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                                                                   Exhibit 10.13

                              PACKAGING AGREEMENT

     This Agreement dated this 9th day of November, 2000, by and between
Packaging Coordinators, Inc., a Pennsylvania corporation (together with its
subsidiaries and affiliates, "PCI"), having its principal offices at 3001 Red
Lion Road, Philadelphia, Pennsylvania 19114 and Orapharma, Inc., a Delaware
corporation ("Purchaser"), having its principal offices at 732 Louis Drive,
Warminster, Pennsylvania 18974.

                                   BACKGROUND

     1.   PCI specializes in packaging for the pharmaceutical industry and has
certain technical and commercial information and know-how.

     2.   Purchaser is a corporation that is developing and commercializing
pharmaceutical products.

     3.   Purchaser desires to engage PCI to provide certain services to
Purchaser in connection with the packaging of certain of Purchaser's
pharmaceutical products; provided, however, that Purchaser shall be responsible
                         --------  -------
for the manufacture, sale and distribution of such products and PCI shall be
responsible solely for the packaging of such products.

     4.   Purchaser and PCI entered into a Quality Agreement on August 16/17,
2000. It is incorporated into this agreement by reference.

                                     TERMS

     In consideration of the mutual promises made by the parties hereto and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties hereto agree as
follows:

 1.  DEFINITIONS
     -----------

The following terms as used in this Agreement shall have the meanings set forth
in this Article unless the context clearly indicates to the contrary:

     "Affiliate(s)" shall mean any corporation, firm, partnership or other
     entity which controls, is controlled by or is under common control with a
     party.  For purposes of this definition, "control" shall mean the ownership
     of at least fifty percent (50%) of the voting share capital of such entity
     or any other comparable equity or ownership interest.

     "Agency" shall mean any governmental regulatory authority involved in
     regulating any aspect of the development, market approval, sale,
     distribution or use of the Product, Packaging, Packaged Product or the sale
     of any of the foregoing.

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     "cGMP" shall mean all the laws, regulations and standards relating to the
     manufacture of the Product and the Packaging, including but not limited to,
     the FDA current Good manufacturing practices, as set forth in the Title 21
     of the United States Code of Federal Regulations.

     "Delivery Date" shall mean the date set forth in the relevant Purchase
     Order on which PCI must supply Purchaser with Packaged Products, as
     accepted by PCI pursuant to Section 5(d).

     "Effective Date" shall mean the date this Agreement has been fully executed
     by both parties.

     "Facility" shall mean PCI's facility at 3001 Red Lion Road, Philadelphia,
     Pennsylvania.

     "FDA" shall mean the United States Food and Drug Administration.

     "Force Majeure" shall mean any of the following events or conditions,
     provided that such event or condition did not exist as of the date of
     execution of this Agreement, was not reasonably foreseeable as of such date
     and is not reasonably within the control of either party and prevents as a
     whole or in material part, the performance by a party of its obligations
     hereunder:  acts of state or governmental action, orders, legislation,
     regulations, riots, disturbance, war (declared or undeclared), prolonged
     shortage of energy supplies, interruption of transportation, embargo
     (inability to procure or shortage of supply materials, equipment or
     production facilities), fire, earthquake, flood, hurricane, typhoon or
     explosion.

     "Package/Packaging" shall mean the filling of the dispenser and the
     packaging of the Product pursuant to the Specifications.

     "Packaged Product" shall mean the Product as contained in the Packaging.

     "Product" shall mean the products of the Purchaser to be packaged which are
     described in Appendix 1.

     "Purchase Order" shall mean a written document issued by the Purchaser to
     PCI in accordance with Section 5 hereof, authorizing PCI's performance of
     Packaging and other related services pursuant to the terms of this
     Agreement.

     "Specifications" shall mean the packaging procedures, testing requirements,
     materials standards, quality standards and product technical requirements
     for the Packaging set forth in Appendix 2.  The parties agree and
     acknowledge that the Specifications will be developed and defined by the
     Purchaser after the date of this Agreement and shall be subject to input,
     review and approval by PCI.  Each party agrees to act in good faith in
     defining and finalizing the Specifications.  Once finalized, the
     Specifications will be appended to this Agreement as Appendix 2.  The

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     parties acknowledge that the Specifications may be revised and refined
     during the term of this Agreement by mutual written agreement of PCI and
     the Purchaser.  If any such change results in obsolescence of any materials
     specifically purchased by PCI for Packaging of the Product under this
     Agreement prior to being notified in writing by Purchaser of the change in
     the Specifications, and provided PCI is unable to use such materials in its
     standard operations, Purchaser shall reimburse PCI for the actual cost of
     all such materials.  If any such change in the Specifications results in
     other costs and expenses to PCI, then PCI shall provided Purchaser with a
     revised packaging fee and Purchaser shall notify PCI whether it desires to
     implement the change, and Purchaser shall be responsible for the costs and
     expenses associated with implementation of such change.

 2.  ENGAGEMENT OF PCI
     -----------------

     PCI agrees to Package the Product and Purchaser agrees to purchase and pay
for the Packaging services on the terms and conditions set forth in this
Agreement.

 3.  PAYMENT AND SHIPPING
     --------------------

      (a) Shipping.  All Packaged Products will be shipped F.O.B. the Facility
          --------
and title and risk of loss of the Packaged Products shall pass to the Purchaser
upon delivery by PCI to a common carrier, provided, however, if the Packaged
Product (other than Packaged Product requiring transport via refrigerated
containers) is shipped to a destination within one hundred (100) miles of the
Facility, PCI shall deliver the Packaged Product at PCI's cost and insure such
risk in transit at PCI's expense.  In all other instances, PCI shall ship the
Packaged Product on a common carrier selected by the Purchaser, as set forth
above.

      (b) Payment.  PCI shall invoice Purchaser concurrently with any shipment
          -------
of the Packaged Products and Purchaser shall make full payment to PCI, at the
address specified on the invoice, no later than thirty (30) days from the date
of such shipment.  If Purchaser has not made payment in full by the expiration
of such thirty (30) day period, PCI may, at its option, elect to:  (i) charge a
late payment fee on such unpaid amount equal to [*] of such unpaid amount; (ii)
suspend any further deliveries hereunder until such invoice is paid in full;
and/or (iii) [*].

      (c) Advance Payment.  If at any time, [*], PCI shall have the right to
          ---------------
require payment in advance before making any further shipment of the Packaged
Products.  If Purchaser shall fail, within a reasonable time, to make such
payment in advance, or if Purchaser shall fail to make payment when due, PCI
shall have the right, at its option, to suspend any further deliveries hereunder
until such default is corrected, without thereby releasing Purchaser from its
obligations under this Agreement, or [*].  In the event PCI takes action to
suspend delivery [*], under this Section 3(c), the provisions of

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Section 18(b) shall not apply and PCI shall not be required to continue to
perform services pursuant to this Agreement.

      (d) Failure to Take Delivery.  If Purchaser fails to take delivery on any
          ------------------------
scheduled delivery date, Purchaser shall be billed at that time for all
unshipped Packaged Product, and on the first of each month thereafter for
reasonable administration and storage costs.  If Purchaser does not instruct PCI
to ship products within seven (7) business days of Purchaser's actual notice or
notice by major overnight delivery service of completion of packaging for a
particular lot, PCI may, at its option, dispose of or otherwise use the Products
or Packaged Products and Purchaser shall be liable for the invoice value as if
such Packaged Products were shipped.

 4.  PRICE
     -----

     (a)  Packaging Fees.  The prices and other fees to be paid to PCI for the
          --------------
Packaging of the Products shall be as set forth Appendix 3, subject to
adjustment as set forth therein.

     (b)  Price Increases.  If, at any time during the term of this Agreement,
          ---------------
PCI's cost of materials increases, [*].

     (c)  Taxes.  PCI shall bear and pay all federal, state and local taxes
          -----
based upon or measured by its net income, and all franchise taxes based upon its
corporate existence, or its general corporate right to transact business.  Any
other tax, however denominated and measured, imposed upon the Products or the
Packaged Products or upon their installation, or upon the storage, inventory,
sale, transportation, delivery, use or consumption of the Products shall be paid
directly by Purchaser, or if prepaid by PCI, shall be invoiced to Purchaser as a
separate item and paid by Purchaser to PCI.

 5.  FORECAST, PURCHASE AND SUPPLY
     -----------------------------

     (a)  Purchase and Supply.  During the term of this Agreement and subject to
          -------------------
paragraph (d) of this Section 5, Purchaser shall purchase such quantities of
Packaged Product as shall be set forth on Purchase Orders submitted by Purchaser
to PCI under this Agreement.

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     (b)  Forecasts.  On or before January 1 and July 1 of each year during the
          ---------
term of this Agreement, Purchaser will provide PCI with a written twelve (12)
month rolling forecast (commencing with the immediately following month) of the
quantity of Product which Purchaser expects to require from PCI during each of
the next twelve (12) months.  The first three (3) months of the such rolling
forecast shall be binding upon Purchaser.  Purchaser's first forecast shall
include (i) the required Delivery Date for the binding portion of the forecast,
(ii) the quantity of Product to be delivered and (iii) the lot numbers to be
applied to such Product.  Purchaser's forecast shall take into account the
capacity limitations of PCI's facilities and equipment, as well as the
Production Equipment (as defined below) to be provided by Purchaser.

     (c)  Purchase Orders.  Following the Effective Date, Purchaser will provide
          ---------------
PCI with monthly Purchase Order(s) setting forth (i) the quantity of Packaged
Product ordered for delivery during the fourth full calendar month after the
date on which the Purchase Order(s) is deemed to be received, (ii) the
applicable Delivery Date(s) for such Purchase Order(s), (iii) the quantity of
Packaged Product to be delivered on the Delivery Date(s) in each form of
packaging and (iv) the lot numbers to be applied to such Packaged Product.  Such
Purchase Order shall be delivered no later than the tenth day of each month.

     (d)  Orders Greater than Forecast.  PCI shall use commercially reasonable
          ----------------------------
efforts to supply the quantity of Product ordered, regardless of the quantity
forecast by Purchaser subject to the capacity limitations of PCI's Packaging
equipment, the Production Equipment (defined below), and the Facility.  In the
event that PCI is unable to fill any order, PCI shall so notify Purchaser within
fifteen (15) days from its receipt of the Purchase Order.

     (e)  Amendment of Purchase Orders.  PCI will use commercially reasonable
          ----------------------------
efforts to accommodate a request to amend a Purchase Order to increase or
decrease the quantity of Product to be delivered.

     (f)  Cancellations.  Purchaser may cancel any Purchase Order by providing
          -------------
PCI written notice at least ninety (90) days prior to the Delivery Date. In the
event that Purchaser cancels any order for Product, Purchaser shall reimburse
PCI for direct costs reasonably incurred by PCI in connection with performance
of such Purchase Order up to the time of receipt of such notice, as well as a
handling fee equal to [*] of such amount; provided that PCI shall credit any
such handling fee to additional Purchase Orders received pursuant to this
Agreement within twelve (12) months of the cancellation date.

     (g)  Terms of Agreement Govern.  No modification or amendment to this
          -------------------------
Agreement shall be effected by or result from the receipt, acceptance, signing
or acknowledgment of any party's Purchase Orders, order acknowledgments,
invoices, shipping documents or other business forms containing terms or
conditions in addition to or different from the terms and conditions set forth
in this Agreement, and the terms of this Agreement shall supersede any provision
in any Purchase Order or other document that is in addition to or inconsistent
with the terms of this Agreement.

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6.   COMPLIANCE WITH AGENCY REGULATIONS
     ----------------------------------

     The parties agree to comply in all material respects with all laws and
regulations of any Agency.  PCI shall be responsible for all the necessary
permits and licenses for Packaging of the Product; provided, however, that the
                                                   --------  -------
Purchaser shall have sole responsibility for obtaining any permits or licenses
from any Agency necessary or required for the sale, marketing or entering into
commerce of any Product or Packaged Product.

 7.  FACILITY AND PRODUCTION EQUIPMENT
     ---------------------------------

     (a)  Packaging.  PCI hereby agrees to perform the Packaging of the
          ---------
Product(s) at its Facility.

     (b)  Compliance with Laws.  PCI will comply, in all material respects, with
          --------------------
all local applicable laws, rules and regulations relating to the services to be
provided by PCI under this Agreement.

     (c)  Agency Inspection.  PCI hereby agrees to advise the Purchaser promptly
          -----------------
in writing of any proposed or unannounced inspection of the Product(s), Packaged
Products or Packaging process or procedures by any Agency and will, to the
extent practicable, permit the Purchaser to be present during any such
inspection.  If the Purchaser is not present during such an inspection, PCI
shall promptly provide a report of the results of the inspection to the
Purchaser.  PCI shall promptly provide Purchaser with a copy of any report,
citation, or the like provided to PCI by such Agency relating to Product(s),
Packaged Product(s) or the Package processes.

     (d)  Purchaser Technical Representative.  During the term of this
          ----------------------------------
Agreement, Purchaser shall have the right to have one or more technical
representatives present in the area of the Facility where the Packaging is being
conducted during the Packaging process to (i) review the Packaging process; (ii)
review any relevant records in connection with such Packaging process and assess
its compliance with cGMP and the Specifications; and (iii) discuss any related
issues with PCI's personnel.  Purchaser's technical representatives, when on-
site, shall comply with PCI's rules and regulations.  Purchaser shall indemnify
and hold PCI and its Affiliates harmless from all liability, including claims
for workers' compensation, resulting from the presence of Purchaser's technical
representatives at the Facility.

     (e)  Production Equipment.  Purchaser will provide to PCI certain packaging
          --------------------
equipment (the "Production Equipment"), as described in Appendix 4, which shall
be used only for packaging Purchaser's Products unless Purchaser gives prior
written consent to PCI.  Purchaser shall at all times own the Production
Equipment.  PCI shall provide routine maintenance on the Production Equipment,
as established by the equipment manufacturer and/or cGMPs; provided, however,
that Purchaser shall be obligated to pay for all non-routine maintenance and
repairs to the Production Equipment unless caused by negligent operation thereof
by PCI.

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8.   WARRANTIES
     ----------

     (a)  Limited Warranty.  Subject to Sections 14 and 18(c), PCI warrants that
          ----------------
the Packaging and the services provided hereunder shall comply, in all material
respects, with the Specifications and cGMPs.  THE LIMITED WARRANTY SET FORTH IN
THIS SECTION 8 IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABILITY AND ANY WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.  EXCEPT FOR THE WARRANTIES EXPRESSED IN THIS SECTION 8, PCI MAKES NO
OTHER WARRANTY, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PACKAGING AND THE
PACKAGED PRODUCTS.  IN ADDITION, PCI HEREBY DISCLAIMS LIABILITY FOR INCIDENTAL
OR CONSEQUENTIAL DAMAGES FOR BREACH OF ANY EXPRESS OR IMPLIED WARRANTY,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY AND ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO PACKAGING, PACKAGED PRODUCTS OR
THE PRODUCTS.  NOTWITHSTANDING THE FOREGOING, THE DURATION OF ANY IMPLIED
WARRANTY WHICH MIGHT BE DEEMED TO EXIST BY OPERATION OF LAW SHALL BE LIMITED TO
SIX (6) MONTHS FROM THE DATE OF DELIVERY) OF PACKAGED PRODUCTS BY PCI.

     (b)  Testing of Packaged Products.  PCI shall perform in-process quality
          ----------------------------
control tests and testing for the release of packaging materials in accordance
with the Specifications and cGMPs.  Purchaser, upon receipt of Packaged Products
from PCI, shall have thirty (30) business days to inspect such Packaged
Products.  In the event Purchaser believes that the Packaged Products do not
conform, in all material respects, to the Specifications set forth in Appendix
2, Purchaser shall send to PCI, via overnight delivery service or certified
mail, return receipt requested, within five (5) business days of discovery of
the defect, a notice of rejection along with samples of the rejected Packaged
Products.  Packaged Products that PCI agrees are defective or non-conforming
will, at PCI's option and expense, be repackaged and shipped to Purchaser or
credited toward Purchaser's purchase price.  If PCI does not agree with
Purchaser's determination that the Packaged Products fail to conform, in all
material respects, with the Specifications, then after reasonable efforts to
resolve the disagreement, either party may submit the dispute to arbitration in
accordance with Section 19.  Any Product that is not rejected within such thirty
(30) day period shall be deemed to have been accepted by Purchaser.

     (c)  Replacement of Defective Packaged Products.  PCI shall replace, at its
          ------------------------------------------
sole expense, all defective Packaging.  THE OBLIGATION OF PCI TO REPLACE
DEFECTIVE PACKAGING, INCLUDING PACKAGED PRODUCTS, IN EXCESS OF THE NORMAL
PACKAGING LOSSES SHALL BE PURCHASER'S EXCLUSIVE REMEDY UNDER THIS AGREEMENT FOR
DEFECTIVE PACKAGED PRODUCTS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE.  For losses of Packaging materials supplied by
Purchaser (or, to the extent required by this Agreement, Product) in excess of
normal Packaging losses, PCI shall pay to Purchaser, depending upon the
circumstances, either (a) the substantiated acquisition cost found on

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the invoice if such materials were purchased by Purchaser from an unrelated
third party; or (b) the substantiated direct costs of Purchaser (or its related
entities) for the Production of materials (which shall not include any profit or
mark-ups) if such materials were produced by Purchaser or any entity related,
directly or indirectly, to Purchaser.

     (d)  Supply of Products for Defective Packaging.  In the event PCI is
          ------------------------------------------
required to replace defective Packaging pursuant to paragraphs (b) or (c) of
this Section 8, Purchaser shall furnish to PCI, at PCI's expense, sufficient
quantities of the Products in order for PCI to replace such Packaging; provided,
however, that PCI shall not be required to incur expenses in excess of [*] in
the aggregate.

8A.  RECALL, WITHDRAWAL, OR FIELD CORRECTION
     ---------------------------------------

     (a)  If Purchaser reasonably decides or is required to initiate a product
recall, withdrawal, or field correction with respect to, or if there is any
governmental seizure of, any of the final Packaged Products which were held,
stored and/or packaged under this Agreement, Purchaser will notify PCI promptly
of the details regarding such action and provide copies of relevant
documentation concerning such action.  PCI will provide reasonable assistance to
Purchaser in investigating any remedying of any such situation, but all
regulatory contacts and communications that are made and all activities and
final decisions concerning seizure, recall withdrawal, or field correction will
be conducted or made by Purchaser.

     (b)  If any such recall, withdrawal, field correction, or seizure occurs
due solely to (i) a failure of any Product and/or Packaged Product held, stored
or packaged by PCI hereunder to conform to cGMP, the Specifications set forth in
Appendix 2, any other specifications the parties agree on in writing or any
warranty or other requirement set forth in this Agreement, (ii) the failure of
PCI to comply in all material respects with any applicable law, regulation,
court order or decree, or (iii) the negligent or intentional wrongful act or
omission of PCI in connection with the packaging, holding and/or storage of
Purchaser's product and the final Packaged Product hereunder, then PCI shall
bear the full cost and expense of any such seizure, recall, withdrawal, or field
correction, including the reasonable fees and expenses of any technical
consultant reasonably needed to assist in such matters.

     (c)  If any such recall, withdrawal, field correction, or seizure occurs
due to any reason or cause other than those set forth in subsection (b) above,
then Purchaser shall bear the full cost and expense of any such seizure, recall,
withdrawal, or field correction including the reasonable fees and expenses of
any technical consultant reasonably needed to assist in such matters.

     (d)  If both parties contribute to the cause of a seizure, recall,
withdrawal, or field correction, the cost and expenses thereof will be shared in
proportion to each party's contribution to the problem(s).  If the parties do
not reach an agreement on either the cause or proportional shares of
contribution of costs and expenses within 45 days, the parties agree to select
jointly an independent qualified testing laboratory to make such

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determinations and agree to be bound by such determination; with the costs of
such laboratory to be shared in proportion to each party's cause.

     (e)  Notwithstanding the foregoing, in no event shall PCI, in connection
with compliance with this Section 8A, be required to incur expenses in excess of
[*] in the aggregate.

 9.  REPRESENTATIONS AND WARRANTIES
     ------------------------------

     (a)  Existence and Power.  Each party hereby represents and warrants to the
          -------------------
other party that such party (i) is duly organized, validly existing and in good
standing under the laws of the state in which it is organized, (ii) has the
power and authority and the legal right to own and operate its property and
assets, and to carry on its business as it is now being conducted, and (iii) is
in compliance with all requirements of applicable law, except to the extent that
any noncompliance would not materially adversely affect such party's ability to
perform its obligations under the Agreement.

     (b)  Authorization and Enforcement of Obligations.  Each party hereby
          --------------------------------------------
represents and warrants to the other party that such party (i) has the power and
authority and the legal right to enter into the Agreement and to perform its
obligations hereunder and (ii) has taken all necessary action on its part to
authorize the execution and delivery of the Agreement and the performance of its
obligations hereunder.  The Agreement has been duly executed and delivered on
behalf of such party, and constitutes a legal, valid, binding obligation,
enforceable against such party in accordance with its terms.

     (c)  No Consents.  Each party hereby represents and warrants to the other
          -----------
party that all necessary consents, approvals and authorizations of all Agencies
and other persons required to be obtained by such party in connection with
Agreement have been obtained.

     (d)  No Conflict.  Each party hereby represents and warrants to the other
          -----------
party that the execution and delivery of the Agreement and the performance of
such party's obligations hereunder and thereunder (i) do not conflict with or
violate any requirement of applicable laws or regulations or any material
contractual obligation of such party and (ii) do not materially conflict with,
or constitute a material default or require any consent under, any material
contractual obligation of such party.

 10. INTELLECTUAL PROPERTY AND TECHNOLOGY TRANSFER
     ---------------------------------------------

     (a)  Intellectual Property.  Purchaser represents and warrants to PCI that
          ---------------------
to the best of Purchaser's knowledge and belief, Purchaser has all necessary
authority and right, title and interest in and to any patents, inventions and
developments related to the Products and the manufacturing and Packaging of the
Products, and Purchaser hereby grants to PCI a non-exclusive, royalty-free
license to use any and all of such right, title and interest as may be necessary
for PCI to perform its obligations under this Agreement.

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     (b)  Drug Master Files.  PCI agrees to provide Purchaser with a right to
          -----------------
reference any Drug Master File ("DMF") filed with FDA or on behalf of PCI,
relating to PCI's manufacturing sites, facilities, operating procedures,
personnel, processes and/or materials to be used to package the Product.  PCI
will file and properly maintain any and all required annual reports and
notices/supplements to the aforementioned DMFs.  PCI will notify Purchaser
promptly in writing of any changes or modifications to the DMF.

     (c)  PCI agrees that any and all ideas, improvement, inventions and works
of authorship conceived, written or first reduced to practice wither by PCI's
employees alone or in conjunction with the Purchaser, if any, that are related
directly and exclusively to the Products (the "Purchaser Inventions") shall be
the sole and exclusive property of Purchaser and PCI hereby assigns to Purchaser
all right, title and interest in and to any and all such Purchaser Inventions.

     (d)  The Purchaser agrees that any and all ideas, improvements, inventions
and works of authorship regarding the packaging of pharmaceuticals conceived,
written or first reduced to practice in the performance of this Agreement that
are not directly and exclusively related to the Products (the "PCI Inventions")
shall be the sole and exclusive property of PCI and the Purchaser assigns to PCI
all right, title and interest in and to any and all such PCI Inventions.  PCI
hereby grants to the Purchaser a non-exclusive, worldwide, royalty-free license
to use and practice such PCI Inventions for the manufacture by the Purchaser of
any of the Purchaser's products.  Such license shall survive the termination or
expiration of this Agreement.

 11. CONFIDENTIALITY
     ---------------

     (a)  Confidentiality Agreement.  PCI and the Purchaser agree to keep secret
          -------------------------
and confidential any and all information ("Proprietary Information") either
disclosed hereunder or through any prior disclosure and not to disclose such
Proprietary Information to any person or entity, except (i) to employees of each
party having a need to know the information in order to fulfill such party's
obligations hereunder; or (ii) as required by an applicable Agency.  The parties
shall use the Proprietary Information solely for the purpose of carrying out the
obligations contained in the Agreement.  The obligations imposed by this Section
shall not apply to any Proprietary Information:

               (i)      which at the time of disclosure is in the public domain;

               (ii)     which, after disclosure, becomes part of the public
                        domain by publication or otherwise, through no fault of
                        the receiving party;

               (iii)    which at the time of disclosure is already in the
                        receiving party's possession, except through prior
                        disclosure by PCI, the Purchaser or an Affiliate of
                        either of them, and such possession can be properly
                        documented by the receiving party in its written
                        records, and was not made available to the receiving
                        party by anyone owing an obligation of confidentiality
                        to the disclosing party;

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               (iv)    which is rightfully made available to the receiving party
                       from sources independent of the disclosing party;

               (v)     which is required to be disclosed in the course of
                       litigation or other legal or administrative proceedings;
                       or

               (vi)    which is required by law to be disclosed;

provided that in all cases the party receiving the Proprietary Information
shall, to the extent permitted, give the other party prompt notice of the
pending disclosure and shall cooperate in such other party's attempts, at such
other party's sole expense, to seek an order maintaining the confidentiality of
the Proprietary Information.

     (b)  Term of Confidential Agreement.  The obligation of confidentiality and
          ------------------------------
non-use set forth in this Article shall survive for a period of [*] years
beyond the termination or expiration of this Agreement.

     (c)  Ownership of Proprietary Information.  Proprietary Information shall
          ------------------------------------
remain the exclusive property of the disclosing party.  In no event shall any of
PCI's proprietary information, technology, know-how, intellectual property (or
rights thereto) become the property of the Purchaser.

 12. TERM AND TERMINATION
     --------------------

     (a)  Term.  This Agreement, unless sooner terminated as provided below,
          ----
shall begin on the Effective Date, and shall continue for a period of seven (7)
years, subject, however, to renewal or extension by mutual agreement of PCI and
the Purchaser.

     (b)  Termination Upon Notice.  At any time after July 31, 2003, either
          -----------------------
party may terminate this Agreement or any Purchase Order at any time upon two
(2) years prior written notice to the other party.

     (c)  Immediate Termination.  Either party shall have the right to
          ---------------------
immediately terminate this Agreement or any Purchase Order if (i) the other
party becomes insolvent, files a petition in bankruptcy, 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 and such order is not discharged within thirty
(30) days; (ii) if 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, the party claiming the breach
shall have the right to terminate this Agreement or any Purchase Order; or (iii)
if any required license, permit or certificate required of the other party is
not approved and/or issued, or is revoked, by any applicable Agency; provided
that such other party may no longer appeal such decision or reapply or otherwise
pursue such permit, license or certificate.

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     (d)  Duties Upon Termination.  In the event of any termination, PCI shall
          -----------------------
promptly return (i) any remaining inventory of materials received from the
Purchaser or Purchaser's suppliers, (ii) all packaging components paid for by
the Purchaser, (iii) all remaining inventories of the Product, process, and (iv)
any other Product or material being stored for the Purchaser, to the Purchaser
at the Purchaser's expense.  PCI shall have no obligation to return the
foregoing until all outstanding invoices sent by PCI to the Purchaser have been
paid in full.  Purchaser shall also be required to pay, at the applicable price
set forth in Appendix 3, for completed but not yet shipped Packaged Products,
Packaged Products in process and Packaged Products shipped but not yet invoiced.
In the event Purchaser 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 PCI), the Purchaser will also be required to pay PCI for its direct
cost of all materials reasonably purchased by PCI for Packaging, together with a
handling charge equal to [*] of such costs. The Purchaser shall specify the
location in the continental United States to which delivery, at Purchaser's
expense, of the foregoing is to be made. Proprietary Information exchanged
between the Purchaser and PCI shall be promptly returned upon termination of the
Agreement.

     (e)  Continuing Obligations.  The rights and obligations of each of the
          ----------------------
parties under the provisions of Sections 1, 3, 4, 6, 8, 8A, 9(e), 10, 11, 12(d)
and (e), 13, 14, 15, 16, 18, 19, 20 and 21(f) of this Agreement shall continue
notwithstanding the termination of this Agreement for any reason.

 13. FORCE MAJEURE
     -------------

     If PCI shall be delayed in making any delivery, or Purchaser shall be
delayed in taking any delivery, in each case in whole or in part, by reason of
Force Majeure (as defined herein), such delay shall be excused during the
continuance of and to the extent of such Force Majeure (except in respect of any
obligation to pay money); provided that if, as a consequence of any such Force
Majeure, the total demands for PCI's products or services cannot be supplied by
PCI, PCI may, at its option, allocate its available supply among Purchaser and
its other customers on such basis as PCI may deem fair and practicable, without
liability for any failure to perform this Agreement.  The party claiming Force
Majeure shall promptly notify the other party of the termination of such event.
During the period that the performance by one of the parties of its obligations
under this Agreement has been suspended by reason of an event of Force Majeure,
the other party may likewise suspend the performance of all or part of its
obligations hereunder to the extent that such suspension is commercially
reasonable, except that Purchaser may not suspend its obligation to make payment
pursuant  to Article 3 for Packaged Products previously delivered by PCI.
Delivery shall be made and taken as soon as reasonably possible after the
removal of such cause, and the time for performance of this Agreement shall be
extended for a period equal to the duration of such cause, and the time for
performance of his Agreement shall be extended for a period equal to the
duration of such cause, provided that if such delay exceeds six (6) months,
either party may terminate this Agreement, subject to the duties set forth in
Section 12(d).

 14. INDEMNIFICATION AND INSURANCE
     -----------------------------

____________________________
* Confidential Treatment Requested

                                      -12-
<PAGE>

     (a)  Indemnification by Purchaser.  Purchaser agrees to indemnify and hold
          ----------------------------
PCI and its Affiliates, and their respective agents, employees, officers,
directors, Affiliates and representatives harmless from and against any and all
costs, expense, liabilities, claims, damages, demands, actions, losses and fees,
including reasonable attorneys' fees and costs, arising from the manufacturing,
sale, distribution, possession or use of any Product or Packaged Product, other
than as a result of PCI's breach of this Agreement.  Purchaser also agrees to
indemnify and hold harmless PCI and its agents, employees, officers, directors,
Affiliates and representatives from and against any and all costs, expense,
liabilities, claims, damages, demands, actions, losses and fees, including
reasonable attorneys' fees and costs, which arise from the use of any trademark,
trade name, copyright, patent or other right specified by Purchaser in the
manufacturing or Packaging of the Product, provided that such use is not part of
PCI's standard packaging procedures.

     (b)  Indemnification by PCI.  PCI agrees to indemnify and hold Purchaser
          ----------------------
harmless from and against any and all costs, expense, liabilities, claims,
damages, demands, actions, losses and fees, including reasonable attorneys' fees
and costs, arising from PCI's willful misconduct or gross negligence in the
performance of Packaging or PCI's breach of this Agreement.  PCI's
indemnification obligation hereunder is expressly subject to the provisions of
Section 8 and Section 18 of this Agreement.

     (c)  Procedure for Indemnification.  Upon receiving notice of any claim for
          -----------------------------
liability under this provision, the indemnified party shall promptly notify the
indemnifying party in writing; provided, however, that failure to give notice
shall not limit or otherwise reduce the indemnity provided for in this
Agreement.  The indemnifying party may, in its sole discretion, assume and
conduct the legal defense of the indemnified party in any suit that could result
in claims under this provision.  Unless made with the express written consent of
the indemnifying party, no sums paid by the indemnified party in settlement of
any lawsuit for alleged damages arising from the use of Products shall be
recoverable under this provision.

     (d)  Insurance.  During the term of this Agreement, the Purchaser and PCI
          ---------
shall each procure and maintain in full force and effect, at its own cost and
expense, insurance against the risks specified in this Agreement in amounts not
less than the amounts specified herein.  The Purchaser and PCI shall maintain
the following minimum coverage with respect to the matters covered by this
Agreement:

                    (i)      PCI shall maintain workers' compensation insurance
                             in compliance with the workers' compensation laws
                             of the state or states in which PCI has employees
                             performing work under this Agreement and employer's
                             liability insurance with respect to such employees
                             with a minimum limit of [*] per occurrence. The
                             Purchaser shall maintain comparable insurance
                             coverage for any of its employees who at any time
                             are present at PCI's facility.

                    (ii)     PIC and Purchaser shall each maintain commercial
                             general liability insurance including premises,
                             broad form property damage,

____________________________
* Confidential Treatment Requested

                                      -13-
<PAGE>

                             contractual, products/completed operations
                             coverage, with a minimum limit of [*] for each
                             occurrence.

                    (iii)    "All Risk" Property Insurance for property utilized
                             in the packaging of products (e.g., equipment and
                             raw materials), with a coverage of at least the
                             full replacement value; provided, however, that the
                             Purchaser shall maintain insurance for all Products
                             while in PCI's possession at the Facility and
                             Purchaser shall insure the Production Equipment at
                             all times while in the Facility.

15.  NOTICES
     -------

     Notices or other communications required or permitted by this Agreement
shall be given in writing, and shall be deemed to have been given when deposited
in United States mail, return receipt requested and postage prepaid, or on the
day following delivery of such notice to a major overnight delivery service.
All notices shall be addressed to the parties as follows:

          To PCI:

          PCI Services
          3001 Red Lion Road
          Philadelphia, PA 19114
          Attention:  Paul Alvater

          With a copy to:

          Cardinal Health, Inc.
          7000 Cardinal Place
          Dublin, OH 43017
          Attn:  General Counsel

____________________________
* Confidential Treatment Requested

                                      -14-
<PAGE>

          To Purchaser

          OraPharma, Inc.
          732 Louis Drive
          Warminster, PA  18974
          Attention:  J. Ronald Lawter, Ph.D., V.P.

          With a copy to:

          Dechert Price & Rhoads
          4000 Bell Atlantic Tower
          1717 Arch Street
          Philadelphia, PA  19103-2793
          Attn:  James Lebovitz

16.  CHOICE OF LAW  The Laws of the Commonwealth of Pennsylvania
     -------------
applicable to contracts made and to be performed in the Commonwealth of
Pennsylvania shall govern any dispute arising out of or under this Agreement.

17.  ASSIGNMENT
     ----------

     This Agreement is not assignable by either party, other than to any of its
Affiliates, without the written consent of the other party, which consent makes
specific reference to this Section 17.

18.  REMEDIES
     --------

     (a)  Remedies Upon Breach of Agreement.  In the event of any breach of any
          ---------------------------------
provisions of this Agreement or any Purchase Order by Purchaser, PCI, at its
option, without prejudice to any other remedy or remedies which PCI may have
against Purchaser for such breach, including without limitation any rights PCI
may have under Section 3 hereof, may (i) without affecting in any way the
obligation of either party in respect of further shipments hereunder, suspend
any further deliveries until such default is cured, or (ii) terminate this
Agreement under Section 12(c) and declare any outstanding obligations of
Purchaser for shipments immediately due and payable.

     (b)  Limitation of Damages.  PCI SHALL NOT BE LIABLE FOR ANY BREACH OF THIS
          ---------------------
AGREEMENT OR ANY PURCHASE ORDER ISSUED HEREUNDER OR OF ANY DUTY OR OBLIGATION
ARISING OUT OF OR RELATED HERETO OR THERETO, IN ANY AMOUNT INDIVIDUALLY AND IN
THE AGGREGATE IN EXCESS OF [*], AND PCI SHALL NOT BE LIABLE IN ANY EVENT FOR THE

____________________________
* Confidential Treatment Requested

                                      -15-
<PAGE>

VALUE OF THE PRODUCT OR FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, INCLUDING WITHOUT LIMITATION, LOST REVENUES OR PROFITS.

19.  ARBITRATION
     -----------

     (a)  Arbitration.  Any claim, controversy or dispute arising out of or
          -----------
relating to this Agreement or any interpretation or breach thereof or
performance thereunder, including without limitation any dispute concerning the
scope of this arbitration provision, shall be settled exclusively by submission
to final, binding and non-appealable arbitration ("Arbitration") for
determination, without any right by any party to a trial de novo in a court of
                                                         -- ----
competent jurisdiction, after a twenty-five (25) calendar day waiting period
(the "Waiting Period") subject to Section 19(j).  During the Waiting Period, the
parties shall work reasonably and in good faith and shall use their best efforts
to resolve the claim, controversy or dispute amicably.  The Arbitration and all
pre-hearing, hearing, post-hearing arbitration procedures, including those for
disclosure and challenge, shall be conducted in accordance with the Commercial
Arbitration Rules (the "Commercial Rules") of the American Arbitration
Association (herein referred to as the "Association") in Philadelphia,
Pennsylvania, or such other place as the parties may agree, as supplemented
hereby.  In addition to the Commercial Rules, the parties shall also follow the
procedures described below.

     (b)  Notice of Demand to Arbitrate.  Following the Waiting Period, the
          -----------------------------
party seeking Arbitration shall give notice of a demand to arbitrate (herein
referred to as the "Demand") to the other party and to the Association.  The
Demand shall include (i) the issues to be determined, (ii) a copy of this
arbitration provision, and (iii) to the extent the parties cannot agree on a
single arbitrator, the designation of one arbitrator, who shall have no prior or
existing personal or financial relationship with the designating party.

     (c)  Response.  Within thirty days after receipt of the Demand, the other
          --------
party shall give notice (herein referred to as the "Response") to the party that
demanded arbitration, and to the Association, of (i) any additional issues to be
arbitrated, (ii) its answer to the issues raised by the party that sent the
Demand, and (iii) its designation of a second arbitrator, who shall have no
prior or existing personal or financial relationship with the designating party.
If a Response designating a second arbitrator is not received within the above-
mentioned thirty (30) day period, the Association shall immediately designate
the second arbitrator.

     (d)  Designation of Third Arbitrator.  The two arbitrators as designated
          -------------------------------
pursuant to the foregoing provision shall then designate a third arbitrator
within ten days after the designation of the second arbitrator.  If the two
arbitrators cannot agree on the designation of the third arbitrator within the
ten (10) day period allotted, the Association shall designate the third
arbitrator.

     (e)  Procedures of Arbitration.  The arbitration panel as designated above
          -------------------------
shall proceed with the Arbitration by giving notice to all parties of its
proceedings and hearings

                                      -16-
<PAGE>

in accordance with the Association's applicable procedures.  Within 15 days
after all three arbitrators have been appointed, an initial meeting among the
arbitrators and counsel for the parties shall be held for the purpose of
establishing a plan for administration of the Arbitration, including: (i)
definition of issues; (ii) scope, timing and type of discovery, which may at the
discretion of the arbitrators include production of documents in the possession
of the parties, but may not, without the consent of the parties, include
depositions; (iii) exchange of documents and filing of detailed statements of
claims and preheating memoranda; (iii) schedule and place of hearings; and (iv)
any other matters that may promote the efficient, expeditious and cost-effective
conduct of the proceeding.  The substantive law of the Commonwealth of
Pennsylvania shall be applied by the arbitrators to the resolution of the
dispute, provided that the arbitrators shall base their decision on the express
terms, covenants and conditions of this Agreement.  The arbitrators shall be
bound to make specific findings of fact and reach conclusions of law, based upon
the submissions and evidence of the parties, and shall issue a written decision
explaining the basis for the decision and award.  The award shall be made within
one year of delivery of the Response.

     (f)  No Modification.  The parties agree that the arbitrators shall have no
          ---------------
power to alter or modify any express provision of this Agreement or to render
any award which, by its terms, effects any such alteration or modification.

     (g)  Discovery.  Upon written demand to any party to the Arbitration for
          ---------
the production of documents and things (including computer discs and data)
reasonably, related to the issues being arbitrated, the party upon which such
demand is made shall promptly product, or make available for inspection and
copying, such documents or things without the necessity of any action by the
arbitrators, provided, however, that no such demand shall be effective if made
more than ninety (90) days after the receipt of the Response.

     (h)  Power to Grant Relief and Remedies.  Subject to the limitations
          ----------------------------------
imposed by Section 19(f), the arbitrators shall have the power to grant any and
all relief and remedies, whether at law or in equity, that the courts in the
Commonwealth of Pennsylvania may grant and such other relief as may be available
under the Commercial Rules, other than punitive damages.  Any award of the
arbitrators shall include pre-award and post-award interest at a rate or rates
considered just under the circumstances by the arbitrators.  The decision of the
arbitrators shall be final and as an "award" within the meaning of the
Commercial Rules and judgment upon the arbitration award may be entered in the
United States District Court for the Eastern District of Pennsylvania
("Philadelphia District Court") or any other court having jurisdiction, as if it
were a judgment of that court.  The parties to this Agreement expressly consent
to the jurisdiction of the Association, including, without limitation,
reasonable attorney's fees and the parties waive any objection they may have as
to jurisdiction and venue regarding the Philadelphia District Court.

     (i)  Fees and Expenses.  The party which does not prevail in the
          -----------------
Arbitration shall be responsible for all fees and expenses incurred in
connection with the Arbitration,

                                      -17-
<PAGE>

including without limitation, the reasonable attorney's fees and expenses
incurred by the prevailing party.

     (j)  Equitable Relief.  Notwithstanding the foregoing, the parties
          ----------------
specifically reserve the right to seek a temporary judicial restraining order,
preliminary injunction, or other similar short term equitable relief, and grant
the arbitration tribunal the right to make a final determination of the parties'
rights, including whether to make permanent or dissolve such court order.  No
party shall bring a civil action seeking enforcement of any other remedy founded
on this Agreement.

 20. RELATIONSHIP OF THE PARTIES
     ---------------------------

     Nothing contained in this Agreement shall create a joint venture or
partnership between the parties.  PCI shall be an independent contractor in
performing its obligations.  Neither party shall be liable for any of the debts
or obligations of the other and neither party shall have any authority or right
to act for or incur any liability of any kind, express or implied, on the name
of or on behalf of the other party.

 21. MISCELLANEOUS
     -------------

     (a)  Entire Agreement.  This Agreement and all Purchase Orders issued
          ----------------
hereunder, and related documents, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties except as specifically set forth herein.  All
Appendices to this Agreement are part of this Agreement to the same effect as if
such terms had been included herein.  The terms of this Agreement shall govern
in the event any term or provision set forth in any Appendix hereto is
inconsistent with this Agreement.  No addition to or waiver or modification of
any provision of this Agreement shall be binding unless in writing and signed by
a duly authorized representative of each party.

     (b)  Counterparts, Signatures by Facsimile.  This Agreement may be executed
          -------------------------------------
in one or more counterparts, each of which shall be deemed to be one and the
same Agreement.  Any facsimile signature of any party hereto shall constitute a
legal, valid binding execution hereof by such party.

     (c)  Titles.  The headings appearing at the beginning of the numbered
          ------
Articles and at the beginning of paragraphs have been inserted for convenience
only and do not constitute any part of this Agreement.

     (d)  Modifications.  No changes, modifications or waivers of any provision
          -------------
of this Agreement shall be binding unless evidenced in writing and signed for
and on behalf of both parties by a duly authorized representative.

                                      -18-
<PAGE>

     (e)  Severability.  In the event that any provision of this Agreement shall
          ------------
be determined to be illegal or unenforceable, that provision will be limited or
eliminated to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect and enforceable.

     (f)  Waiver.  The failure on the part of any party to exercise or enforce
          ------
any rights conferred upon it hereunder shall not be deemed to be a waiver of any
such rights nor operated to bar the exercise or enforcement thereof at any time
or times thereof.

     (g)  No Strict Construction.  The language used in this Agreement will be
          ----------------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

     IN WITNESS WHEREOF, Purchaser and PCI have executed this Agreement on the
date first set forth above.

OraPharma, Inc.                         Packaging Coordinators, Inc.

By: /s/ James A. Ratigan                By: /s/ W. Don Huggins
    -----------------------                 -----------------------
    Name:  James A. Ratigan                 Name:  W. Don Huggins
    Title: EVP & CFO                        Title: Sr. V.P. Sales & Mktg.
    Date:  11-24-00                         Date:  11-17-00

                                      -19-
<PAGE>

                                  APPENDIX 1

                            Description Of Product

Product Name:  Arestin

                                      -20-
<PAGE>

                                  APPENDIX 2

                                Specifications

See Attached.

                                      -21-
<PAGE>

                           [PCI SERVICES LETTERHEAD]

November 2, 2000

Mr. Michael Lanzilotti
OraPharma, Inc.
732 Louis Drive
Warminster, PA  18940

Dear Mike:

The following are additional prices and specifications associated with the
commercial production and packaging of Arestin (Minocycline PTS):

OraPharma will supply the following:
-----------------------------------
1.   Bulk product (1 kg. batch size)
2.   Dispenser tips and caps
3.   Filling machines (10 active - 2 back-up)
4.   Gauge blocks

PCI will supply the following:
-----------------------------
1.   Pre-formed pouches
2.   Thermoformed tray to hold 12 tips
3.   Printed label (affixed to pouch)
4.   Printed folding carton
5.   Printed insert
6.   4 mg. desiccant packets

Packaging Component specifications as follows:
---------------------------------------------

Item - Pre-formed Pouch
Size - 5.026" x 9.625" finished pouch with recloseable zipper and rounded
corners
Material - .48 mil coated polyester/ .75 mil white LDPE/ 1.0 mil foil/ .75 mil
CRC-1/2.25 mil EVAPEF

Item - Thermoformed Tray
Size - 5 3/8 x 2 x 7/16
Material - .020 Pharmagrade PVC

Item - Printed Carton
Size - 5 3/16 x 1 1/2 x 9 13/16
Material - .018 SBS
Printing - 4 colors & coating
Die - $[*]
Prep & plates - $[*]
____________________________
*Confidential Treatment Requested

                                      -22-
<PAGE>

Item - Printed Label
Size - 2 3/4 x 7
Material - 60# semi-gloss/ 40# SCK/AC-34TA (basic label) w/ 1 mil clear
polypropylene overlaminate
Printing - 4 colors
Die - $[*]
Prep & plates - $[*]

Item - Printed Insert
Flat Size - 18 x 7 1/2
Fold Size - 4 1/2 x 7 1/2
Material - 40# paper
Printing - 1 color front, 1 color back
Prep & plates - $[*]

Commercial Production Operation:
-------------------------------
1.   Gauge dispenser tips
2.   Fill tip with 4 mg. of product and cap
3.   Snap 12 tips into thermoformed tray
4.   Affix printed label to pouch
5.   Insert 1 tray and 2 4 mg. desiccants into preformed pouch and seal
6.   Erect carton and insert 2 filled pouches and 1 insert
7.   Code carton and pack 10 cartons into corrugated shipper

Quantity & Pricing - See Attachment
-----------------------------------

[*]

Terms are Net 30 days.

Mike: if you have any questions regarding this proposal or require additional
information please feel free to call anytime.

Cordially,
PCI Services

/s/ Jeff Welch

Jeff Welch
Account Executive

cc:  Paul Alvater - President - PCI Services
     Don Huggins - Vice President of Sales - PCI Services
     Frank Amaya - Project Manager - PCI Services
     Jim Ratigan - Vice President & CFO - OraPharma
     Robert Haddow - Controller - OraPharma
     Ron Lawter - Vice President, Product Development & Mftg. - OraPharma

____________________________

* Confidential Treatment Requested

<PAGE>

                                  APPENDIX 3

                                    Prices

A.   The letter dated November 2, 2000 from Jeff Welch to Michael Lanzilotti
including the pricing in attachment "OraPharma Cost Improvement Program" dated
10/30/2000. (attachment)

B.   For the period from the date of this contract through [*] the price will be
fixed at $[*] per unit.

C.   Beginning on [*] the price will be fixed at $[*] per unit. This price will
be reviewed on a quarterly basis beginning on June 1, 2001 to determine if it
can be lowered based on improved production processes or improved production
efficiencies, some of which are described in the letter referenced in this
Appendix 3 Item A.

D.   Room charges for [*] will be an aggregate of $[*].

E.   After [*] there will be a nonuse room charge of $[*] per day to be charged
in any month when the room is not used for production for [*]. There will be an
allowance of [*] after which the nonuse room charge will apply. In no event will
this nonuse room charge be assessed until after the room has been unused for
[*]. Further, the [*] will be extended if Purchaser is not permitted to use the
room by PCI.

____________________________

* Confidential Treatment Requested

                                     -22-
<PAGE>

                           [PCI SERVICES LETTERHEAD]

November 2, 2000

Mr. Michael Lanzilotti
OraPharma, Inc.
732 Louis Drive
Warminster, PA  18940

Dear Mike:

The following are additional prices and specifications associated with the
commercial production and packaging of Arestin (Minocycline PTS):

OraPharma will supply the following:
-----------------------------------
1.   Bulk product (1 kg. batch size)
2.   Dispenser tips and caps
3.   Filling machines (10 active - 2 back-up)
4.   Gauge blocks

PCI will supply the following:
-----------------------------
1.   Pre-formed pouches
2.   Thermoformed tray to hold 12 tips
3.   Printed label (affixed to pouch)
4.   Printed folding carton
5.   Printed insert
6.   4 mg. desiccant packets

Packaging Component specifications as follows:
---------------------------------------------

Item - Pre-formed Pouch
Size - 5.026" x 9.625" finished pouch with recloseable zipper and rounded
corners
Material - .48 mil coated polyester/ .75 mil white LDPE/ 1.0 mil foil/ .75 mil
CRC-1/2.25 mil EVAPEF

Item - Thermoformed Tray
Size - 5 3/8 x 2 x 7/16
Material - .020 Pharmagrade PVC

Item - Printed Carton
Size - 5 3/16 x 1 1/2 x 9 13/16
Material - .018 SBS
Printing - 4 colors & coating
Die - $[*]
Prep & plates - $[*]

____________________________

* Confidential Treatment Requested

<PAGE>

Item - Printed Label
Size - 2 3/4 x 7
Material - 60# semi-gloss/ 40# SCK/AC-34TA (basic label) w/ 1 mil clear
polypropylene overlaminate
Printing - 4 colors
Die - $[*]
Prep & plates - $[*]

Item - Printed Insert
Flat Size - 18 x 7 1/2
Fold Size - 4 1/2 x 7 1/2
Material - 40# paper
Printing - 1 color front, 1 color back
Prep & plates - $[*]

Commercial Production Operation:
-------------------------------
1.   Gauge dispenser tips
2.   Fill tip with 4 mg. of product and cap
3.   Snap 12 tips into thermoformed tray
4.   Affix printed label to pouch
5.   Insert 1 tray and 2 4 mg. desiccants into preformed pouch and seal
6.   Erect carton and insert 2 filled pouches and 1 insert
7.   Code carton and pack 10 cartons into corrugated shipper

Quantity & Pricing - See Attachment
-----------------------------------

[*]

Terms are Net 30 days.

Mike: if you have any questions regarding this proposal or require additional
information please feel free to call anytime.

Cordially,
PCI Services

/s/ Jeff Welch

Jeff Welch
Account Executive

cc:  Paul Alvater - President - PCI Services
     Don Huggins - Vice President of Sales - PCI Services
     Frank Amaya - Project Manager - PCI Services
     Jim Ratigan - Vice President & CFO - OraPharma
     Robert Haddow - Controller - OraPharma
     Ron Lawter - Vice President, Product Development & Mftg. - OraPharma

____________________________

* Confidential Treatment Requested

<PAGE>

                      Orapharma Cost Improvement Program
                      ----------------------------------

[*]

____________________________

* Confidential Treatment Requested

<PAGE>

                       OraPharma Projected Annual Volumes
                       ----------------------------------
------------------------------------------------------------------------------
            Contract Year                     Volume (finished cartons)
            -------------                     -------------------------
------------------------------------------------------------------------------
                [*]                                     [*]

____________________________

* Confidential Treatment Requested

<PAGE>

                                  APPENDIX 4

                         List of Production Equipment
                         to be Supplied by OraPharma

A.   MFG 18 station intermittent motion rotary pouch handling-filling-sealing
machine

B.   Renen Filling Machines (qty 12)

C.   Mettler Toledo Analytical Balance model number AT261 (qty 2)

                                     -23-<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.
<PAGE>

     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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<PAGE>

     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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                                      -3-
<PAGE>

     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

                                      -4-
<PAGE>

            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

                                      -5-
<PAGE>

     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

                                      -6-
<PAGE>

     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.

                                      -7-
<PAGE>

            (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.

                                      -8-
<PAGE>

     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

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<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

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

<PAGE>

                                                                      APPENDIX B

                              OraPharma Equipment
                              -------------------

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