Exhibit 10.1

COLLAGENEX PHARMACEUTICALS, INC.
CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement (the “Agreement”) is made and entered into effective as of October 16, 2006 (the “Effective Date”), by and between Colin W. Stewart (the “Employee”) and CollaGenex Pharmaceuticals, Inc., a Delaware corporation (“CollaGenex”).  Certain capitalized terms used in this Agreement are defined in Section 1 below.

R E C I T A L S

A.            It is expected that CollaGenex from time to time will consider the possibility of a Change of Control, as defined in this Agreement.  The Board of Directors of CollaGenex (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

B.            The Board believes that it is in the best interests of CollaGenex and its stockholders to provide the Employee with an incentive to continue his or her employment and to maximize the value of CollaGenex upon a Change of Control for the benefit of its stockholders.

C.            In order to encourage the Employee to remain with CollaGenex notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment under certain circumstances following a Change of Control.

D.            This agreement supersedes any and all prior agreements that have as their primary purpose the provision of benefits upon termination of employment under certain circumstances following a Change of Control.

AGREEMENT

In consideration of the mutual covenants contained in this Agreement and the continued employment of Employee by CollaGenex, the parties agree as follows:

1.             Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:

(a)           Cause.  “Cause” shall mean (i) any act of dishonesty taken by the Employee in connection with his or her responsibilities as an employee which is intended to result in personal enrichment of the Employee, (ii) Employee’s conviction of a felony that the Board believes has had or will have a material detrimental effect on CollaGenex’ reputation or business, (iii) a willful act or willful failure to act by the Employee that constitutes misconduct and is injurious to CollaGenex, (iv) any material breach by Employee of any agreement with CollaGenex, after there has been delivered to the Employee a written notice of breach and Employee has been given a reasonable opportunity to cure such breach, or (v) continued willful violations by the Employee of the Employee’s obligations to CollaGenex or responsibilities/duties as an employee after there has been delivered to the Employee a written demand for performance from CollaGenex which describes the basis for CollaGenex’ belief that the Employee has not substantially performed his or her duties, and Employee has been given a reasonable opportunity to cure the violations.

(b)           Change of Control.  “Change of Control” shall mean the occurrence of any of the following events:

(i)            the approval by CollaGenex’ shareholders of a merger or consolidation of CollaGenex with any other corporation, other than a merger or consolidation which would result in the voting securities of CollaGenex outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of CollaGenex or such surviving entity outstanding immediately after such merger or consolidation;

(ii)           the approval by CollaGenex’ shareholders of a plan of complete liquidation of CollaGenex or an agreement for the sale or disposition by CollaGenex of all or substantially all of CollaGenex’ assets;

(iii)          any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said

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Act), directly or indirectly, of securities of CollaGenex representing 50% or more of the total voting power represented by CollaGenex’ then outstanding voting securities; or

(iv)          a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are directors of CollaGenex as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not either in connection with any transactions described in subsections (i), (ii), or (iii), or in connection with an actual or threatened proxy contest relating to the election of directors of CollaGenex.

(c)           Involuntary Termination  “Involuntary Termination” shall mean (i) without the Employee’s express written consent, a significant reduction of the Employee’s duties, position or responsibilities relative to the Employee’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities;  (ii) without the Employee’s express written consent, a significant reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a reduction by CollaGenex of the Employee’s base salary as in effect immediately prior to such reduction; (iv) without the Employee’s express written consent, a material reduction by CollaGenex in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (v) without the Employee’s express written consent, the relocation of the Employee to a facility or a location more than fifty (50) miles from his or her current location; (vi) any termination of the Employee by CollaGenex that is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of CollaGenex to obtain the assumption of this Agreement by any successors contemplated in Section 7 below.

(d)           Termination Date.  “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other under this Agreement.

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2.             Term of Agreement.  This Agreement shall terminate on the earlier of (a) the date that all obligations of the parties under this Agreement have been satisfied or (b) on the date, prior to a Change of Control, the Employee is no longer employed by CollaGenex.

3.             At-Will Employment.  CollaGenex and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law.  If, prior to any Change of Control, the Employee leaves the employment of CollaGenex either voluntarily or involuntarily for any reason, this Agreement will terminated by Operation of Section 2 and the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as may otherwise be established under CollaGenex’ then existing employee benefit plans or policies at the Termination Date, or as otherwise agreed by the parties at such time.

4.             Option Acceleration Upon A Change of Control.  If a Change of Control occurs while the Employee is employed by CollaGenex, regardless of whether Employee’s employment relationship with CollaGenex continues following such Change of Control, then (a) all stock options granted by CollaGenex to the Employee prior to the Change of Control shall become fully vested and exercisable as of the date of the Change of Control to the extent such stock options are outstanding and unexercisable at the time of such termination, and (b) all stock subject to a right of repurchase by CollaGenex (or its successor) that was purchased prior to the Change of Control shall have such right of repurchase lapse with respect to all of such shares.

5.             Severance Benefits In the Event of an Involuntary Termination.

(a)           Termination Following A Change of Control.  If the Employee’s employment with CollaGenex terminates as a result of an Involuntary Termination at any time within twenty-four (24) months after a Change of Control, Employee shall be entitled to the following severance benefits:

(i)            2.5 (two and one half) times the Employee’s base salary as in effect as of the Termination Date, plus an amount equal to 2.5 (two and one half) times the average bonus paid to Employee for the three fiscal years prior to the Termination Date (pro rated in the event Employee’s duration of employment by CollaGenex resulted in less than three bonus payments), less applicable withholding, payable in a lump sum within thirty (30) days of the Termination Date;

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provided, however, if Employee has not worked long enough to have received a bonus for a full year of employment, an amount equal to 2 (two) times the maximum bonus opportunity for the year in which employment is terminated shall be substituted for the payment based on average bonus payments referred to above in this subparagraph;

(ii)           the same level of health (i.e., medical, vision and dental) coverage and benefits as in effect for the Employee on the day immediately preceding the day of the Employee’s termination of employment for a period of twenty-four (24) months; and

(iii)          outplacement/administrative support for a period of eighteen (18) months following the Termination Date, plus reimbursement of up to Five Thousand Dollars ($5,000) of out of pocket expenses incurred by Employee in connection with Employee’s job search.

(b)           Termination Apart from a Change of Control.  If the Employee’s employment with CollaGenex terminates other than as a result of an Involuntary Termination within twenty-four (24) months following a Change of Control, then the Employee shall not be entitled to receive severance or other benefits as