  Severability.  If any provision of this Agreement is held by a
             ------------
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it shall be stricken and
the remaining provisions shall remain in full force and effect.

     12.06.  Public Disclosure.  Neither party shall disclose to third parties,
             -----------------
nor originate any publicity, news release or public announcement, written or
oral, whether to the public, the press, stockholders or otherwise, referring to
the existence or terms of this Agreement the subject matter to which it relates,
the performance under it or any of its specific terms and conditions, except
such announcements, as in the opinion of the counsel for the party making such
announcement, are required by law, including United States securities laws,
rules or regulations, without the prior written consent of the other party.  It
is agreed that either party may file this Agreement with the Securities and
Exchange Commission as an exhibit to any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, provided that the parties shall
negotiate in good faith the content of any confidential treatment request to the
SEC.  If a party

                                      -19-
<PAGE>

     decides to make an announcement it believes to be required by law with
respect to this Agreement, it will give the other party such notice as is
reasonably practicable and an opportunity to comment upon the announcement.

     12.07.  Survival.  The provisions of Articles 6, 7, 8, 10.04, 10.05, 11 and
             --------
12, shall survive the termination for any reason of this Agreement. Any payments
due under this Agreement with respect to any period prior to its termination
shall be made notwithstanding the termination of this Agreement.

     12.08.  No Conflict.  Each party represents that neither this Agreement nor
             -----------
any of its obligations hereunder will conflict or result in a breach of any
arrangement or agreement between such party and any Third Party.

     12.09.  Entire Agreement.  This Agreement, including the exhibits hereto,
             ----------------
sets forth the entire understanding between the parties hereto as to the subject
matter hereof and supersedes all other documents, agreements, verbal consents,
arrangements, and understandings by or between the parties with respect to the
subject matter hereof.  This Agreement is intended to define the full extent of
the parties respective agreements, arrangements and obligations with respect to
the subject matter hereof, and each party represents that it is not relying on
any other discussions, conversations, negotiations, correspondence, writings,
and memoranda in executing and delivering this Agreement or performing its
respective obligations hereunder.

     12.10.  Limitation of Grant.  Nothing in this Agreement shall be construed
             -------------------
as granting by implication, estoppel, or otherwise, any license or rights than
otherwise set forth herein.

     12.11.  Governing Law.  This Agreement shall be governed by, and construed,
             -------------
and enforced in accordance with, the substantive laws of the State of North
Carolina without giving effect to such states' rules concerning conflicts of
law.  A suit against either party shall be brought in federal court located in
Wilmington, North Carolina.

     12.12.  Assignment.  No assignment or transfer by either party hereto of
             ----------
its respective rights or obligations hereunder shall be made without prior
written consent of the other party; provided, however, that either party shall
be permitted to assign part or all of its rights and/or obligations hereunder to
a wholly owned subsidiary or Affiliate, but only to the extent such party fully
and absolutely guarantees performance by such wholly owned subsidiary or
Affiliate or the rights and obligations so assigned.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -20-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
          be executed as of the date first written above by their duly
          authorized representatives.

     aaiPharma Inc.                           OraPharma, Inc.

     By: /s/ David Johnston                   By: /s/ James A. Ratigan
        ------------------------                 --------------------------
        David Johnston                           Name: James A. Ratigan
        Executive Vice President                 Title: CFO

                                      -21-
<PAGE>

                                                                      APPENDIX A

                                                                  April 10, 2001

                             Product Specifications
                             ----------------------

                                      [*]

-----------------------------
* Confidential Treatment Requested

<PAGE>

                                                                      APPENDIX B

                                                                     Page 1 of 3
                                                                  April 10, 2001
<TABLE>
<CAPTION>
                                                       OraPharma  Equipment

                                        OraPharma Process Equipment Purchased by OraPharma
Current Equipment on Site

                  Description                   AAI Equip. #             Vendor                        SR #                 Kinetics
                                                                                                                             Tag #
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>               <C>                                 <C>                    <C>
40 Liter Polymer Solution Vessel                    142c          Cherry Burrell                      E 507-90               VE-2020
100 Liter Microencapsulation Vessel                 212C          B+G Machine Co., Inc.               L283                   VE-2030
522 Liter Hardening Vessel                          143C          Cherry Burrell                      E-508-90               VE-2050
MeCI 2 Pressure Can                                 219C          Apache Stainless Equip. Corp.       26987                  VE-2026
Cyclomethicone Filter Housing                                     Millipore                           Cat # CES6251-1        FL-2053
Polymer-Solution Filter housing                                   Millipore                           Cat # CES6252-1        FL-2032
Dimethicone Pump                                    214C          Fristam                             FKL 25 001587          PU-2033
Dimethicone ProMass Flow Meter                                    Endress & Hauser                    G45 5005893            FE-08
Dimethicone PLC                                                   Red Lion Controls/DIN Control
Cyclomethicone Pump                                 145C          Honeywell                           85135-1                PU-2052
Cycomethicone ZEDrive Controller                                  Zenith/Parker Hannifin              90115
Collection Filter Unit                              213C          Nutsche/Steri Technologie, Inc.     93041-1                FL-2070
Collection Filter Unit Gear Box                                   Brevini                             1999482012
Vacuum Dryer/KS98+ Controller &
 Philips recorder                                216C/T8071       Pink                                Fabr. No. 20004673     DR-2071
Vacuum Dryer/KS98+ Controller &
 Philips recorder                                215C/T8070       Pink                                Fabr. No. 20004672
Polymer Solution Vessel Agitator                                  Lightnin Mixer                      91/A53364              AG-2021
Polymer Solution Vessel Agitator Controls          R1012          ABB ACS 300
Microencapsulation Vessel Agitator                                Magna Safe                          MST 20/76/150          AG-2031
Microencapsulation Vessel Agitator Controls
Hardening Vessel Agitator                                         Lightnin Mixer                      91/557916              AG-2051
Hardening Vessel Agitator Controls                 R1011          ABB ACS 300

Purchased Equipment for New Facilities
                                                                                                      Drawing #
40 L Pressure Can
26 Liter Polymer Solution Vessel                                  DCI                                 D188063
81 Liter Microencapsulation Vessel                                DCI                                 D188064
647 Liter Hardening Vessel                                        DCI                                 D188065
800 Liter Dimethicone Storage Vessel                                                                                         VE2060
Waste Solvent Pump                                                Fristam                             FZX100
Waste Collection Vessel   (4)                                                                                                VE2075
Cyclomethicone Transfer Pump                                      Fristam                             FPX741/190
Collection Filter Unit                                            Steri Tecnolagy                     601-230
"Walkie Stacky"/fork lift
Stainless Steel Totes   (22)                                      PIBC
</TABLE>

<PAGE>

                                                                      APPENDIX B

                                                                     Page 2 of 3
                                                                  April 10, 2001

Additional Equipment list in AAI - not currently in use

Stokes Vacuum Dryer -
               Eleven stainless steel trays numbered 1 through 12 inside the
                unit, (# 3 is missing)
               Two thermocouples  (inside tray # 2)
               One box of spare components- taped to top of unit
                       2-6 pack Omega RD100-ZFP chart paper
                       1 flat disc thermocouple
                       1 probe thermocouple
                       1 tube gasket compound
                       1 belt #085-015-088
                       1 bag 1/2 inch red o-rings
                       4 brass plugs
               One power backup system (battery system)

SWECO 22 Inch PharmaSep Collector Unit (with stainless steel caps, gaskets and
 clamps).
               SWECO Components-
                       1 blue plastic bin
                       1 pneumatic control box
                       2 pieces 1/4 Teflon tubing
                       3" hose barb connects
                       1-200 micron 12" top screen
                       2-3"x1 1/2" reducers
                       9-1  1/2" Teflon Triclamp gaskets
                       1- 2" pressure relief valve
                       1-1 1/2" to 3/4" reducer
                       2- 1 1/2" Triclamps
                       1- 1 1/2" elbow
                       gaskets
                               1- 12" flat white
                               2- 22" 1/4 round white
                               5- 3" soft white
                               1- square flat white w/holes
                               1- flat round seal for actuator valve
               SWECO Heat Exchanger Unit- with thermocouple
               SWECO Vacuum Pump- with 2 glass vapor collectors
               Omega Chart Recorder - for heat exchanger unit

Sanitary Teflon Hoses and SS sanitary fittings
Watson -Marlow Peristaltic Pump
               Pump
               Pump head
               tool kit
               instruction manual
Watson -Marlow Peristaltic Pump
               Pump
               Pump head
               tool kit
               instruction manual
Tubing for pumps
Stainless steel table on wheels

Four drum dollies for 55 gallon drums
1-Rosedale bag collector
        approx. 18 10-micron nylon filter bag
2-drum pump assemblys
<PAGE>

                                                                      APPENDIX B

                                                                     Page 3 of 3
                                                                  April 10, 2001

1- un-opened chiller  (should still be on a skid)
1- Packworld Heat Sealer
2- Placebo filling machines
2- extra SS screens for Nutsche Filter  (AAI equipment # 213C)
Microscope
Digital microscope camera
laptop computer
2- extra impellers for VE2030 (B&G tank)
6- Millipore 4 inch fluoroguard ATX filter
Homogenizer
chiller

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