Document:

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                                                                   EXHIBIT 10.02

                                LICENSE AGREEMENT

                                     BETWEEN

                            ATRIX LABORATORIES, INC.

                                       AND

                        COLLAGENEX PHARMACEUTICALS, INC.

                                 AUGUST 24, 2001

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                                TABLE OF CONTENTS

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

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

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

Article III PAYMENTS AND ROYALTIES...............................................................................10

     Section 3.01.   License Fee.................................................................................10
     Section 3.02.   Royalty Payments............................................................................10
     Section 3.03.   Reports, Exchange Rates.....................................................................10
     Section 3.04.   Records and Audits..........................................................................10
     Section 3.05.   Taxes.......................................................................................11

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

     Section 4.01.   Payment Terms...............................................................................11
     Section 4.02.   Payment Method..............................................................................11
     Section 4.03.   Late Payments...............................................................................11
     Section 4.04.   [  ]**......................................................................................11

Article V ATRIX CO-MARKETING RIGHTS..............................................................................12

     Section 5.01.   Co-Marketing Rights.........................................................................12

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

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

Article VII COMMERCIALIZATION OF THE PRODUCT.....................................................................17

     Section 7.01.   CollaGenex's Obligations....................................................................17
     Section 7.02.   Marketing Advisory Board....................................................................18
     Section 7.03.   Co-Promotional Activities of Atrix..........................................................19

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

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

Article IX PURCHASE AND SALE.....................................................................................22

     Section 9.01.   Purchase Price and Payment..................................................................22
     Section 9.02.   Purchase Price Adjustment...................................................................22
     Section 9.03.   Labeling and Artwork........................................................................22
     Section 9.04.   Purchase Forms..............................................................................23
     Section 9.05.   Confirmation................................................................................23
     Section 9.06.   Delivery....................................................................................23
     Section 9.07.   Forecasts and Orders........................................................................23
     Section 9.08.   Professional Samples........................................................................24

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

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

Article XI REGULATORY COMPLIANCE.................................................................................26

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

Article XII PATENTS AND TRADEMARKS...............................................................................28

     Section 12.01.   Maintenance of Patents or Marks............................................................28
     Section 12.02.   Cooperation................................................................................28
     Section 12.03.   Atrix to Prosecute Infringement............................................................28
     Section 12.04.   Infringement Claimed by Third Parties......................................................29

Article XIII REPRESENTATIONS, WARRANTIES and COVENANTS...........................................................29

     Section 13.01.   Corporate Power............................................................................29
     Section 13.02.   Due Authorization..........................................................................29
     Section 13.03.   Binding Obligation.........................................................................29
     Section 13.04.   Ownership of Atrix Patent Rights...........................................................29
     Section 13.05.   Patent Proceedings.........................................................................30
     Section 13.06.   Adverse Properties.........................................................................30
     Section 13.07.   Preservation of Name and Reputation........................................................30
     Section 13.08.   Debarment..................................................................................30
     Section 13.09.   Limitation on Warranties...................................................................30
     Section 13.10.   Limitation of Liability....................................................................30

Article XIV COVENANTS OF COLLAGENEX AND ATRIX....................................................................30

     Section 14.01.   Covenant Not to Launch Competitive Product.................................................30
     Section 14.02.   Limitation to the Territory................................................................31
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     Section 14.03.   Marketing and Instructional Materials......................................................31
     Section 14.04.   A&S Spending Levels........................................................................32
     Section 14.05.   [  ]**.....................................................................................32
     Section 14.06.   [  ]**.....................................................................................32
     Section 14.07.   Minimum Size of Detail Force...............................................................32
     Section 14.08.   Detail Calls...............................................................................32
     Section 14.09.   Access to Books and Records................................................................33
     Section 14.10.   Marketing Expenses.........................................................................33
     Section 14.11.   Protection of the Marks....................................................................33
     Section 14.12.   Distribution System........................................................................33
     Section 14.13.   Further Actions............................................................................33
     Section 14.14.   Equitable Relief...........................................................................33

Article XV PRODUCT RECALL........................................................................................34

     Section 15.01.   Product Recalls or Withdrawal..............................................................34
     Section 15.02.   Recall Costs...............................................................................34
     Section 15.03.   Notification of Complaints.................................................................35
     Section 15.04.   Notification of Threatened Action..........................................................35

Article XVI INDEMNIFICATION AND INSURANCE........................................................................35

     Section 16.01.   CollaGenex Indemnified by Atrix............................................................35
     Section 16.02.   Atrix Indemnified by CollaGenex............................................................35
     Section 16.03.   Prompt Notice Required.....................................................................36
     Section 16.04.   Indemnitor May Settle......................................................................36
     Section 16.05.   Insurance..................................................................................37

Article XVII DISPUTE RESOLUTION..................................................................................37

     Section 17.01.   Disputes...................................................................................37
     Section 17.02.   Mediation..................................................................................37
     Section 17.03.   Trial Without Jury.........................................................................37
     Section 17.04.   Performance to Continue....................................................................38
     Section 17.05.   Provisional Remedies.......................................................................38
     Section 17.06.   Determination of Patents and Other Intellectual Property...................................38

Article XVIII CONFIDENTIALITY....................................................................................38

     Section 18.01.   Confidentiality............................................................................38
     Section 18.02.   Publicity Review...........................................................................38

Article XIX MISCELLANEOUS........................................................................................39

     Section 19.01.   No-Solicitation............................................................................39
     Section 19.02.   Commercially Reasonable Efforts............................................................39
     Section 19.03.   No Right to Use Names......................................................................40
     Section 19.04.   Notices....................................................................................40
     Section 19.05.   Severability...............................................................................41
     Section 19.06.   Entire Agreement/Merger....................................................................41
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     Section 19.07.   Amendment..................................................................................41
     Section 19.08.   Counterparts...............................................................................41
     Section 19.09.   No Waiver of Rights........................................................................41
     Section 19.10.   Force Majeure..............................................................................41
     Section 19.11.   Further Assurances.........................................................................41
     Section 19.12.   Assignment and Sub-License.................................................................42
     Section 19.13.   Expenses...................................................................................42
     Section 19.14.   Binding Effect.............................................................................42
     Section 19.15.   Governing Law..............................................................................42
     Section 19.16.   Survival of Representations and Warranties.................................................42
     Section 19.17.   No Strict Construction.....................................................................42
     Section 19.18.   Independent Contractors....................................................................42

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

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

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

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

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

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

                                    ARTICLE I

                                   DEFINITIONS

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

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

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

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

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

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

         "A&S" means [ ]** in and associated with [ ]** and any [ ]** of the
Products, [ ]**

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

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

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

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

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

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

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

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

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

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

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

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

         "Competitive Products" means:

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

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

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

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

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

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

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

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

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

         [ ]** means [ ]** determined by [ ]** during that period of time, [ ]**
during that period of time.

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

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

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

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

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

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

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

         [ ]** means [ ]** and shall refer to [ ]** unless otherwise set forth
in this Agreement.

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

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

         "First Commercial Sale" means the first sale for use, consumption or
resale of a Product by CollaGenex or its Affiliates in the Territory (excluding
any sales for clinical trials or the

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distribution of Professional Samples). A sale to an Affiliate shall not
constitute a First Commercial Sale unless the Affiliate is the end user of the
Product.

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

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

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

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

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

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

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

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

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

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

         "Net Sales" means the [ ]** for sales of each Product [ ]** less the
following items, provided that they are [ ]**

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         "Territory" means the United States.

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

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

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

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

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<Table>
<S>                                                                                           <C>
         ADE.......................................................................................Section 11.02(a)
         Adjusted Product Repurchase Cost.......................................................Section 6.06(d)(ii)
         [  ]**.....................................................................................Section 9.02(a)
         [  ]**........................................................................................Section 7.03
         Block..................................................................................."Eighth Amendment"
         Dental Consultant...................................................................."Dental Detail Force"
         Disputed Amount............................................................................Section 6.03(a)
         Effective Date....................................................................................Preamble
         Force Majeure................................................................................Section 19.10
         Indemnitee...................................................................................Section 16.03
         Indemnitor...................................................................................Section 16.03
         [  ]**.....................................................................................Section 9.02(a)
         Initiating Group.............................................................................Section 19.01
         Loss.........................................................................................Section 16.01
         Marketing Advisory Board...................................................................Section 7.02(a)
         Marketing Materials..........................................................................Section 14.03
         Other Group..................................................................................Section 19.01
         Product Repurchase Cost................................................................Section 6.06(d)(ii)
         Purchase Price................................................................................Section 9.01
         Recall.......................................................................................Section 15.01
         Representatives..............................................................................Section 18.01
         Royalty Payment Date..........................................................................Section 4.01
         Royalty Statement.............................................................................Section 3.03
         SEC..........................................................................................Section 18.02
         [  ]**.....................................................................................Section 9.02(a)
         SOP.......................................................................................Section 11.02(c)
         Supplemental Royalty Statement.............................................................Section 9.02(a)
         [  ]**........................................................................................Section 4.04
         Term..........................................................................................Section 6.01
         [  ]**.....................................................................................Section 9.02(b)
</Table>

                  (c) Interpretation. The Section headings contained in this
         Agreement are for reference purposes only and shall not affect the
         meaning or interpretation of this Agreement. Except where the context
         clearly requires to the contrary: (i) each reference in this Agreement
         to a designated "Section" or "Exhibit" is to the corresponding Section
         or Exhibit of or to this Agreement; (ii) instances of gender or
         entity-specific usage (e.g., "his" "her" "its" "person" or
         "individual") shall not be interpreted to preclude the application of
         any provision of this Agreement to any individual or entity; (iii) the
         word "or" shall not be applied in its exclusive sense; (iv) "including"
         shall mean "including, without limitation"; (v) references to laws,
         regulations and other governmental rules, as well as to contracts,
         agreements and other instruments, shall mean such rules and instruments
         as in effect at the time of determination (taking into account any
         amendments thereto effective at such time without regard to whether
         such amendments were enacted or adopted after the effective date of
         this Agreement) and shall include all successor rules and instruments
         thereto; (vi) references to "$" or "dollars" shall mean the lawful
         currency of the United States; (vii) references to "Federal" or
         "federal" shall be to laws, agencies or other attributes of the United
         States (and not to any State or locality thereof); (viii) the

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         meaning of the terms "domestic" and "foreign" shall be determined by
         reference to the United States; (ix) references to "days" shall mean
         calendar days; (x) references to months or years shall be to the actual
         calendar months or years at issue (taking into account the actual
         number of days in any such month or year); (xi) days, business days and
         times of day shall be determined by reference to local time in Denver,
         Colorado; (xii) the English language version of this Agreement shall
         govern all questions of interpretation relating to this Agreement,
         notwithstanding that this Agreement may have been translated into, and
         executed in, other languages; and (xiii) the terms "Product" and
         "Products" shall refer to each individual Product and all Products
         collectively, unless the context clearly indicates otherwise.

                                   ARTICLE II

                              LICENSE AND PURCHASE

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

         Section 2.02. TRADEMARKS.

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

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

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

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<PAGE>

                                   ARTICLE III

                             PAYMENTS AND ROYALTIES

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

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

                  (a) [ ]** Net Sales of the Products during that calendar year;
         then

                  (b) [ ]** Net Sales of the Products [ ]** during that calendar
         year; then

                  (c) [ ]** Net Sales of the Products [ ]** during that calendar
         year.

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

         Section 3.04. RECORDS AND AUDITS. During the Term and for a period of
two years thereafter or as otherwise required in order for Atrix to comply with
Applicable Law, CollaGenex shall keep complete and accurate records in
sufficient detail to permit Atrix to confirm the completeness and accuracy of:
(a) the information presented in each Royalty Statement and all payments due
hereunder; and (b) the calculation of A&S expenditures. CollaGenex shall permit
an independent, certified public accountant reasonably acceptable to CollaGenex
to audit and/or inspect those records of CollaGenex (including financial
records) that relate to Net Sales, Royalty Statements, A&S expenditures and
compliance with Sections 14.07 and 14.08 for the sole purpose of: (i) verifying
the completeness and accuracy of the Royalty Statements; (ii) verifying the
calculation of the Net Selling Price, the calculation of Net Sales and the
calculation of A&S expenditures; (iii) verifying CollaGenex's compliance with
Sections 14.07 and 14.08; and (iv) to confirm royalty payments and A&S
expenditures for the Products in each case, during the two preceding calendar
years. Such inspection shall be conducted during CollaGenex's normal business
hours, no more than once in any 12 month period and upon at least ten days prior
written notice by Atrix to CollaGenex. If such accounting firm concludes that
such payments were underpaid during the periods reviewed by such accountants,
CollaGenex shall pay Atrix the amount of any such underpayments, plus interest
at a rate equal to the Prime

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Rate of Interest, within 30 days of the date Atrix delivers to CollaGenex such
accounting firm's report so concluding that such payments were underpaid. If
such accounting firm concludes that such payments were overpaid during such
period, Atrix shall pay to CollaGenex the amount of any such overpayments,
without interest, within 30 days of the date Atrix delivers to CollaGenex such
accounting firm's report so concluding that such payments were overpaid. Atrix
shall bear the full cost of such audit unless such audit discloses an
underpayment by more than [ ]** of the amount due during such period. In such
case, CollaGenex shall bear the full cost of such audit.

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

                                   ARTICLE IV

                                    PAYMENTS

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

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

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

         Section 4.04. [ ]** The intent of the Parties is that [ ]** The Parties
acknowledge and agree that the [ ]** Further, [ ]** shall not be entitled to
[ ]** shall not be entitled to [ ]** rather [ ]**

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                                    ARTICLE V

                            ATRIX CO-MARKETING RIGHTS

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

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

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

                  (c) If Atrix exercises its right to co-market a Product in the
         Territory the following shall occur, to the extent allowed by
         Applicable Laws: (i) CollaGenex shall grant Atrix an irrevocable,
         exclusive, royalty free license, except as against CollaGenex, with the
         right to sublicense, under the license granted to CollaGenex under
         Section 2.01 (and no other CollaGenex proprietary or intellectual
         property rights) to market, advertise, promote, distribute, offer for
         sale and sell such Product in the Territory; (ii) Atrix will be solely
         responsible for its expenses related to marketing such Product in the
         Territory and Atrix will retain all revenues from such Product that it
         or its sublicensees sell in the Territory; (iii) Atrix or its
         sublicensee shall market such Product under a trademark and a trade
         dress that are not confusingly similar to the trademark and trade dress
         being used by CollaGenex in the Territory; and (iv) the Marketing
         Advisory Board shall automatically dissolve as of the date Atrix
         exercises its right to co-market such Product.

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

                                   ARTICLE VI

                              TERM AND TERMINATION

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

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

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

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<PAGE>

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

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

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

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

                  (a) if CollaGenex shall fail to make any payments to Atrix on
         the date on which such payments are due hereunder and such failure
         continues for more than ten business days after notice of such failure
         to pay; provided, however, that this subsection (a) shall not apply to
         any payment, or portion thereof, under this Agreement, which is the
         subject of a good faith dispute (a "Disputed Amount") between
         CollaGenex and Atrix. Further, CollaGenex shall pay interest on any
         Disputed Amount at a rate equal to the Prime Rate of Interest to begin
         accruing on a daily basis from the date such payment was due and
         continuing until such payment is received by Atrix. Any Disputed Amount
         shall be resolved by the Parties within 30 days from the date
         CollaGenex notifies Atrix of a good faith dispute; provided, however,
         if the Disputed Amount cannot be resolved to the mutual satisfaction of
         the Parties within such 30 day period then either Party may request
         that the dispute be submitted to the Chief Executive Officers of Atrix
         and CollaGenex, respectively, or their designees, for joint resolution.
         If the Disputed Amount is not jointly resolved by the Parties' Chief
         Executive Officers, or their designees, within ten days after the
         submission thereto, then Atrix shall be entitled to pursue any and all
         remedies at law available to it. In no event will the dispute
         resolution period exceed a maximum of 60 days unless otherwise agreed
         in writing by the Parties. Further, CollaGenex may in its discretion
         elect to pay any such Disputed Amount and in the event such amount is
         finally determined not to have been payable by CollaGenex, Atrix shall
         reimburse CollaGenex for such amount, without interest;

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

                  (b) except with respect to the termination of this Agreement
         under Sections 6.02(b) or (c), CollaGenex shall reimburse Atrix for
         those costs and expenses reasonably incurred or committed to by Atrix
         in anticipation of meeting forecasted amounts for six months from the
         last firm order which cannot reasonably be canceled, eliminated,
         re-deployed, or mitigated by using reasonable and diligent efforts (but
         including any direct

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<PAGE>

         costs incurred by Atrix in doing so). CollaGenex shall reimburse Atrix
         for such costs and expenses within ten days after its receipt of an
         appropriately detailed invoice setting forth those costs and expenses
         incurred by Atrix pursuant to the terms of this subsection (b);

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

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

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

                           (ii) continue to sell off or distribute, as
                  applicable, existing inventory of the Products and
                  Professional Samples for six months after the notice of
                  termination. At the expiration of such six month period
                  CollaGenex shall, at Atrix's election, either (A) sell all
                  existing inventory of the Products and Professional Samples to
                  Atrix or (B) destroy all remaining inventory of the Products
                  and Professional Samples in accordance with Applicable Law and
                  provide Atrix with written proof of destruction sufficient to
                  comply with Applicable Laws. In either case, Atrix shall pay
                  to CollaGenex the full amount of the actual cost paid by
                  CollaGenex to Atrix for such remaining inventory of the
                  Products and Professional Samples (the "Product Repurchase
                  Cost"); provided, however, that if Atrix terminates this
                  Agreement, Atrix shall be entitled to deduct from the Product
                  Repurchase Cost the costs incurred by Atrix to repackage such
                  Products or Professional Samples for sale or distribution,
                  respectively, by Atrix or a Third Party (the "Adjusted Product
                  Repurchase Cost");

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

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

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

                           (iv) if CollaGenex sells any inventory of the
                  Products or Professional Samples to Atrix pursuant to this
                  subsection (d), it shall warrant that such

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<PAGE>

                  inventory of the Products and Professional Samples has been
                  stored in compliance with all Applicable Laws, has not been
                  adulterated and has otherwise been maintained according to the
                  requirements of Applicable Laws and Governmental Authorities;
                  and

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

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

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

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

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                                   ARTICLE VII

                        COMMERCIALIZATION OF THE PRODUCT

Section 7.01. COLLAGENEX'S OBLIGATIONS.

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

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

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

         (d) Marketing Plans And Reports. Prior to January 15th of each calendar
year, CollaGenex shall submit to the Marketing Advisory Board in writing the
annual marketing, sales and distribution plan for the Territory detailing
CollaGenex's and its Affiliates' proposed marketing, sales and distribution
strategy and tactics for the sale and

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

Section 7.02. MARKETING ADVISORY BOARD.

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

                  (i) Product positioning in the marketplace;

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

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

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

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

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

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

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

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<PAGE>

                  (ix) internet presence; and

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

         CollaGenex, alone, will be responsible for making the final decisions
         on the marketing of each Product regardless of the action or inaction
         of the Marketing Advisory Board, except with respect to [ ]**
         CollaGenex agrees that in making such decisions and taking such actions
         that it will consider the effect of such decisions and actions on the
         marketing and sale of such Product outside the Territory.
         Notwithstanding the foregoing, for the avoidance of doubt, Atrix,
         alone, shall make the final decision on all matters concerning the
         Manufacture of the Products.

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

                  Section 7.03. CO-PROMOTIONAL ACTIVITIES OF ATRIX. Beginning on
         [ ]**, Atrix shall have the right, [ ]** to participate in the sales,
         marketing and promotion of the Products or Product. If Atrix so elects,
         [ ]** the sales, marketing and promotional activities of the Products
         [ ]** as the Parties may agree. All costs associated with [ ]** The
         [ ]** carry out those co-promotional tasks as directed by [ ]** All
         revenues from the sale of Products [ ]**

                                  ARTICLE VIII

                             MANUFACTURE AND SUPPLY

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

                  Section 8.02. QUALITY ASSURANCE. Atrix shall Manufacture the
         Products in accordance with the Specifications. Atrix shall promptly
         notify CollaGenex in writing of any changes required by a Governmental
         Authority in the Specifications or Atrix's quality assurance procedures
         that would render Atrix unable to supply a Product and/or Professional
         Samples in

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         accordance with the terms of this Agreement. The Parties agree to
         negotiate in good faith to develop and execute an appropriate action
         plan in such situation. [ ]** the Parties [ ]** provided, however, that
         if the Parties cannot reach an agreement in good faith as to [ ]** by
         the Parties.

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

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

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

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

                           (d) keep on file all manufacturing records and
                  analytical results pertaining to the Manufacture of each batch
                  of Product and the Professional Samples for a period expiring
                  not earlier than one year after the expiration date of the
                  last lot of the last batch of Product and the Professional
                  Samples Manufactured and Shipped to CollaGenex. Atrix shall
                  make such records available to CollaGenex upon request,
                  however, Atrix shall be responsible for investigating any
                  Manufacturing problems or defects;

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

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

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<PAGE>

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

         Section 8.04. FAILURE TO SUPPLY.

                  (a) Atrix shall immediately notify CollaGenex if Atrix is
         unable to fill any order placed by CollaGenex pursuant to Section 9.07
         and advise CollaGenex of the revised delivery date. CollaGenex shall
         then have the option of terminating the purchase order without
         obligation of payment or of accepting the revised delivery date. [ ]**
         provided, however, [ ]** under this Section 8.04(a) [ ]**

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

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

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

                  (c) [ ]** the Parties agree that [ ]** and therefore [ ]** in
         accordance with the terms of this Agreement, [ ]** then [ ]**

         The [ ]** are a [ ]** In no event [ ]** under this Section 8.04(c)
         [ ]** acknowledges and agrees that [ ]** set forth in this Section
         8.04(c) [ ]** in accordance with the terms of this Agreement. [ ]**
         under this Section 8.04(c) [ ]**

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

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                                   ARTICLE IX

                                PURCHASE AND SALE

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

         Section 9.02. PURCHASE PRICE ADJUSTMENT.

                  (a) Timing and Information Requirements. The Purchase Price
         for each Product shall be subject to adjustment [ ]** On or prior to
         [ ]** CollaGenex shall provide [ ]** for each Product, [ ]** and [ ]**

                  (b) When Adjustment is Required. Based on the Supplemental
         Royalty Statement, the Parties will adjust the Purchase Price on a
         Product-by-Product basis in accordance with the following provisions:
         [ ]** adjustment shall be made [ ]** and then only to the extent [ ]**
         The Purchase Price shall [ ]**

                  (c) Amount of Adjustment. Any required adjustment: (i) shall
         only be made [ ]** (ii) shall be based on [ ]** and (iii) shall in no
         event [ ]** The Parties shall [ ]**

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

         Section 9.03. LABELING AND ARTWORK.

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

                  (b) Both Parties will approve all artwork developed for
         inclusion in the Product packaging, including carton labels, package
         inserts, etc., which approval will not be unreasonably withheld,
         conditioned or delayed by either Party. For the avoidance of doubt,
         Atrix will be solely responsible for the initial conversion of the
         current artwork to artwork bearing the CollaGenex name and trade dress,
         as applicable. The Parties acknowledge that other significant changes
         from currently approved packaging and labeling may require FDA approval
         prior to marketing. If CollaGenex wishes to institute changes in
         labeling artwork, after the Parties have agreed to and implemented the
         first

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         labeling artwork bearing the CollaGenex name and information, both
         Parties will develop a mutually acceptable implementation schedule. The
         actual cost of implementing such change will be at CollaGenex's sole
         cost and expense, including any materials made obsolete by CollaGenex's
         changes to the artwork. Neither Party shall alter, change or in any way
         modify the artwork, which has previously been approved, for any reason,
         without prior written authorization from the other Party, which
         approval will not be unreasonably withheld, conditioned or delayed, and
         provided that such approved artwork shall conform to all Applicable
         Laws.

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

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

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

         Section 9.07. FORECASTS AND ORDERS.

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

                           (i) During the first four calendar quarters following
                  the First Commercial Sale of each Product, the forecasts shall
                  be provided quarterly, no less than 45 days prior to the
                  beginning of each quarter. Said requirements will be based on
                  standard production planning parameters including sales
                  forecasts, sales demand forecasts, promotional forecasts,
                  inventory requirements, and the like. The first two quarters
                  of the 12 month forecast will be stated in monthly
                  requirements. The second two quarters of the 12 month forecast
                  will be total requirement by stock keeping unit and will be
                  stated as quarterly requirements. The first 3 months of the 12
                  month forecast will be firm orders to purchase. The second 3
                  months will be allowed to be flexed from the previous forecast
                  by plus

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<PAGE>

                  or minus [ ]** until fixed by the subsequent forecast;
                  provided that the aggregate adjustment from the quantity set
                  forth in the previous forecast for such 3 month period shall
                  not exceed [ ]** during that 3 month period. For example, if
                  CollaGenex's forecast for [ ]** was for [ ]** and its forecast
                  for [ ]** was for [ ]** the maximum number of Units CollaGenex
                  could order at the time [ ]** becomes fixed would be [ ]** The
                  [ ]** of any [ ]** will be [ ]**

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

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

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

                                    ARTICLE X

                       WARRANTY, REJECTION AND INSPECTIONS

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

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

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

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

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                                   ARTICLE XI

                              REGULATORY COMPLIANCE

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

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

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

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

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

                  (c) Subject to Atrix's exercise of its Co-Marketing rights
         under Article V, the Parties agree to follow CollaGenex's standard
         operating procedure for reporting and identifying adverse drug
         reactions (the "SOP") a copy of which is attached hereto as Exhibit F.
         In the event the SOP is modified or amended during the Term, CollaGenex
         shall provide Atrix with copies of any such modification or amendment
         to the SOP for

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         Atrix's prior approval, which will not be unreasonably withheld,
         conditioned or delayed, at least five business days prior to such
         amendment taking effect. CollaGenex shall designate a qualified person
         under Applicable Laws to be responsible for ADE reporting in the
         Territory. In order to facilitate the development of the customer
         response procedures for the Products, Atrix shall supply to CollaGenex:
         (i) all professional and patient materials used for responding to
         professional and consumer inquirers (including but not limited to
         procedural, standard response letters, literature search findings and
         references used in the evaluation, documentation and communication with
         healthcare professionals and consumers), (ii) NDA summaries and general
         technical reports relevant to the processing and response to customer
         inquiries, (iii) the historical electronic database of professional and
         consumer inquiries and responses for the last 12 months (iv) a copy of
         the responses to each inquiry and (v) an historical electronic database
         of Adverse Events, provided in each such case Atrix has Control of such
         information.

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

         Section 11.03. PHASE IV STUDIES. In the event a Governmental Authority
requires Atrix to conduct a Phase IV study, Atrix shall develop, design and
implement such Phase IV study and the costs shall be borne [ ]** shall pay [ ]**
of the costs of any Phase IV study conducted solely for marketing purposes;
[ ]** In exchange for [ ]** Upon completion of such Phase IV seeding study,
[ ]** in such Phase IV seeding study [ ]** to conduct such Phase IV seeding
study, [ ]** The costs of any Phase IV study [ ]**

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

         Section 11.05. COMPLIANCE. CollaGenex shall be responsible for
compliance with Applicable Laws and the Government Approvals relating to the
possession, promotion, marketing, sale, advertising and distribution of the
Products and Units and distribution of the Professional Samples, as applicable,
including (a) obtaining all necessary permits, licenses and any other
requirements relating to the sale and distribution of the Products and
Professional

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

                                   ARTICLE XII

                             PATENTS AND TRADEMARKS

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

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

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

         In the event Atrix fails to institute proceedings and terminate any
Third Party infringement of the Atrix Patent Rights, CollaGenex may take such
action as it deems appropriate, including without limitation, the filing of a
lawsuit against such Third Party. In such event Atrix will provide such
assistance and cooperation to CollaGenex as may be necessary, at

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CollaGenex's expense, and CollaGenex may deduct all costs and expenses of such
actions against any amount payable to Atrix under this Agreement and retain all
amounts awarded in such action. CollaGenex may settle any such claim so long as
the terms of such settlement do not impair Atrix's rights hereunder or Atrix's
rights in the Atrix Technology.

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

                                  ARTICLE XIII

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

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

         Section 13.04. OWNERSHIP OF ATRIX PATENT RIGHTS. As of the Effective
Date, Atrix represents and warrants that (a) it has all right, title and
interest in and to the Atrix Patent Rights and the Atrix Marks necessary to
grant CollaGenex the licenses hereunder; (b) except for those rights granted to
Block under the Eighth Amendment and except with respect to CollaGenex, it has
not granted any license under the Atrix Patent Rights or the Atrix Marks for any
Product in the Territory for use in the Field to any Third Party and is under no
obligation to grant any such license; (c) except for the security interest
granted to Block in the Atrix Marks under the Eighth

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<PAGE>

Amendment and such other rights of Block thereunder, there are no outstanding
liens, encumbrances, agreements or understanding of any kind, either written,
oral or implied, regarding either the Atrix Patent Rights or the Atrix Marks
which are inconsistent or in conflict with this Agreement; and [ ]** Atrix,
[ ]** Atrix's [ ]** (ii) that Block shall sell to Atrix all unsold Product held
by Block as of October 31, 2001.

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

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

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

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

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

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

                                  ARTICLE XIV

                        COVENANTS OF COLLAGENEX AND ATRIX

         Section 14.01. COVENANT NOT TO LAUNCH COMPETITIVE PRODUCT.

                  (a) CollaGenex hereby covenants and shall cause its Affiliates
         to agree not to develop, in-license, market, sell, distribute or have
         marketed, have sold or have distributed any Competitive Product in the
         Territory during the Term without the prior written approval of Atrix,
         such approval not to be unreasonably withheld.

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         Notwithstanding the foregoing, if CollaGenex or any Affiliate acquires
         an entity or all or substantially all of the assets of an entity and
         such entity distributes or such assets include a Competitive Product,
         CollaGenex or such Affiliate shall have 120 days in which to divest
         itself of such Competitive Product or to otherwise cease distribution
         of such Competitive Product, and CollaGenex shall not be in breach of
         this Section 14.01 if it or the Affiliate, as the case may be, so
         divests or ceases distribution within such 120 day period;

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

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

         Section 14.02. LIMITATION TO THE TERRITORY.

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

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

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

                                       31
<PAGE>

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

         Section 14.04. A&S SPENDING LEVELS. CollaGenex's aggregate direct A&S
spending level in the Territory for the fiscal year beginning [ ]** for all
Products shall be no less than [ ]** which amount shall include CollaGenex's
retention of additional representatives for its Dental Detail Force specifically
for the Products. [ ]** CollaGenex shall attend all major relevant industry
recognized dental trade shows, immediately commence detailing the Products to
Atrix's and CollaGenex's existing customers and make such other A&S expenditures
as mutually agreed to by the Parties. [ ]** A&S spending level [ ]** shall:

                  (a) [ ]**

                  (b) [ ]**

                  (c) [ ]**

         Section 14.05. [ ]** In the event [ ]** and shall [ ]**

         Section 14.06. [ ]** In the event CollaGenex [ ]** CollaGenex will
         [ ]**

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

         Section 14.08. DETAIL CALLS.

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

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

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

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

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

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

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

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

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

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<PAGE>

which it may then be entitled against the breaching Party. This Article XIV
shall not limit any other legal or equitable remedies that the non-breaching
Party may have against the breaching Party for violation of the covenants set
forth in this Article XIV. The Parties agree that the non-breaching Party shall
have the right to seek relief for any violation or threatened violation of this
Article XIV by the breaching Party from any court of competent jurisdiction in
any jurisdiction authorized to grant the relief necessary to prohibit the
violation or threatened violation of this Article XIV. This Article XIV shall
apply with equal force to the breaching Party's Affiliates.

                                   ARTICLE XV

                                 PRODUCT RECALL

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

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

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

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

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

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

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

                                  ARTICLE XVI

                          INDEMNIFICATION AND INSURANCE

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

         Section 16.02. ATRIX INDEMNIFIED BY COLLAGENEX. CollaGenex shall
indemnify and hold harmless Atrix from and against any Loss insofar as such Loss
or actions in respect thereof

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<PAGE>

occurs subsequent to the Effective Date, whether existing or occurring prior to,
on or subsequent to the date hereof, arises out of or is based upon (a) any
misrepresentation or breach of any of the warranties, covenants or agreements
made by CollaGenex in this Agreement; (b) CollaGenex's use of the Marketing
Authorizations in the marketing, sale, distribution or promotion of the Products
or the Professional Samples; (c) CollaGenex's marketing, sale, distribution or
promotion of the Products or the Professional Samples (except if such Loss
arises as a result of matters described in Section 16.01); (d) the use of
CollaGenex's name and trademark in the packaging and labeling of the Products or
Professional Samples and in the marketing, sale, distribution or promotion of
the Products or Professional Samples where it is alleged that such name or
trademark infringes the proprietary rights of a Third Party.

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

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

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<PAGE>

         Section 16.05. INSURANCE. Each Party shall, at its sole cost and
expense, obtain and keep in force comprehensive general liability insurance,
including any applicable self-insurance coverage, with bodily injury, death and
property damage limits of $5,000,000 per occurrence and $10,000,000 in the
aggregate, including contractual liability and product liability coverage. Upon
execution of this Agreement, each Party shall furnish the other with a
certificate of insurance signed by an authorized representative of such Party's
insurance underwriter evidencing the insurance coverage required by this
Agreement and providing for at least 30 days prior written notice to the other
Party of any cancellation, termination or reduction of such insurance coverage.

                                  ARTICLE XVII

                               DISPUTE RESOLUTION

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

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

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

         Section 17.03. TRIAL WITHOUT JURY. If the Parties fail to resolve the
dispute through negotiation and mediation in accordance with Sections 17.01 or
17.02, each Party shall have the right to pursue any of the remedies legally
available to resolve the dispute; provided, however,

                                       37
<PAGE>

that the Parties expressly waive any right to a jury trial in any legal
proceedings under this Section XVII.

         Section 17.04. PERFORMANCE TO CONTINUE. Each Party shall continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or related to this Agreement; provided, however, that a
Party may suspend performance of its obligations during any period in which the
other Party fails or refuses to perform its obligations.

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

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

                                  ARTICLE XVIII

                                 CONFIDENTIALITY

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

         Section 18.02. PUBLICITY REVIEW. The Parties agree that the public
announcement of the execution of this Agreement shall be in the form of press
releases issued by each of the Parties to be agreed upon on or before the
Effective Date and thereafter each Party shall be entitled to make or publish
any public statement consistent with the contents thereof. Thereafter, the
Parties will jointly discuss and agree, based on the principles of this Section
18.02, on any statement to

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

                                   ARTICLE XIX

                                  MISCELLANEOUS

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

         Section 19.02. COMMERCIALLY REASONABLE EFFORTS. Each Party shall use
commercially reasonable and diligent efforts to perform its responsibilities
under this Agreement. As used herein, the term "commercially reasonable and
diligent efforts" means, unless the Parties agree

                                       39
<PAGE>

otherwise, those efforts consistent with the exercise of prudent scientific and
business judgment, as applied to other products of similar scientific and
commercial potential within the relevant product lines of the Parties.

         Section 19.03. NO RIGHT TO USE NAMES. Except as otherwise provided
herein, no right, express or implied, is granted by the Agreement to use in any
manner the name "Atrix," "CollaGenex" or any other trade name or trademark of
the other Party or its Affiliates in connection with the performance of the
Agreement.

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

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

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

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

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

         Notice so given shall be deemed given and received (i) if by mail on
the fourth day after posting; (ii) by cable, telegram, telex or personal
delivery on the date of actual transmission, with evidence of transmission
acceptance, or (as the case may be) personal or other delivery; and (iii)

                                       40
<PAGE>

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

         Section 19.05. SEVERABILITY. Whenever possible, each clause, subclause,
provision or condition of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any clause, subclause,
provision or condition of this Agreement should be prohibited or invalid under
applicable law, such clause, subclause, provision or condition shall be
considered separate and severable from this Agreement to the extent of such
prohibition or invalidity without invalidating the remaining clauses,
subclauses, provisions and conditions of this Agreement.

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

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

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

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

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

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

                                       41
<PAGE>

         Section 19.12. ASSIGNMENT AND SUB-LICENSE. Neither this Agreement nor
any of the rights, interests, options or obligations hereunder may be assigned,
sublicensed or delegated by either of the Parties without the prior written
consent of the other Party, provided, however, that either CollaGenex or Atrix
may, without such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all of
its business pertaining to this Agreement, or in the event of its merger or
consolidation or change in control or similar transaction. Any permitted
assignee shall assume all obligations of its assignor under this Agreement or
that Party may assign or sublicense any and all of its rights, interests,
options, and delegate all obligations hereunder, to any Affiliate of such Party
(and such Affiliate may further assign or sublicense this Agreement to such
Party or any other Affiliate of such Party) without the consent of the other
Party. In the event of an assignment or sublicense to an Affiliate, the
assigning Party shall guarantee the performance of such assignee or
sub-licensee. The assignment or sublicense to an Affiliate shall not operate to
discharge the assignor or sub-licensor from any obligation under this Agreement.
Any assignment which contravenes this Section 19.12 shall be void ab initio.

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

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

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

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

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

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

                                       42
<PAGE>

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

                              COLLAGENEX PHARMACEUTICALS, INC.

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

                              ATRIX LABORATORIES, INC.

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

                                       43

<PAGE>

                                    EXHIBIT A

                               ATRIX PATENT RIGHTS

                                      [ ]**

----------

** Confidential Treatment Requested

                                      A-1

<PAGE>

                                    EXHIBIT B

                        FORM OF CERTIFICATE OF COMPLIANCE

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

                            CERTIFICATE OF COMPLIANCE

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

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

Reviewed By:

         Batch Record Auditor

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

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

cc: All Customers

                                      B-1

<PAGE>

                                    EXHIBIT C

                                 SPECIFICATIONS

                                      [ ]**

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** Confidential Treatment Requested

                                      C-1

<PAGE>

                                    EXHIBIT D

                             FORM OF STOCK PURCHASE

                                       D-1

<PAGE>

                                    EXHIBIT E

                                   ATRIX MARKS

                  TRADEMARK ROSTER (01) (GROUPED BY TRADEMARK)

<Table>
<Caption>

ATRIDOX
-------

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

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

ATRISORB
--------

COUNTRY            CLASSES   APP. #       APP. DT        REG. #     REG. DATE   Registered. Owner             CURRENT STATUS
-------            -------   ------       -------        ------     ---------   -----------------             --------------

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

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

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

----------

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

                                      E-1

<PAGE>

                                    EXHIBIT F

                   COLLAGENEX'S STANDARD OPERATING PROCEDURES

                                      [ ]**

----------

** Confidential Treatment Requested

                                       F-1

<PAGE>

                                    EXHIBIT G

                          PRODUCT FIXED PRICE SCHEDULE

                                      [ ]**

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** Confidential Treatment Requested

                                       G-1<PAGE>
                                                                   EXHIBIT 10.03

                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 24th
day of August, 2001 (the "Execution Date"), by and between Atrix Laboratories,
Inc., a Delaware corporation having offices at 2579 Midpoint Drive, Fort
Collins, CO 80525-4417 (hereinafter, the "Investor"), and CollaGenex
Pharmaceuticals, Inc., a Delaware corporation having offices at 41 University
Drive, Newtown, PA 18940 (hereinafter, "CGPI").

         THE PARTIES HEREBY AGREE AS FOLLOWS:

1.       Purchase and Sale of Stock.

         1.1.     Sale and Issuance of Common Stock. Subject to the terms and
                  conditions of this Agreement, at the Closing (defined below)
                  Investor will purchase and the CGPI will sell and issue to
                  Investor 330,556 shares of CGPI Common Stock (the "Shares")
                  for the purchase price per share equal to [ ]** the Nasdaq
                  National Market System [ ]** for an aggregate purchase price
                  of $2,999,994.03 (the "Purchase Price").

         1.2.     Closing. The purchase and sale of the Shares shall take place
                  at the offices of the Investor, 2579 Midpoint Drive, Fort
                  Collins, Colorado 80525, on the "Effective Date", as such term
                  is defined in the License Agreement of even date herewith
                  between the parties hereto (the "License Agreement"), or at
                  such other times and places as CGPI and Investor mutually
                  agree upon in writing (which times and places are designated
                  as the "Closing"). At the Closing, CGPI shall deliver to its
                  transfer agent, American Stock Transfer & Trust Company, a
                  letter, in the form of Exhibit A, which letter directs
                  American Stock Transfer & Trust Company to deliver promptly to
                  Investor a certificate representing the Shares.

         1.3.     Purchase Price. At the Closing, the Purchase Price shall be
                  paid by Investor to CGPI in immediately available funds by
                  wire transfer to a bank account designated by CGPI two (2)
                  business days prior to the Closing Date or, if not so
                  designated, then by certified or official bank check payable
                  in immediately available funds to the order of CGPI in such
                  amount.

         1.4.     Definition.

                           (a)      The following terms, as used herein, have
                                    the following meanings:

                                    "Affiliate" shall have the meaning defined
                                    in Rule 501 of Regulation D as promulgated
                                    under the 1933 Act.

                                    "Closing Date" means the date of the
                                    Closing.

----------

** Confidential Treatment Requested

<PAGE>

                                    "Common Stock" means the Common Stock, par
                                    value $.01 per share of CGPI.

                                    "GAAP" means generally accepted accounting
                                    principles in the United States.

                                    "Material Adverse Effect" means a material
                                    adverse effect on the condition (financial
                                    or otherwise), business, assets, results of
                                    operations of CGPI and its subsidiaries
                                    taken as a whole.

                                    "1934 Act" means the Securities Exchange Act
                                    of 1934, as amended, and the rules and
                                    regulations promulgated thereunder.

                                    "1933 Act" means the Securities Act of 1933,
                                    as amended, and the rules and regulations
                                    promulgated thereunder.

                                    "Person" shall mean an individual,
                                    corporation, partnership, trust, business
                                    trust, association, joint stock company,
                                    joint venture, pool, syndicate, sole
                                    proprietorship, and any other form of entity
                                    not specifically listed herein.

                                    "SEC" shall mean the U.S. Securities and
                                    Exchange Commission.

2.       Representations and Warranties of CGPI. CGPI hereby represents and
         warrants to Investor that:

         2.1.     Organization, Good Standing and Qualification. CGPI is a
                  corporation duly organized, validly existing and in good
                  standing under the laws of the State of Delaware and has all
                  requisite corporate power and authority to carry on its
                  business as now conducted. CGPI is duly qualified to transact
                  business and is in good standing in each jurisdiction in which
                  the failure to so qualify would have a Material Adverse
                  Effect.

         2.2.     Capitalization. The authorized capital of CGPI consists of:

                  (a)      Preferred Stock. 5,000,000 shares of preferred stock,
                           $.01 par value, of which (i) 200,000 shares have been
                           designated Series D Convertible Preferred Stock, of
                           which 200,000 are issued and outstanding; and (ii)
                           4,800,000 shares are undesignated, none of which are
                           issued and outstanding.

                  (b)      Common Stock. 25,000,000 shares of Common Stock, of
                           which 10,669,017 shares were issued and outstanding
                           on August 15, 2001.

         2.3.     Authorization. All corporate action on the part of CGPI, its
                  officers, directors and stockholders necessary for (i) its
                  authorization, execution and delivery of this Agreement, (ii)
                  the performance of all obligations of CGPI hereunder and (iii)
                  the authorization, issuance (or reservation for issuance) and
                  delivery of the Common

                                       2
<PAGE>

                  Stock being sold hereunder, to the extent that the foregoing
                  requires performance on or prior to the Closing, has been
                  taken. This Agreement, assuming due authorization, execution
                  and delivery by Investor, constitutes the valid and legally
                  binding obligation of CGPI, enforceable against CGPI in
                  accordance with its terms, except as such enforcement may be
                  limited by applicable bankruptcy, insolvency, reorganization,
                  moratorium or similar laws affecting the enforcement of
                  creditors' rights generally or by equitable principles
                  relating to enforceability (regardless of whether considered
                  in a proceeding at law or in equity).

         2.4.     Valid Issuance of Common Stock. The Shares, when issued
                  against payment thereof in accordance with this Agreement,
                  will be duly and validly issued, fully paid and nonassessable
                  and, based in part upon the representations of the Investor in
                  this Agreement and except for requisite Federal securities and
                  state blue sky filings, will be issued in compliance with all
                  applicable federal and state securities laws.

         2.5.     SEC Filings. CGPI has registered its Common Stock pursuant to
                  Section 12 of the 1934 Act, and the Common Stock is quoted on
                  the Nasdaq National Market. CGPI has filed all 1934 Act
                  reports for a period of at least twelve (12) months
                  immediately preceding the offer or sale of the Shares. CGPI's
                  filings with the SEC complied as of their respective filing
                  dates, or in the case of registration statements, their
                  respective effective dates, as to form in all material
                  respects with all applicable requirements of the 1933 Act and
                  the 1934 Act and the rules and regulations promulgated
                  thereunder. None of such filings, including, without
                  limitation, any exhibits, financial statements or schedules
                  included therein, at the time filed, or in the case of
                  registration statements, at their respective filing dates,
                  contained any untrue statement of a material fact or omitted
                  to state a material fact required to be stated therein or
                  necessary to make the statements therein, in light of the
                  circumstances under which they were made, not misleading. The
                  audited financial statements of CGPI included in CGPI's Annual
                  Report on Form 10-K for the year ended December 31, 2000
                  comply as to form in all material respects with the published
                  rules and regulations of the SEC with respect thereto, and
                  such audited financial statements (i) were prepared from the
                  books and records of CGPI, (ii) were prepared in accordance
                  with GAAP applied on a consistent basis (except as may be
                  indicated therein or in the notes or schedules thereto) and
                  (iii) present fairly the financial position of CGPI as of the
                  dates thereof and the results of operations and cash flows for
                  the periods then ended. The unaudited financial statements
                  included in CGPI's Quarterly Reports on Form 10-Q for the
                  quarterly periods ended March 31, 2001 and June 30, 2001
                  comply as to form in all material respects with the published
                  rules and regulations of the SEC with respect thereto; and
                  such unaudited financial statements (i) were prepared from the
                  books and records of CGPI, (ii) were prepared in accordance
                  with GAAP, except as otherwise permitted under the 1934 Act
                  and the rules and regulations thereunder, on a consistent
                  basis (except as may be indicated therein or in the notes or
                  schedules thereto, and except that they do not contain
                  footnotes and other presentation items that may be required by
                  GAAP) and (iii) present fairly the financial position of CGPI
                  as of the dates thereof and the results of operations and

                                       3
<PAGE>

                  cash flows (or changes in financial condition) for the periods
                  then ended, subject to normal year-end adjustments and any
                  other adjustments described therein or in the notes or
                  schedules thereto.

         2.6.     Litigation. Except as disclosed in CGPI's filings with the
                  SEC, there is no action, suit or proceeding before or by any
                  court or governmental agency or body, domestic or foreign, now
                  pending or, to the knowledge of CGPI, threatened, against or
                  affecting CGPI, or any of its properties, which could
                  reasonably be expected, individually or in the aggregate, (i)
                  to have a Material Adverse Effect or (ii) to result in the
                  issuance of an order restraining, enjoining or otherwise
                  prohibiting or making illegal the consummation of any of the
                  transactions contemplated by this Agreement.

         2.7.     No Default. Except as disclosed in CGPI's filings with the
                  SEC, CGPI is not in default in the performance or observance
                  of any material obligation, agreement, covenant or condition
                  contained in any indenture, mortgage, deed of trust or other
                  material agreement or instrument to which it is a party or by
                  which it or its property may be bound and which is filed as an
                  exhibit to CGPI's 1934 Act reports, except for defaults that
                  have not had and would not reasonably be expected to have,
                  individually or in the aggregate, a Material Adverse Effect.

         2.8.     Subsequent Events; Undisclosed Liabilities. Since June 30,
                  2001, CGPI has not incurred any liability or obligation,
                  contingent or otherwise, that taken as a whole, is material in
                  the aggregate to CGPI, except (i) in the ordinary course of
                  business consistent with past practices, or (ii) as reflected
                  in or reserved against in the balance sheet of CGPI as of June
                  30, 2001. Since June 30, 2001, CGPI has conducted its business
                  in the ordinary course of business consistent with past
                  practices, and there has not been any Material Adverse Effect
                  and there is no condition existing that could reasonably be
                  expected to result in a Material Adverse Effect on the
                  business of CGPI.

         2.9.     Consents and Approvals. No material consent, approval,
                  qualification, order or authorization of, or filing with, any
                  local, state or federal governmental authority or any third
                  party, including any approval under the Hart-Scott-Rodino
                  Antitrust Improvements Act of 1976, as amended, is required on
                  the part of CGPI in connection with CGPI's valid execution,
                  delivery or performance of this Agreement, or the offer, sale
                  or issuance of the Shares by CGPI, other than the filings that
                  have been made prior to the Closing, except that any notices
                  of sale required to be filed by CGPI with the SEC under
                  Regulation D of the 1933 Act and filings required by the rules
                  of the Nasdaq National Market, or such post-closing filings as
                  may be required under applicable state securities laws, which
                  will be timely filed within the applicable periods therefor.

         2.10.    Compliance with Laws and Court Orders. CGPI is not in
                  violation of any applicable law, rule, regulation, judgment,
                  injunction, order or decree except for violations that have
                  not had and would not reasonably be expected to have,
                  individually or in the aggregate, a Material Adverse Effect.

                                       4
<PAGE>

         2.11.    No Conflict. Except for rights to anti-dilution protection for
                  holders of CGPI's Series D Preferred Stock, the execution and
                  delivery of this Agreement and CGPI's performance of its
                  obligations under this Agreement will not (i) violate any
                  applicable law, ordinance, rule or regulation of any
                  governmental authority or (ii) conflict with or result in a
                  breach of the terms and conditions of, or constitute any
                  default under, CGPI's Certificate of Incorporation or By-laws,
                  or any contract, agreement or instrument to which CGPI or any
                  subsidiary is a party or by which CGPI or any Subsidiary or
                  any of their respective property if bound, except, in each
                  case, for violations, conflicts or breaches which individually
                  or in the aggregate would not have a Material Adverse Effect.

         2.12.    Insurance. CGPI has in full force and effect fire and
                  casualty, general liability and product liability insurance
                  policies, with extended coverage, in amounts customary for
                  companies similarly situated to CGPI.

3.       Representations and Warranties of Investor. Investor hereby represents
         and warrants to CGPI that:

         3.1.     Organization and Existence. Investor is a corporation duly
                  incorporated, validly existing and in good standing under the
                  laws of Delaware and has all requisite corporate power and
                  authority to carry on its business as now conducted.

         3.2.     Corporate Authorization. Investor has full corporate power and
                  authority to execute and deliver this Agreement and perform
                  its obligations hereunder. The execution, delivery and
                  performance by Investor of this Agreement have been duly
                  authorized by all requisite corporate action. This Agreement,
                  assuming due authorization, execution and delivery by CGPI,
                  constitutes the valid and legally binding obligation of
                  Investor, enforceable against Investor in accordance with its
                  terms, except as such enforcement may be limited by applicable
                  bankruptcy, insolvency, reorganization, moratorium or similar
                  laws affecting the enforcement of creditors' rights generally
                  or by equitable principles relating to enforceability
                  (regardless of whether considered in a proceeding at law or in
                  equity).

         3.3.     Purchase Entirely for Own Account. Investor is sophisticated
                  in transactions of this type and capable of evaluating the
                  merits and risks of the transactions described herein, and has
                  the capacity to protect its own interests. Investor has not
                  been formed solely for the purpose of entering into the
                  transactions described herein. The Shares to be received by
                  Investor will be acquired for investment for Investor's own
                  account, not as a nominee or agent, and not with a view to the
                  resale or distribution of any part thereof, and that Investor
                  has no present intention of selling, granting any
                  participation in, or otherwise distributing the same. By
                  executing this Agreement, Investor further represents that
                  Investor does not have any contract, undertaking, agreement or
                  arrangement with any person to sell, transfer or grant
                  participation to such person or to any third person, with
                  respect to any of the Shares.

                                       5
<PAGE>

         3.4.     Restricted Securities. Investor understands that the shares of
                  Common Stock it is purchasing are characterized as "restricted
                  securities" under the federal securities laws inasmuch as they
                  are being acquired from CGPI in a transaction not involving a
                  public offering and that under such laws and applicable
                  regulations such securities may be resold without registration
                  under the 1933 Act only under certain limited circumstances.
                  Investor represents that it is familiar with SEC Rule 144, as
                  presently in effect, and understands the resale limitations
                  imposed thereby and by the 1933 Act.

                  Investor agrees that it shall not sell or otherwise transfer
                  any of the Shares without registration under the 1933 Act, or
                  pursuant to Rule 144 under the 1933 Act, or pursuant to an
                  opinion of counsel reasonably satisfactory to CGPI that an
                  exemption from registration is available, and fully
                  understands and agrees that it must bear the total economic
                  risk of its purchase for an indefinite period of time because
                  of the restricted nature of the Shares. Investor understands
                  that CGPI is under no obligation to register the Shares on its
                  behalf. Investor understands the lack of liquidity and
                  restrictions on transfer of the Shares and that this
                  investment is suitable only for a person or entity of adequate
                  financial means that has no need for liquidity of this
                  investment and that can afford a total loss of its investment.

         3.5.     Legends. Investor acknowledges that the certificates
                  evidencing the Shares shall bear the following or
                  substantially similar legend and such other legends as may be
                  required by state or other applicable securities laws:

                           "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
                           BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                           AMENDED (THE "ACT"), OR THE SECURITIES ACT OF ANY
                           STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED FOR
                           VALUE, PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED
                           IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM
                           UNDER THE ACT AND/OR THE SECURITIES ACT OF ANY STATE
                           OR IN THE ABSENCE OF AN OPINION OF COUNSEL ACCEPTABLE
                           TO CGPI THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
                           SUCH ACT OR ACTS."

                           "Until the Separation Time (as defined in the Rights
                           Agreement referred to below), this certificate also
                           evidences and entitles the holder hereof to certain
                           Rights as set forth in a Shareholder Protection
                           Rights Agreement, dated as of September 15, 1997 (as
                           such may be amended from time to time, the "Rights
                           Agreement"), between CollaGenex Pharmaceuticals, Inc.
                           (the "Company") and American Stock Transfer & Trust
                           Company, as Rights Agent, the terms of which are
                           hereby incorporated herein by reference and a copy of
                           which is on file at the principal executive offices
                           of the Company. Under certain circumstances, as set
                           forth in the Rights Agreement, such Rights may be
                           redeemed, may become exercisable for securities or
                           assets of the Company or securities of another
                           entity, may be exchanged for shares of Common Stock
                           or other securities or assets of the

                                       6
<PAGE>

                           Company, may expire, may become void (if they are
                           "Beneficially Owned" by an "Acquiring Person" or an
                           Affiliate or Associate thereof, as such terms are
                           defined in the Rights Agreement, or by any transferee
                           of any of the foregoing) or may be evidenced by
                           separate certificates and may no longer be evidenced
                           by this certificate. The Company will mail or arrange
                           for the mailing of a copy of the Rights Agreement to
                           the holder of this certificate without charge after
                           the receipt of a written request therefor."

         3.6.     Removal of Legends

                  (a)      The first legend endorsed on a certificate pursuant
                           to Section 3.5 shall be removed (i) if the shares of
                           Common Stock represented by such certificate shall
                           have been resold under an effective registration
                           statement under the 1933 Act or otherwise lawfully
                           sold in a public transaction, (ii) if such shares are
                           transferred in compliance with Rule 144 promulgated
                           under the 1933 Act, or (iii) if the holder of such
                           shares shall have provided CGPI with an opinion of
                           counsel, in form and substance acceptable to CGPI and
                           its counsel, stating that a public sale, transfer or
                           assignment of such shares may be made without
                           registration.

                  (b)      Any legend endorsed on a certificate as required by
                           state securities laws pursuant to Section 3.5 shall
                           be removed if CGPI receives an order of the
                           appropriate state authority authorizing such removal
                           or if the holder of such shares provides CGPI with an
                           opinion of counsel, in form and substance acceptable
                           to CGPI and its counsel, stating that such state
                           legend may be removed.

         3.7.     Accredited Investor. Investor is an "accredited investor" (as
                  defined in Rule 501(a) under the 1933 Act) and has the
                  financial ability to bear the economic risks of its
                  investment, has adequate means for providing for its current
                  needs and contingencies and has no need for liquidity with
                  respect to its investment in CGPI.

         3.8.     Consents and Approvals. Except for Schedule 13D or 13G under
                  the Securities Exchange Act of 1934, no material consent,
                  approval, qualification, order or authorization of, or filing
                  with, any local, state or federal governmental authority or
                  any third party, including any approval under the
                  Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
                  amended, is required on the part of the Investor in connection
                  with the Investor's valid execution, delivery or performance
                  of this Agreement.

         3.9.     Legal Proceedings, Etc. There is no legal, administrative,
                  arbitration or other action or proceeding or governmental
                  investigations pending, or to the Investor's knowledge
                  threatened against the Investor which could reasonably be
                  expected to result in the issuance of an order restraining,
                  enjoining or otherwise prohibiting or making illegal the
                  consummation of any of the transactions contemplated by this
                  Agreement.

                                       7
<PAGE>

         3.10.    Availability of Funds. Investor has or will have available at
                  Closing, sufficient funds to pay the Purchase Price for the
                  Shares.

4.       Covenant relating to Rule 144. CGPI will file reports in compliance
         with the 1934 Act, will comply with all rules and regulations of the
         Commission applicable in connection with the use of Rule 144 and take
         such other actions and furnish the Investor with such other information
         as the Investor may request in order to avail itself of such rule or
         any other rule or regulation of the Commission allowing Investor to
         sell the Shares without registration, and will, at its own expense,
         upon the request of the Investor, deliver to the Investor a
         certificate, signed by CGPI's principal financial officer, stating (a)
         CGPI's name, address and telephone number (including area code), (b)
         CGPI's Internal Revenue Service identification number, (c) CGPI's
         Commission file number, (d) the number of shares of each class of stock
         outstanding as shown by the most recent report or statement published
         by CGPI, and (e) whether CGPI has filed the reports required to be
         filed under the 1934 Act for a period of at least ninety (90) days
         prior to the date of such certificate and in addition has filed the
         most recent annual report required to be filed thereunder. If at any
         time CGPI is not required to file reports in compliance with either
         Section 13 or Section 15(d) of the 1934 Act, CGPI at its expense will,
         upon the written request of the Investor, make available adequate
         current public information with respect to CGPI within the meaning of
         paragraph (c)(2) of Rule 144. The covenants set forth in this Section 4
         shall survive the Closing.

5.       Piggyback Registration Rights.

         5.1.     Registration Rights. If (but without any obligation to do so)
                  CGPI proposes to register any of its stock or other securities
                  under the 1933 Act in connection with an underwritten public
                  offering of such securities (other than a registration
                  relating solely to the sale of securities to participants in a
                  CGPI stock plan, a registration relating to a corporate
                  reorganization or other transaction under Rule 145 of the 1933
                  Act, a registration on any form that does not include
                  substantially the same information as would be required to be
                  included in a registration statement covering the sale of the
                  Shares, a registration in which the only Common Stock being
                  registered is Common Stock issuable upon conversion of debt
                  securities that are also being registered, or Common Stock
                  issued or to be issued pursuant to an equity line financing),
                  CGPI shall, at such time, promptly give Atrix written notice
                  of such registration. Upon the written request of Atrix given
                  within twenty (20) days after mailing of such notice by CGPI,
                  CGPI shall, subject to the provisions of Section 5.2 and
                  Section 5.6 hereof, use commercially reasonable efforts to
                  cause to be registered under the 1933 Act all of the Shares
                  that Atrix has requested to be registered.

         5.2.     Right to Terminate Registration. CGPI shall have the right to
                  terminate or withdraw any registration initiated by it under
                  Section 5.1 prior to the effectiveness of such registration
                  whether or not Atrix has elected to include securities in such
                  registration. The expenses of such withdrawn registration
                  shall be borne by CGPI.

                                       8
<PAGE>

         5.3.     Atrix to Provide Information. It shall be a condition
                  precedent to the obligations of CGPI to take any action
                  pursuant to this Section 5 with respect to the registration of
                  the Shares that Atrix furnish to CGPI such information
                  regarding itself, the Shares, and the intended method of
                  distribution of such Shares as shall be reasonably required to
                  effect the registration of such Shares.

         5.4.     Payment of Expenses. All expenses other than underwriting
                  discounts and commissions incurred in connection with
                  registrations, filings or qualifications pursuant to this
                  Section 5, including, without limitation, all registration,
                  filing and qualification fees (including "blue sky" fees),
                  printers' and accounting fees, fees and disbursements of
                  counsel for CGPI shall be borne by CGPI.

         5.5.     Additional Agreements. In the event of an underwritten public
                  offering, the right of the Investor to registration pursuant
                  to this Section 5 is conditioned upon such Investor's
                  participation in such underwriting, the inclusion of such
                  securities in the underwriting to the extent provided herein
                  and Investor entering into an underwriting agreement with the
                  underwriter or underwriters selected for such underwriting by
                  the Company (together with the Company and the other holders
                  distributing their securities through such underwriting), and
                  such other documents, agreements and certificates as shall be
                  deemed necessary by the underwriter in connection with such
                  public offering.

         5.6.     Registration Priority. Notwithstanding any other provision of
                  this Section 5, if the underwriter advises the Company in
                  writing that in its good faith judgment the number of shares
                  requested to be registered exceeds the number of shares which
                  can be sold in such offering: (a) the number of shares so
                  requested to be included in the offering will be reduced to
                  that number of shares which in the good faith judgment of the
                  underwriter can be sold in such offering and (b) such reduced
                  number of shares will be allocated first to the securities
                  CGPI proposes to sell; second to those CGPI stockholders
                  having registration rights pursuant to the terms of that
                  certain Registration Rights Agreement dated September 29, 1995
                  and that certain Stockholders and Registration Rights
                  Agreement dated March 19, 1999 in accordance with the terms of
                  each such agreement; third, to those CGPI stockholders having
                  registration rights pursuant to the terms of those certain
                  Registration Rights Agreements dated March 12, 2001 in
                  accordance with the terms of each such agreement; and fourth,
                  to Atrix, with respect to the Shares.

         5.7.     Termination of Registration Rights. Atrix shall not be
                  entitled to exercise any right provided for in this Section 5
                  at such time as all of the Shares can be sold pursuant to Rule
                  144(k) of the 1933 Act.

6.       Conditions to Closing.

         6.1.     Conditions of Investor to Closing; Deliveries to Investor. The
                  obligations of Investor to consummate the transactions
                  contemplated by this Agreement are subject to the
                  satisfaction, at or prior to the Closing, of each of the
                  following conditions:

                                       9
<PAGE>

                  (a)      A certificate from a duly authorized officer of CGPI
                           certifying that the representations and warranties of
                           CGPI set forth in this Agreement shall be true and
                           correct as of the Closing Date as if made on and as
                           of the Closing Date.

                  (b)      The Effective Date of the License Agreement shall
                           have occurred.

                  (c)      Investor shall have received the following documents
                           or deliveries at or before the Closing, each of which
                           shall be in full force and effect:

                           (i) evidence of the delivery of the letter to CGPI's
                  transfer agent pursuant to Section 1.2 above; and

                           (ii) a certificate signed by the chief executive
                  officer and the corporate secretary of CGPI certifying (x) to
                  resolutions duly and validly adopted by the Board of Directors
                  of CGPI evidencing its authorization of the execution and
                  delivery of this Agreement and the issuance of the Shares to
                  Investor, and the consummation of the transactions
                  contemplated hereby and that such resolutions have not been
                  amended and remain in full force and effect, and (y) to the
                  names and signatures of the persons authorized on behalf of
                  CGPI to execute and deliver this Agreement.

         6.2.     Conditions of CGPI to Closing; Deliveries to CGPI. The
                  obligations of CGPI to consummate the transactions
                  contemplated by this Agreement are subject to the
                  satisfaction, at or prior to the Closing, of each of the
                  following conditions:

                  (a)      A certificate from a duly authorized officer of
                           Investor certifying that the representations and
                           warranties of Investor set forth in this Agreement
                           shall be true and correct as of the Closing Date as
                           if made on and as of the Closing Date.

                  (b)      The Effective Date of the License Agreement shall
                           have occurred.

                  (c)      CGPI shall have received the following documents or
                           deliveries at or before the Closing, each of which
                           shall be in full force and effect:

                           (i) a certificate signed by the chief executive
                  officer and the corporate secretary of Investor certifying (x)
                  to resolutions duly and validly adopted by the Board of
                  Directors of Investor evidencing its authorization of the
                  execution and delivery of this Agreement and the consummation
                  of the transactions contemplated hereby and that such
                  resolutions have not been amended and remain in full force and
                  effect, and (y) to the names and signatures of the persons
                  authorized on behalf of Investor to execute and deliver this
                  Agreement; and

                           (ii) the consideration payable by Investor at Closing
                  as provided in Section 1.3 in immediately available funds.

                                       10
<PAGE>

7.       Termination.

         7.1.     Termination. This Agreement may be terminated prior to the
                  Closing:

                  (a)      By mutual written consent of CGPI and Investor.

                  (b)      In the event that the Effective Date under the
                           License Agreement shall not have occurred on or prior
                           to August 24, 2001.

         7.2.     Effect of Termination. In the event of the termination of this
                  Agreement as provided in Section 7.1, this Agreement shall be
                  of no further force or effect; provided, however that the
                  termination of this Agreement shall not relieve any party from
                  any liability for any willful and knowing breach of this
                  Agreement.

8.       Miscellaneous.

         8.1.     Successors and Assigns. This Agreement may not be assigned
                  without the prior written consent of the non-assigning party;
                  provided, however, that without prior written approval,
                  Investor may assign any and all of its rights and interest
                  under this Agreement to one or more of its Affiliates and
                  designate one or more of its Affiliates to perform its
                  obligations under this Agreement; provided such Affiliate
                  expressly acknowledges and confirms the representations,
                  warranties and information set forth in Sections 3.4, 3.5 and
                  3.7 of this Agreement. Any purported assignment in violation
                  of this provision shall be null and void. The terms and
                  conditions of this Agreement shall inure to the benefit of and
                  be binding upon the respective permitted successors and
                  assigns of the parties. Nothing in this Agreement, express or
                  implied, is intended to confer upon any party other than the
                  parties hereto or their respective successors and assigns any
                  rights, remedies, obligations, or liabilities under or by
                  reason of this Agreement, except as expressly provided in this
                  Agreement.

         8.2.     Third Party Purchaser. A third-party purchaser of the Shares
                  from Investor will not be subject to any of the terms of this
                  Agreement other than those imposed by the federal and state
                  securities laws.

         8.3.     Governing Law. This Agreement shall be governed by and
                  construed under the laws of the State of Delaware
                  (irrespective of its choice of law principles).

         8.4.     Counterparts. This Agreement may be executed in two or more
                  counterparts, each of which shall be deemed an original, but
                  all of which together shall constitute one and the same
                  instrument.

         8.5.     Titles and Subtitles. The titles and subtitles used in this
                  Agreement are used for convenience only and are not to be
                  considered in construing or interpreting this Agreement.

         8.6.     Notices. All notices, requests and other communications to any
                  party hereunder shall be in writing (including facsimile
                  transmission) and shall be deemed to have

                                       11
<PAGE>

                  been given if delivered personally, mailed by certified mail
                  (return receipt requested) or sent by cable, telegram,
                  telecopier or recognized overnight delivery service to the
                  parties at the following addresses or at such other addresses
                  as specified by the parties by like notice:

                           If to Investor:
                           Atrix Laboratories, Inc.
                           2579 Midpoint Drive
                           Fort Collins, Colorado 80525
                           Attn:  Dr. Charles P. Cox, Senior Vice President of
                                    Corporate Development
                           Fax:  (970) 482-9765
                           Phone:  (970) 482-5868

                           With a copy to:

                           Morrison & Foerster LLP
                           370 17th Street, Suite 5200
                           Denver, Colorado 80202
                           Attn:  Warren L. Troupe, Esq.
                           Fax:  (303) 592-1510
                           Phone:  (303) 592-1500

                           If to CGPI:

                           CollaGenex Pharmaceuticals, Inc.
                           41 University Drive
                           Newtown, PA 18940
                           Attn:  Brian M. Gallagher, Ph.D.
                           Chairman, President and Chief Executive Officer
                           Telephone: (215) 579-7388
                           Facsimile:  (215) 579-8577

                           With a copy to:

                           William J. Thomas, Esq.
                           Hale and Dorr LLP
                           650 College Road East
                           Princeton, New Jersey 08540

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

                                       12
<PAGE>

         8.7.     Finders Fee. Each party represents that it neither is nor will
                  be obligated for any finders' fee or commission in connection
                  with this transaction. Investor agrees to indemnify and hold
                  harmless CGPI from any liability for any commission or
                  compensation in the nature of a finders' fee (and costs and
                  expenses of defending against such liability or asserted
                  liability) for which Investor or any of its officers,
                  partners, employees or representatives is responsible. CGPI
                  agrees to indemnify and hold harmless Investor from any
                  liability for any commission or compensation in the nature of
                  a finders' fee (and the costs and expenses of defending
                  against such liability or asserted liability) for which CGPI
                  or any of its officers, employees or representatives is
                  responsible.

         8.8.     Expenses. CGPI and the Investor shall pay their own respective
                  costs and expenses incurred with respect to the negotiation,
                  execution, delivery and performance of this Agreement and the
                  transactions contemplated hereby.

         8.9.     Amendments and Waivers. Any term of this Agreement may be
                  amended and the observance of any term of this Agreement may
                  be waived (either generally or in a particular instance and
                  either retroactively or prospectively), only with the written
                  consent of CGPI and the Investor. Any amendment or waiver
                  effected in accordance with this paragraph shall be binding on
                  the Investor and CGPI.

         8.10.    Severability. If one or more provisions of this Agreement are
                  held to be unenforceable under applicable law, such provision
                  shall be excluded from this Agreement and the balance of this
                  Agreement shall be interpreted as if such provision were so
                  excluded and shall be enforceable in accordance with its
                  terms.

         8.11.    Entire Agreement. This Agreement constitutes the entire
                  agreement between the parties with respect to the subject
                  matter hereof and supersedes all prior agreements and
                  understandings, both oral and written, between the parties
                  with respect to the subject matter hereof. No representation,
                  inducement, promise, understanding, condition or warranty not
                  set forth herein has been made or relied upon by either party
                  intended to confer upon any person other than the parties
                  hereto any rights or remedies hereunder.

                                    * * * * *

                                       13
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

ATRIX LABORATORIES, INC.                       COLLAGENEX PHARMACEUTICALS, INC.
a Delaware corporation                         a Delaware corporation

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

                                       14
<PAGE>

                                    EXHIBIT A

                 LETTERHEAD OF COLLAGENEX PHARMACEUTICALS, INC.

                                 August 24, 2001

American Stock Transfer & Trust Company
Transfer Agent and Registrar
40 Wall Street
New York, New York 10005
Attention:  Craig Leibell

         Re:  CollaGenex Pharmaceuticals, Inc. - Share Issuance Instructions

Ladies and Gentlemen:

         CollaGenex Pharmaceuticals, Inc., a Delaware corporation ("CGPI"),
proposes to issue three hundred thirty thousand five hundred fifty-six (330,556)
shares of its common stock, par value $.01 per share (the "Common Stock")
pursuant to a Stock Purchase Agreement between CGPI and Atrix Laboratories, Inc.

         1. You are hereby irrevocably authorized and directed, as CGPI's
Transfer Agent and Registrar, to register and countersign, as an original issue,
one certificate representing an aggregate of 330,556 shares of the Common Stock
in the name of Atrix Laboratories, Inc.

         2. You are further directed to deliver the above referenced share
certificate to the following address, by registered mail:

                  Atrix Laboratories, Inc.
                  2579 Midpoint Drive
                  Fort Collins, CO 80525-4417
                  Attn:  Brian G. Richmond
                  Chief Financial Officer

         3. The above-referenced certificate shall bear the legends
substantially similar to the following:

         "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES ACT
OF ANY STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED FOR VALUE, PLEDGED,
HYPOTHECATED OR OTHERWISE ENCUMBERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
OF THEM UNDER THE ACT AND/OR THE SECURITIES ACT OF ANY STATE OR IN THE ABSENCE
OF AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR ACTS."

                                      A-1

<PAGE>

         "Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Protection Rights Agreement, dated
as of September 15, 1997 (as such may be amended from time to time, the "Rights
Agreement"), between CollaGenex Pharmaceuticals, Inc. (the "Company") and
American Stock Transfer & Trust Company, as Rights Agent, the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may become
exercisable for securities or assets of the Company or securities of another
entity, may be exchanged for shares of Common Stock or other securities or
assets of the Company, may expire, may become void (if they are "Beneficially
Owned" by an "Acquiring Person" or an Affiliate or Associate thereof, as such
terms are defined in the Rights Agreement, or by any transferee of any of the
foregoing) or may be evidenced by separate certificates and may no longer be
evidenced by this certificate. The Company will mail or arrange for the mailing
of a copy of the Rights Agreement to the holder of this certificate without
charge after the receipt of a written request therefor."

         Please acknowledge receipt of these instructions below.

                                 Very truly yours,

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

American Stock Transfer & Trust Company
as Transfer Agent and Registrar

By:
   -------------------------------------
Name:
     -----------------------------------
Title:
      ----------------------------------

                                      A-2

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