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                                                                   FINAL 7-11-96


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                             CROSS-LICENSE AGREEMENT

         THIS CROSS-LICENSE AGREEMENT (together with the attached Schedules, the
"Agreement") is made as of July 15, 1996 (the "Effective Date") by and among
Genetics Institute, Inc., a Delaware corporation (for itself and on behalf of
its Affiliate, the GPDC Partnership, a Delaware general partnership), with a
business address at 87 CambridgePark Drive, Cambridge, Massachusetts 02140
("GI"), Stryker Corporation, a Michigan corporation with a business address at
2725 Fairfield Road, Kalamazoo, Michigan 49002 ("Stryker") and Creative
BioMolecules, a Delaware corporation with a business address at 45 South Street,
Hopkinton, Massachusetts 01748 ("CBM").

1.       BACKGROUND.

         1.1.     PATENTS. GI, Stryker and CBM have each filed patent
                  applications and obtained patents in the United States and
                  around the world, or have rights under such applications and
                  patents, that relate generally to the following subject matter
                  (the "BMP Subject Matter"): chondrogenic proteins, osteogenic
                  proteins and/or bone morphogenetic proteins, the DNA encoding
                  those proteins, vectors and host cells containing that DNA,
                  methods of making and purifying those proteins, the activities
                  of those proteins, and methods, devices and compositions for
                  using those proteins to, inter alia, induce bone and/or
                  cartilage formation.

         1.2.     CROSS-LICENSES. Each of the parties has recognized that their
                  respective patent positions are of a nature that, in the
                  absence of unblocking cross-licenses, could have a negative
                  impact on potential competition between the parties and could
                  block the development and availability of these proteins to
                  the detriment of all parties generally, and to the substantial
                  detriment of patients needing treatment with such proteins.

         1.3.     AGREEMENT. In consideration of the premises and for other good
                  and valuable consideration, the receipt and sufficiency of
                  which are acknowledged, the parties, intending to be legally
                  bound, agree as follows:
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2.       DEFINITIONS AND INTERPRETATION. As used in this Agreement, the
         following terms shall have the meanings set forth below and shall be
         interpreted in accordance with the provisions of Section 2.20.

         2.1.     "AFFILIATE" means any corporation, company, partnership, joint
                  venture, firm and/or other entity which controls, is
                  controlled by, or is under common control with a Party. For
                  purposes of this Section 2.1, "control" means (a) in the case
                  of corporate entities, direct or indirect ownership of at
                  least fifty percent (50%) of the stock or shares entitled to
                  vote for the election of directors; and (b) in the case of
                  non-corporate entities, direct or indirect ownership of at
                  least fifty percent (50%) of the equity interest with the
                  power to direct the management and policies of such
                  noncorporate entities.

         2.2.     "BASE PROTEIN" means either a GI Base Protein or a CBM/
                  Stryker Base Protein, as the context so requires.

         2.3.     "BONE DISEASES" means osteoporosis, osteomalacia and Paget's
                  Disease.

         2.4.     "BONE DISEASE FIELD" means the portion of the OP Field
                  consisting of prevention or treatment of the Bone Diseases
                  other than (a) by the local application of GI Products, CBM
                  Products or Stryker Products in an insoluble formulation
                  directly on bone or joint tissue for local, as opposed to
                  general or systemic, effect and (b) the treatment of fractures
                  regardless of whether they result from Bone Disease.

         2.5.     "CBM/STRYKER BASE PROTEIN" means a polypeptide chain whose * 
                  *********************************** is set forth on Schedule
                  2.5 to this Agreement.

         2.6.     "CBM/STRYKER DERIVATIVE PRODUCT" means, with respect to a
                  particular CBM/Stryker Base Protein:

                  a. species variant forms thereof;

                  b. amino acid variant forms of such Base Protein sharing at
                     least *** amino acid sequence identity with the ********
                     ************************** of such Base Protein ("***
                     Homologs");


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                  c. ******* variant forms of such Base Protein or such
                     species variant forms or such *** Homologs, including,
                     without limitation, polypeptides comprising only the
                     ***************************************

                  d. homodimeric, heterodimeric and chimeric forms of such Base
                     Protein and of variant forms thereof identified in the
                     preceding Subsections (a), (b) and (c), to the extent they
                     also consist of:

                     i.   such Base Protein or variant forms thereof
                          identified in the preceding Subsections (a),
                          (b) or (c),

                     ii.  other CBM/Stryker Base Proteins or variant
                          forms thereof identified in the preceding
                          Subsections (a), (b) or (c), or

                     iii. other polypeptide chains which are not within
                          the preceding Subsections (i) or (ii), and are
                          not GI Base Proteins or variant forms thereof
                          identified in Subsections (a), (b) or (c) of
                          Section 2.12;

                  e. polyclonal or monoclonal antibodies to such Base Protein or
                     to the foregoing proteins;

                  f. the DNA or RNA encoding such Base Protein or the foregoing
                     proteins;

                  g. vectors and host cells containing the foregoing DNA or RNA;
                     and

                  h. such Base Protein or the foregoing proteins when combined
                     with a matrix or other scaffold, and such proteins when
                     formulated with a delivery vehicle, including a
                     sequestering agent or other slow release agent or other
                     carrier.

                  Determination of "identity" between any two amino acid
                  sequences is based on that alignment which achieves the
                  maximum identity between the two sequences.

         2.7.     "CBM FIELD" means all fields of use outside of the Stryker
                  Field. The CBM Field includes, without limitation, (a) the
                  Bone Disease Field and (b) the area of the Dental Field
                  outside the Stryker Field.


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         2.8.     "CBM/STRYKER PATENTS" means all Patents in which and to the
                  extent Stryker and/or CBM, as the case may be, has an interest
                  licensable to GI as of the Effective Date, including without
                  limitation, those listed on SCHEDULE 2.8 to this Agreement. In
                  addition "CBM/Stryker Patents" will include all Patents listed
                  as "*** Patents" on SCHEDULE 2.8 covering ***********,
                  provided that Stryker and/or CBM has obtained the right to
                  sublicense such *** Patents to GI under this Agreement.
                  CBM/Stryker Patents shall not include Patent claims directed
                  to the polypeptide chains described in Section 2.12(d)(iii),
                  below.

         2.9.     "CBM PRODUCTS" means the CBM/Stryker Base Proteins and the
                  CBM/Stryker Derivative Products with respect thereto.

         2.10.    "DENTAL FIELD" means the field of treatment, repair or
                  replacement of the tooth, dentin, alveolar bone, tooth-root
                  cementum, gingiva and/or periodontal ligament.

         2.11.    "GI BASE PROTEIN" means a polypeptide chain whose *******
                  *************************** is set forth on SCHEDULE 2.11 to
                  this Agreement.

         2.12.    "GI DERIVATIVE PRODUCT" means, with respect to a particular GI
                  Base Protein:

                  a. species variant forms thereof;

                  b. amino acid variant forms of such Base Protein sharing at
                     least *** amino acid sequence identity with the **********
                     ***************************** of such Base Protein ("***
                     Homologs");

                  c. ********* variant forms of such Base Protein or such
                     species variant forms or such *** Homologs, including,
                     without limitation, polypeptides comprising only the
                     **************************************;

                  d. homodimeric, heterodimeric and chimeric forms of such Base
                     Protein and of variant forms thereof identified in the
                     preceding Subsections (a), (b) and (c), to the extent they
                     also consist of:


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                     i.   such Base Protein or variant forms thereof
                          identified in the preceding Subsections (a),
                          (b) or (c),

                     ii.  other GI Base Proteins or variant forms
                          thereof identified in the preceding
                          Subsections (a), (b) or (c), or

                     iii. other polypeptide chains which are not within
                          the preceding Subsections (i) or (ii), and are
                          not CBM/Stryker Base Proteins or variant forms
                          thereof identified in Subsections (a), (b) or
                          (c) of Section 2.6;

                  e. polyclonal or monoclonal antibodies to such Base Protein or
                     to the foregoing proteins;

                  f. the DNA or RNA encoding such Base Protein or the foregoing
                     proteins;

                  g. vectors and host cells containing the foregoing DNA or RNA;
                     and

                  h. such Base Protein or the foregoing proteins when combined
                     with a matrix or other scaffold, and such proteins when
                     formulated with a delivery vehicle, including a
                     sequestering agent or other slow release agent or other
                     carrier.

                  Determination of "identity" between any two amino acid
                  sequences is based on that alignment which achieves the
                  maximum identity between the two sequences.

         2.13.    "GI PATENTS" means all Patents in which and to the extent GI
                  has an interest licensable to Stryker and/or CBM as of the
                  Effective Date, including without limitation, those listed on
                  SCHEDULE 2.13 to this Agreement. GI Patents shall not include
                  Patent claims directed to the polypeptide chains described in
                  Section 2.6(d)(iii), above.

         2.14.    "GI PRODUCTS" means the GI Base Proteins and the GI Derivative
                  Products with respect thereto.

         2.15.    "OP FIELD" means the field of treatment, repair or replacement
                  of bone and joint tissue, including, without limitation,
                  meniscus and articular cartilage, and ligaments and tendons.


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         2.16.    "ORPHAN DRUG RIGHTS" means the designation of orphan drug,
                  orphan combination product or orphan device status and the
                  award of exclusive marketing approval with respect to a GI
                  Product, a CBM Product or a Stryker Product, as applicable, by
                  the United States Food and Drug Administration, or any
                  designation or award by other governments or regulatory
                  authorities which provides for marketing exclusivity to
                  promote the development and commercialization of orphan drugs,
                  orphan combination products or orphan devices with restricted
                  patient populations for a given indication.

         2.17.    "PATENTS" means (a) all patent applications filed on or before
                  the Effective Date of this Agreement and all patents that
                  issue or have issued from any such application and (b) all
                  patent applications filed after the Effective Date of this
                  Agreement and all patents that issue from any such
                  application, but only to the extent of claims that are
                  entitled to priority or benefit from a patent application of
                  Subsection (a), above, regardless of whether such priority or
                  benefit is claimed. For purposes of this Agreement, patent
                  applications and patents include U.S. and foreign
                  applications, patents, divisions, continuations,
                  continuations-in-part, applications for certificates of
                  invention and priority rights, certificates of invention,
                  reissues, re-examination certificates, extensions or other
                  governmental acts that effectively extend the period of
                  exclusivity by the patent holder, substitutions, renewals,
                  supplementary protection certificates, confirmations,
                  registrations, validations and additions. Patents shall not
                  include any claims in any patent application or patent
                  described in the preceding Subsection (a) or (b) to methods,
                  devices or formulations directed toward specific uses outside
                  (i) the Stryker Field, (ii) the Bone Disease Field and (iii)
                  the Dental Field. Patents also shall not include any claims in
                  any patent application or patent described in the preceding
                  Subsection (a) or (b) to orthopedic hardware or prosthetic
                  devices per se, or to methods of making or using such hardware
                  or prosthetic devices per se.

         2.18.    "STRYKER FIELD" means the OP Field, but excluding the Bone
                  Disease Field. The Stryker Field includes, without limitation,
                  the area of the Dental Field outside the CBM Field.


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         2.19.    "STRYKER PRODUCTS" means the CBM/Stryker Base Proteins and the
                  CBM/Stryker Derivative Products with respect thereto.

         2.20.    INTERPRETATION. Notwithstanding the definitions set forth
                  above, the parties acknowledge that it is possible, for
                  example, that certain CBM/Stryker Derivative Products or
                  certain GI Derivative Products may be derived from more than
                  one of the CBM/Stryker Base Proteins or GI Base Proteins, as
                  applicable, listed on SCHEDULE 2.5 or SCHEDULE 2.11 hereof,
                  respectively. In order to assure the parties the benefit of
                  the licenses granted pursuant to Section 3, it is hereby
                  agreed that the following rules of interpretation shall apply,
                  in the order of priority of Subsections (a) through (e) set
                  forth below:

                  a. If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Protein
                     HBMP2 and of the Base Protein HBMP7, no rights to such
                     Derivative Product are granted under this Agreement; and
                     all parties agree that they shall not make, have made, use,
                     offer for sale, sell, have sold, import, have imported,
                     export or have exported (collectively, "exploitation") such
                     Derivative Product for so long as the exploitation of such
                     Derivative Product is covered by an unexpired patent
                     exclusively licensed hereunder.

                  b. If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Protein
                     ***** and of the Base Proteins ***** or *****, no rights to
                     such Derivative Product are granted under this Agreement.

                  c. If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Protein
                     HBMP7 and of another Base Protein other than HBMP2, it
                     shall be deemed to be a Derivative Product of the Base
                     Protein HBMP7; and rights are granted under this Agreement
                     to such Derivative Product to the extent, but only to the
                     extent, that rights are granted under this Agreement to the
                     Base Protein HBMP7 and Derivative Products with respect
                     thereto.

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                     If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Protein
                     HBMP2 and of another Base Protein other than HBMP7, it
                     shall be deemed to be a Derivative Product of the Base
                     Protein HBMP2; and rights are granted under this Agreement
                     to such Derivative Product to the extent, but only to the
                     extent, that rights are granted under this Agreement to the
                     Base Protein HBMP2 and Derivative Products with respect
                     thereto.

                  d. If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Proteins
                     ***** or ***** and of another Base Protein other than
                     HBMP2, HBMP7 or *****, it shall be deemed to be a
                     Derivative Product of the Base Proteins ***** or *****; and
                     rights are granted under this Agreement to such Derivative
                     Product to the extent, but only to the extent, that rights
                     are granted under this Agreement to the Base Proteins *****
                     or ***** and Derivative Products with respect thereto.

                     If a particular GI Product, Stryker Product or CBM Product,
                     as applicable, is a Derivative Product of the Base Protein
                     ***** and of another Base Protein other than HBMP2, HBMP7,
                     ***** or *****, it shall be deemed to be a Derivative
                     Product of the Base Protein *****; and rights are granted
                     under this Agreement to such Derivative Product to the
                     extent, but only to the extent, that rights are granted
                     under this Agreement to the Base Protein ***** and
                     Derivative Products with respect thereto.

                  e. Notwithstanding the fact that the Base Protein ***** may
                     have a greater than *** amino acid sequence identity with
                     the Base Protein HBMP2, the exclusivity of the license
                     granted to GI shall not apply to the Base Protein ***** and
                     heterodimeric and homodimeric forms of the Base Protein
                     ***** or to the following Derivative Products: (i) species
                     variant forms of the Base Protein *****, (ii) polyclonal or
                     monoclonal antibodies to the Base Protein ***** or species
                     variants thereof, (iii) DNA and RNA encoding the Base
                     Protein ***** or species variants thereof, (iv) vectors and
                     cells containing such DNA or RNA, and (v) the foregoing


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                     when combined or formulated as described in Subsection
                     2.12(h); and the Base Protein ***** and such Derivative
                     Products shall not be deemed to be Derivative Products with
                     respect to Base Protein HBMP2.

                     Notwithstanding the fact that the Base Proteins ***** or
                     ***** may have a greater than *** amino acid sequence
                     identity with the Base Protein HBMP7, the exclusivity of
                     the license granted to Stryker and CBM shall not apply to
                     the Base Proteins ***** and ***** and heterodimeric and
                     homodimeric forms of the Base Proteins ***** and *****, or
                     to the following Derivative Products: (i) species variant
                     forms of the Base Proteins ***** or *****, (ii) polyclonal
                     or monoclonal antibodies to the Base Proteins ***** or
                     ***** or species variants thereof, (iii) DNA and RNA
                     encoding the Base Proteins ***** and ***** or species
                     variants thereof, (iv) vectors and cells containing such
                     DNA or RNA, and (v) the foregoing when combined or
                     formulated as described in Subsection 2.6(h); and the Base
                     Proteins ***** and ***** and such Derivative Products shall
                     not be deemed to be Derivative Products with respect to the
                     Base Protein HBMP7.

3.       PATENT LICENSES AND ROYALTIES. Subject to the terms and conditions of
         this Agreement, the parties grant the following licenses and, in
         consideration thereof, shall pay the following royalties:

         3.1.     FROM GI TO STRYKER.

                  a. GRANT. GI grants to Stryker irrevocable, worldwide,
                     non-exclusive (except as provided below) licenses and
                     sublicenses, limited to the Stryker Field, under the
                     Patents listed on SCHEDULE 2.13 (and in addition, those
                     Patents which are sublicensable to Stryker under the Third
                     Party License Agreements listed on SCHEDULE 3.1 to this
                     Agreement), to make and have made, to use, to offer for
                     sale, to sell and have sold, to import and have imported,
                     and to export and have exported, the Stryker Products. This
                     grant shall be exclusive, even as to GI, with respect to
                     the CBM/Stryker Base


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                     Products of HBMP7. With respect to heterodimers and
                     chimeras of any CBM/Stryker Base Protein or any CBM/Stryker
                     Derivative Product, no right, license or sublicense is
                     granted with respect to any protein, polypeptide chain or
                     fragment thereof (alone or as a component of any
                     heterodimer or chimera) that is not on the list of CBMI/
                     Stryker Base Proteins set forth on SCHEDULE 2.5, or is not
                     licensed or sublicensed hereunder as a Derivative Product
                     of such CBM/Stryker Base Proteins.

                  b. OPTION TO EXPAND LICENSE. GI grants to Stryker an option,
                     exercisable by Stryker at any time upon written notice to
                     GI, to add the following to the licenses/sublicenses
                     granted to Stryker in Section 3.1(a), above, subject to all
                     limitations and restrictions set forth therein: (i) any
                     other GI Patent (or claim thereof) which is necessary or
                     useful in order for Stryker to make, have made, use, offer
                     for sale, sell, have sold, import, have imported, export or
                     have exported the CBM/Stryker Base Proteins, and the
                     CBM/Stryker Derivative Products referred to in Section
                     2.6(a) through (h) with respect thereto; or (ii) any other
                     Patent (or claim thereof) in which GI acquires an interest
                     sublicensable to Stryker after the Effective Date, which is
                     strictly necessary in order for Stryker to make and have
                     made, to use, to offer for sale, to sell and have sold, to
                     import and have imported, and to export and have exported,
                     the CBMI/Stryker Base Proteins, and the CBMI/Stryker
                     Derivative Products referred to in Section 2.6(a) through
                     (g) with respect thereto.

                  c. THIRD PARTY LICENSE AGREEMENTS. Stryker agrees to comply
                     with all applicable terms and conditions of all agreements
                     with third parties pursuant to which GI acquired or
                     acquires a sublicensable interest in any Patents
                     sublicensed to Stryker pursuant to Sections 3.1(a) or
                     3.1(b), above (the "GI Third Party License Agreements").



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                     above, Stryker will not be deemed to have a sublicense
                     under any third party Patent with respect to any product or
                     activity which (i) would not, but for such sublicense,
                     infringe such Patent, or (ii) is otherwise licensed or
                     sublicensed by Stryker under such third party's Patents for
                     such purpose or purposes.

                  d. COVENANT NOT TO SUE. GI covenants not to sue Stryker or its
                     Affiliates or sublicensees, or any third party which
                     acquires Stryker Product from Stryker or its Affiliates or
                     sublicensees, under any third party Patent licensed to GI
                     without the right to sublicense Stryker, with respect to
                     any Stryker Product or any activity related thereto for
                     which GI would have sublicensed (or would have been
                     required to sublicense) Stryker under such Patent, if GI
                     had such sublicensable interest in such Patent.

                  e. THIRD PARTY ROYALTIES. The licenses to Stryker set forth in
                     Subsection 3.1(a) shall be royalty-free; provided, however,
                     Stryker shall pay or reimburse GI for all royalties payable
                     by GI pursuant to GI Third Party License Agreements on
                     account of Stryker's sales of any Stryker Product and,
                     beginning on March 1, 1997, the ******* annual payment
                     required for GI to maintain exclusivity and sublicensing
                     rights in the *********** field under the
                     Stanford/Ringold License Agreement listed on SCHEDULE 3.1
                     attached to this Agreement. (For such time as both Stryker
                     and CBM have a sublicense from GI under the
                     Stanford/Ringold License Agreement, Stryker and CBM each
                     shall pay one-half of such ******* annual payment.)
                     Recognizing that GI has limited knowledge of the Stryker
                     Products and the processes, formulations, matrices and
                     other matters used by Stryker with respect thereto, GI
                     represents and warrants, to the best of its knowledge, that
                     (i) the Patents listed on SCHEDULE 2.13 attached to this
                     Agreement represent all GI Patents relating to the BMP
                     Subject Matter


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                     that would be infringed by Stryker making and having made,
                     using, offering for sale, selling and having sold,
                     importing and having imported, or exporting and having
                     exported, the Stryker Products, and (ii) that SCHEDULE 3.1
                     attached to this Agreement sets forth all GI Third Party
                     License Agreements that would require Stryker to pay or
                     reimburse GI for royalties payable to third parties on
                     Stryker's sales of the Stryker Products as a result of
                     receiving a license under Section 3.1(a) to the Patents
                     listed on SCHEDULE 2.13, together with the corresponding
                     maximum royalty percentages thereunder.

         3.2.     FROM GI TO CBM.

                  a. GRANT. GI grants to CBM irrevocable, worldwide,
                     non-exclusive (except as provided below) licenses and
                     sublicenses, limited to the CBM Field, under the Patents
                     listed on SCHEDULE 2.13 (and in addition, those Patents
                     which are sublicensable to CBM under the Third Party
                     License Agreements listed on SCHEDULE 3.1 to this
                     Agreement), to make and have made, to use, to offer for
                     sale, to sell and have sold, to import and have imported,
                     and to export and have exported, the CBM Products. This
                     grant shall be exclusive, even as to GI, with respect to
                     the CBM/Stryker Base Protein HBMP7 and the CBM/Stryker
                     Derivative Products of HBMP7. With respect to heterodimers
                     and chimeras of any CBM/Stryker Base Protein or any
                     CBM/Stryker Derivative Product, no right, license or
                     sublicense is granted with respect to any protein,
                     polypeptide chain or fragment thereof (alone or as a
                     component of any heterodimer or chimera) that is not on the
                     list of CBM/Stryker Base Proteins set forth on SCHEDULE
                     2.5, or is not licensed or sublicensed hereunder as a
                     Derivative Product of such CBM/Stryker Base Proteins.

                  b. OPTION TO EXPAND LICENSE. GI grants to CBM an option,
                     exercisable by CBM at any time upon written notice to GI,
                     to add the following to the licenses/ sublicenses granted
                     to CBM in Section 3.2(a), above, subject to all limitations
                     and restrictions set forth therein: (i) any other GI Patent
                     (or


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                     claim thereof) which is necessary or useful in order for
                     CBM to make, have made, use, offer for sale, sell, have
                     sold, import, have imported, export or have exported the
                     CBM/Stryker Base Proteins, and the CBM/Stryker Derivative
                     Products referred to in Section 2.6(a) through (h) with
                     respect thereto; or (ii) any other Patent (or claim
                     thereof) in which GI acquires an interest sublicensable to
                     CBM after the Effective Date, which is strictly necessary
                     in order for CBM to make and have made, to use, to offer
                     for sale, to sell and have sold, to import and have
                     imported, and to export and have exported, the CBM/Stryker
                     Base Proteins, and the CBM/Stryker Derivative Products
                     referred to in Section 2.6(a) through (g) with respect
                     thereto.

                  c. THIRD PARTY LICENSE AGREEMENTS. CBM agrees to comply with
                     all applicable terms and conditions of all agreements with
                     third parties pursuant to which GI acquired or acquires a
                     sublicensable interest in any Patents sublicensed to CBM
                     pursuant to Sections 3.2(a) or 3.2(b), above (the "GI Third
                     Party License Agreements"). Notwithstanding Sections 3.2(a)
                     and 3.2(b), above, CBM will not be deemed to have a
                     sublicense under any third party Patent with respect to any
                     product or activity which (i) would not, but for such
                     sublicense, infringe such Patent, or (ii) is otherwise
                     licensed or sublicensed by CBM under such third party's
                     Patents for such purpose or purposes.

                  d. COVENANT NOT TO SUE. GI covenants not to sue CBM or its
                     Affiliates or sublicensees, or any third party which
                     acquires CBM Product from CBM or its Affiliates or
                     sublicensees, under any third party Patent licensed to GI
                     without the right to sublicense CBM, with respect to any
                     CBM Product or any activity related thereto for which GI
                     would have sublicensed (or would have been required to
                     sublicense) CBM under such Patent, if GI had such
                     sublicensable interest in such Patent.

                  e. THIRD PARTY ROYALTIES. The licenses to CBM set forth in
                     Subsection 3.2(a) shall be royalty-free; provided, however;
                     CBM shall pay or reimburse GI for all royalties payable by
                     GI pursuant to GI


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                     Third Party License Agreements on account of CBM's sales of
                     any CBM Product and, beginning on March 1, 1997, the
                     ******* annual payment required for GI to maintain
                     exclusivity and sublicensing rights in the ***********
                     field under the Stanford/Ringold License Agreement listed
                     on SCHEDULE 3.1 attached to this Agreement. (For such time
                     as both CBM and Stryker have a sublicense from GI under the
                     Stanford/Ringold License Agreement, CBM and Stryker each
                     shall pay one-half of such ******* annual payment.)
                     Recognizing that GI has limited knowledge of the CBM
                     Products and the processes, formulations, matrices and
                     other matters used by CBM with respect thereto, GI
                     represents and warrants, to the best of its knowledge, that
                     (i) the Patents listed on SCHEDULE 2.13 attached to this
                     Agreement represent all GI Patents relating to the BMP
                     Subject Matter that would be infringed by CBM making and
                     having made, using, offering for sale, selling and having
                     sold, importing and having imported, or exporting and
                     having exported, the CBM Products, and (ii) that SCHEDULE
                     3.1 attached to this Agreement sets forth all GI Third
                     Party License Agreements that would require CBM to pay or
                     reimburse GI for royalties payable to third parties on
                     CBM's sales of the CBM Products as a result of receiving a
                     license under Section 3.2(a) to the Patents listed on
                     SCHEDULE 2.13, together with the corresponding maximum
                     royalty percentages thereunder.

         3.3.     FROM STRYKER TO GI.

                   a.   GRANT.  Stryker grants to GI irrevocable,
                        worldwide, non-exclusive (except as provided below)
                        licenses and sublicenses in all fields in which
                        Stryker has a licensable interest under the Patents
                        listed on SCHEDULE 2.8 (and in addition, those
                        Patents which are sublicensable to GI under the
                        Third Party License Agreements listed on SCHEDULE
                        3.3 to this Agreement), to make and have made, to
                        use, to offer for sale, to sell and have sold, to
                        import and have imported, and to export and have
                        exported, the GI Products.  This grant shall be
                        exclusive, even as to Stryker, with respect to the
                        GI Base Protein HBMP2 and the GI Derivative
                        Products of HBMP2.  With respect to heterodimers


                                      -14-
<PAGE>   15



                     and chimeras of any GI Base Protein or any GI Derivative
                     Product, no right, license or sublicense is granted with
                     respect to any protein, polypeptide chain or fragment
                     thereof (alone or as a component of any heterodimer or
                     chimera) that is not on the list of GI Base Proteins set
                     forth on SCHEDULE 2.11, or is not licensed or sublicensed
                     hereunder as a Derivative Product of such GI Base Proteins.

                  b. OPTION TO EXPAND LICENSE. Stryker grants to GI an option,
                     exercisable by GI at any time upon written notice to
                     Stryker, to add the following to the licenses/sublicenses
                     granted to GI in Section 3.3(a), above, subject to all
                     limitations and restrictions set forth therein: (i) any
                     other CBM/Stryker Patent (or claim thereof) which is
                     necessary or useful in order for GI to make, have made,
                     use, offer for sale, sell, have sold, import, have
                     imported, export or have exported the GI Base Proteins, and
                     the GI Derivative Products referred to in Section 2.12(a)
                     through (h) with respect thereto; or (ii) any other Patent
                     (or claim thereof) in which Stryker acquires an interest
                     sublicensable to GI after the Effective Date, which is
                     strictly necessary in order for GI to make and have made,
                     to use, to offer for sale, to sell and have sold, to import
                     and have imported, and to export and have exported, the GI
                     Base Proteins, and the GI Derivative Products referred to
                     in Section 2.12(a) through (g) with respect thereto.

                  c. THIRD PARTY LICENSE AGREEMENTS. GI agrees to comply with
                     all applicable terms and conditions of all agreements with
                     third parties pursuant to which Stryker acquired or
                     acquires a sublicensable interest in any Patents
                     sublicensed to GI pursuant to Sections 3.3(a) or 3.3(b),
                     above (the "Stryker Third Party License Agreements").
                     Notwithstanding Sections 3.3(a) and 3.3(b), above, GI will
                     not be deemed to have a sublicense under any third party
                     Patent with respect to any product or activity which (i)
                     would not, but for such sublicense, infringe such Patent,
                     or (ii) is otherwise licensed or sublicensed by GI under
                     such third party's Patents for such purpose or purposes.




                                      -15-
<PAGE>   16



                  d. COVENANT NOT TO SUE. Stryker covenants not to sue GI or its
                     Affiliates or sublicensees, or any third party which
                     acquires GI Product from GI or its Affiliates or
                     sublicensees, under any third party Patent licensed to
                     Stryker without the right to sublicense GI, with respect to
                     any GI Product or any activity related thereto for which
                     Stryker would have sublicensed (or would have been required
                     to sublicense) GI under such Patent, if Stryker had such
                     sublicensable interest in such Patent.

                  e. THIRD PARTY ROYALTIES. The licenses to GI set forth in
                     Subsection 3.3(a) shall be royalty-free; provided, however,
                     GI shall pay or reimburse Stryker for all royalties payable
                     by Stryker pursuant to Stryker Third Party License
                     Agreements on account of GI's sales of any GI Product.
                     Recognizing that Stryker has limited knowledge of the GI
                     Products and the processes, formulations, matrices and
                     other matters used by GI with respect thereto, Stryker
                     represents and warrants, to the best of its knowledge, that
                     (i) the Patents listed on SCHEDULE 2.8 attached to this
                     Agreement represent all CBM/Stryker Patents relating to the
                     BMP Subject Matter that would be infringed by GI making and
                     having made, using, offering for sale, selling and having
                     sold, importing and having imported, or exporting and
                     having exported, the GI Products, and (ii) that SCHEDULE
                     3.3 attached to this Agreement sets forth all Stryker Third
                     Party Agreements that would require GI to pay or reimburse
                     Stryker for royalties payable to third parties on GI's
                     sales of the GI Products as a result of receiving a license
                     under Section 3.3(a) to the Patents listed on SCHEDULE 2.8,
                     together with the corresponding maximum royalty percentages
                     thereunder.

         3.4.     FROM CBM TO GI.

                  a. GRANT. CBM grants to GI irrevocable, worldwide,
                     non-exclusive (except as provided below) licenses and
                     sublicenses in all fields in which CBM has a licensable
                     interest under the Patents listed on SCHEDULE 2.8 (and in
                     addition, those Patents which are sublicensable to GI under
                     the Third Party License Agreements listed on SCHEDULE 3.4
                     to this Agreement), to make and have made, to use, to offer


                                      -16-
<PAGE>   17



                     for sale, to sell and have sold, to import and have
                     imported, and to export and have exported, the GI Products.
                     This grant shall be exclusive, even as to CBM, with respect
                     to the GI Base Protein HBMP2 and the GI Derivative Products
                     of HBMP2. With respect to heterodimers and chimeras of any
                     GI Base Protein or any GI Derivative Product, no right,
                     license or sublicense is granted with respect to any
                     protein, polypeptide chain or fragment thereof (alone or as
                     a component of any heterodimer or chimera) that is not on
                     the list of GI Base Proteins set forth on SCHEDULE 2.11, or
                     is not licensed or sublicensed hereunder as a Derivative
                     Product of such GI Base Proteins.

                  b. OPTION TO EXPAND LICENSE. CBM grants to GI an option,
                     exercisable by GI at any time upon written notice to CBM,
                     to add the following to the licenses/sublicenses granted to
                     GI in Section 3.4(a), above, subject to all limitations and
                     restrictions set forth therein: (i) any other CBM/Stryker
                     Patent (or claim thereof) which is necessary or useful in
                     order for GI to make, have made, use, offer for sale, sell,
                     have sold, import, have imported, export or have exported
                     the GI Base Proteins, and the GI Derivative Products
                     referred to in Section 2.12(a) through (h) with respect
                     thereto; or (ii) any other Patent (or claim thereof) in
                     which CBM acquires an interest sublicensable to GI after
                     the Effective Date, which is strictly necessary in order
                     for GI to make and have made, to use, to offer for sale, to
                     sell and have sold, to import and have imported, and to
                     export and have exported, the GI Base Proteins, and the GI
                     Derivative Products referred to in Section 2.12(a) through
                     (g) with respect thereto.

                  c. THIRD PARTY LICENSE AGREEMENTS. GI agrees to comply with
                     all applicable terms and conditions of all agreements with
                     third parties pursuant to which CBM acquired or acquires a
                     sublicensable interest in any Patents sublicensed to GI
                     pursuant to Sections 3.4(a) or 3.4(b), above (the "CBM
                     Third Party License Agreements"). Notwithstanding Sections
                     3.4(a) and 3.4(b), above, GI will not be deemed to have a
                     sublicense under any third party Patent with respect to any
                     product or activity


                                      -17-
<PAGE>   18



                     which (i) would not, but for such sublicense, infringe such
                     Patent, or (ii) is otherwise licensed or sublicensed by GI
                     under such third party's Patents for such purpose or
                     purposes.

                  d. COVENANT NOT TO SUE. CBM covenants not to sue GI or its
                     Affiliates or sublicensees, or any third party which
                     acquires GI Product from GI or its Affiliates or
                     sublicensees, under any third party Patent licensed to CBM
                     without the right to sublicense GI, with respect to any GI
                     Product or any activity related thereto for which CBM would
                     have sublicensed (or would have been required to
                     sublicense) GI under such Patent, if CBM had such
                     sublicensable interest in such Patent.

                  e. THIRD PARTY ROYALTIES. The licenses to GI set forth in
                     Subsection 3.4(a) shall be royalty-free; provided, however;
                     GI shall pay or reimburse CBM for all royalties payable by
                     CBM pursuant to CBM Third Party License Agreements on
                     account of GI's sales of any GI Product. Recognizing that
                     CBM has limited knowledge of the GI Products and the
                     processes, formulations, matrices and other matters used by
                     GI with respect thereto, CBM represents and warrants, to
                     the best of its knowledge, that (i) the Patents listed on
                     SCHEDULE 2.8 attached to this Agreement represent all
                     CBM/Stryker Patents relating to the BMP Subject Matter that
                     would be infringed by GI making and having made, using,
                     offering for sale, selling and having sold, importing and
                     having imported, or exporting and having exported, the GI
                     Products, and (ii) that SCHEDULE 3.4 attached to this
                     Agreement sets forth all CBM Third Party License Agreements
                     that would require GI to pay or reimburse CBM for royalties
                     payable to third parties on GI's sales of the GI Products
                     as a result of receiving a license under Section 3.4(a) to
                     the patents listed on SCHEDULE 2.8, together with the
                     corresponding maximum royalty percentages thereunder.

         3.5.     SUBLICENSES. GI, Stryker and CBM each shall have the right to
                  grant sublicenses under the foregoing licenses, to their
                  respective licensees (including, without limitation, their
                  respective Affiliates) of the GI Products, Stryker Products or
                  CBM Products,


                                      -18-
<PAGE>   19



                  as applicable, provided said sublicensees agree to comply with
                  all terms and conditions of the foregoing licenses.
                  Notwithstanding any such sublicense, the licensor party shall
                  remain primarily liable for all of such sublicensee's duties
                  and obligations contained in this Agreement.

         3.6.     ORPHAN DRUG RIGHTS. If GI, Stryker or CBM (or a sublicensee of
                  such party) receives Orphan Drug Rights for a GI Product, a
                  Stryker Product or a CBM Product, respectively, for which the
                  recipient of the Orphan Drug Rights (the "Recipient") has
                  granted a license hereunder to the other parties, the
                  Recipient agrees to consent to the approval of the other
                  parties' (and their respective sublicensees') marketing
                  approval applications for the GI Product, Stryker Product or
                  CBM Product, as the case may be, for which such license was
                  granted by the Recipient, notwithstanding such Orphan Drug
                  Rights, or to otherwise immediately take such action or grant
                  such rights as are necessary so that the other parties (and
                  their sublicensees) are not blocked or delayed by the
                  designation or award of such Orphan Drug Rights from selling a
                  GI Product, Stryker Product or CBM Product, as applicable, for
                  which they received a license from the Recipient hereunder,
                  including, but not limited to, the submission of a consent
                  letter to the United States Food and Drug Administration or
                  applicable foreign government or regulatory authority, with
                  respect to the other parties (or sublicensees) at the time a
                  request for Orphan Drug Rights is submitted, or the prompt
                  execution of any other documents, notices or agreements that
                  may be necessary to carry out the intent of this Section . In
                  connection with the grant of a sublicense under Section 3.5,
                  above, the parties shall have the right to provide such
                  sublicensees with a consent under the Orphan Drug Rights of
                  the other parties. Upon request, a party shall immediately
                  provide a consent to the applicable regulatory authorities
                  and/or the requesting party under its Orphan Drug Rights for
                  the benefit of such sublicensee of the requesting party.





                                      -19-
<PAGE>   20



         3.7.     NO RESTRICTIONS ON LICENSOR PARTY. Stryker and CBM severally,
                  and not jointly, agree that they and their respective
                  Affiliates shall not (and shall not grant a license to any
                  third party to) make, have made, use, offer for sale, sell,
                  have sold, import, have imported, export or have exported
                  (collectively, "exploitation") any product comprising the GI
                  Base Protein BMP2 or any GI Derivative Product with respect to
                  the GI Base Protein BMP2, for so long as the exploitation of
                  such GI Base Protein or such GI Derivative Product is covered
                  by an unexpired patent exclusively licensed hereunder. GI
                  agrees that it and its Affiliates shall not (and shall not
                  grant a license to any third party to) make, have made, use,
                  offer for sale, sell, have sold, import, have imported, export
                  or have exported (collectively, "exploitation") any product
                  comprising the CBM/Stryker Base Protein BMP7 or any
                  CBM/Stryker Derivative Product with respect to the CBM/Stryker
                  Base Protein BMP7, for so long as the exploitation of such
                  CBM/Stryker Base Protein or such CBM/Stryker Derivative
                  Product is covered by an unexpired patent exclusively licensed
                  hereunder. Except as set forth in the preceding sentences and
                  except for the exclusive licenses set forth in Section 3,
                  above, (a) nothing contained in this Agreement shall be deemed
                  to restrict in any manner whatsoever the right of each of
                  Stryker and CBM to use the CBM/Stryker Patents, to issue
                  licenses to others for any purpose under such CBM/Stryker
                  Patents or to enforce such Patents against third parties, and
                  (b) nothing contained in this Agreement shall be deemed to
                  restrict in any manner whatsoever the right of GI to use the
                  GI Patents, to issue licenses to others for any purpose under
                  such GI Patents or to enforce such Patents against third
                  parties.

         3.8.     TERMINATION OF LICENSES. Unless terminated earlier by a
                  licensee party, all licenses or sublicenses provided for in
                  this Agreement shall run to the end of the enforceable term of
                  the Patents or Third Party License Agreements (other than
                  sublicenses under Third Party License Agreements which are
                  sooner terminated by a third party licensor pursuant to the
                  terms of such agreements) under


                                      -20-
<PAGE>   21



                     which such licenses or sublicenses are granted and shall
                     not be terminable by any licensor party or any
                     successor, assign or any person claiming through a
                     licensor party under any circumstances or for any
                     reason. Notwithstanding the foregoing, in the event a
                     licensor party wishes to terminate a Third Party License
                     Agreement, it shall give notice to the licensee party or
                     parties. A licensee party may require the licensor party
                     to maintain such Third Party License Agreement and the
                     sublicense to such licensee party thereunder, provided
                     that such licensee party assumes all of such licensor
                     party's obligations under such Third Party License
                     Agreement. Any licensee party may at any time terminate
                     any license or sublicense granted to it by any other
                     licensor party under any particular Patent or Patents or
                     any claim or claims of any particular Patent or Patents
                     by written notice to the licensor party thereof.

         3.9.     THIRD PARTY ROYALTY ADMINISTRATION.

                  a. REPORTS AND PAYMENT. Each party shall deliver to the
                     licensor party to which third party royalty reimbursement
                     is payable, within sixty (60) days after the end of each
                     calendar quarter in which royalty-bearing sales of a GI
                     Product, a Stryker Product or a CBM Product, as applicable,
                     have occurred, a written report showing its computation of
                     royalties due on account of the royalty obligations imposed
                     by the applicable Third Party License Agreement, upon sales
                     by such party and its sublicensees during each such
                     calendar quarter. Simultaneously with the delivery of each
                     such report, the paying party shall tender payment in
                     United States Dollars of all royalties shown to be due
                     therein, by wire transfer to a bank and account designated
                     by the party to which payment is owed, or by other means
                     agreed to by the parties.

                  b. COMPLIANCE WITH TERMS AND CONDITIONS OF THIRD PARTY
                     AGREEMENTS. In calculating and paying or reimbursing a
                     party for third party royalty obligations under Subsections
                     3.1(e), 3.2(e), 3.3(e) and 3.4(e), the parties shall comply
                     with the applicable terms and conditions of the applicable
                     Third Party License Agreements which


                                      -21-
<PAGE>   22



                     impose such royalty obligations, including, without
                     limitation, calculation of net sales, reporting
                     requirements, currency conversion, foreign royalties, taxes
                     and records. Copies of the relevant provisions of such
                     third party agreements shall be furnished to a paying party
                     for compliance purposes.

                  c. RECORDS. Each party shall keep, and shall require all
                     sublicensees to keep, for a period of at least two (2)
                     years, full, true and accurate books of accounts and other
                     records containing all information and data which may be
                     necessary to ascertain and verify the royalties payable
                     hereunder. During the term of this Agreement and for a
                     period of two (2) years following its termination, each
                     party shall have the right, at its own expense, from time
                     to time (not to exceed once during each calendar year) to
                     designate an independent accounting firm to inspect, in
                     confidence, such books, records and supporting data. In the
                     event such inspection reveals an underpayment of more than
                     10% of the royalty due for the period inspected, the party
                     whose books and records were inspected shall reimburse the
                     inspecting party for the reasonable cost of the inspection.

4.       WARRANTIES AND INDEMNITIES.

         4.1.     WARRANTIES. Stryker and CBM each severally and not jointly
                  represents and warrants to GI that (a) Stryker and CBM
                  collectively have an interest licensable or sublicensable to
                  GI in all of the Patents listed on SCHEDULE 2.8 attached to
                  this Agreement and (b) the combination of the rights granted
                  by them to GI under Sections 3.3(a) and 3.4(a) of this
                  Agreement represents, in sum, all fields of use under such
                  Patents. GI represents and warrants to each of Stryker and CBM
                  that it has an interest licensable or sublicensable to Stryker
                  and CBM in all of the Patents listed on SCHEDULE 2.13 attached
                  to this Agreement. Stryker and CBM each severally and not
                  jointly represents and warrants to GI, and GI represents and
                  warrants to each of Stryker and CBM, that it has full right,
                  power and authority to grant the licenses and sublicenses
                  granted by it under this Agreement.


                                      -22-
<PAGE>   23



                  Stryker and CBM (and their respective sublicensees, and all of
                  their respective agents, directors, officers and employees)
                  jointly and severally harmless, at GI's cost and expense, from
                  and against any and all losses, costs, liabilities, damages,
                  fees and expenses, including reasonable attorneys' fees and
                  expenses (collectively, "Liabilities") arising out of or in
                  connection with GI's manufacture, promotion, sale or other
                  disposition of the GI Products, including, but not limited to,
                  patent infringement or patent validity-related matters, and
                  any actual or alleged injury, damage, death or other
                  consequence occurring to any person as a result, directly or
                  indirectly, of the possession, consumption or use of the GI
                  Products, regardless of the form in which any such claim is
                  made.

                  Stryker shall defend, indemnify and hold GI (and its
                  sublicensees, and their respective agents, directors, officers
                  and employees) harmless, at Stryker's cost and expense, from
                  and against any and all Liabilities arising out of or in
                  connection with Stryker's manufacture, promotion, sale or
                  other disposition of the Stryker Products, including, but not
                  limited to, patent infringement or patent validity-related
                  matters, and any actual or alleged injury, damage, death or
                  other consequence occurring to any person as a result,
                  directly or indirectly, of the possession, consumption or use
                  of the Stryker Products, regardless of the form in which any
                  such claim is made.

                  CBM shall defend, indemnify and hold GI (and its sublicensees,
                  and their respective agents, directors, officers and
                  employees) harmless, at CBM's cost and expense, from and
                  against any and all Liabilities arising out of or in
                  connection with CBM's manufacture, promotion, sale or other
                  disposition of the CBM Products, including, but not limited
                  to, patent infringement or patent validity-related matters,
                  and any actual or alleged injury, damage, death or other
                  consequence occurring to any person as a result, directly or
                  indirectly, of the possession, consumption or use of the CBM
                  Products, regardless of the form in which any such claim is
                  made.


                                      -23-
<PAGE>   24

           CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.



                  In the event an indemnified party is sued, or a claim or
                  threat of suit is made against the indemnified party, on
                  account of the indemnifying party's activities with the GI
                  Products, Stryker Products or CBM Products, as applicable,
                  then the indemnified party shall promptly notify the
                  indemnifying party thereof, and at the indemnifying party's
                  cost, will permit the indemnifying party's attorneys to
                  handle, fully control, defend and/or settle such claims or
                  suits; provided, however, that the failure to give prompt
                  notice shall not relieve the indemnifying party of its
                  obligations to indemnify the indemnified party unless such
                  failure significantly prejudices the ability of the
                  indemnifying party to defend such claim, suit or threatened
                  suit. The indemnified party may elect to be represented in
                  such suit by counsel of its own choice at its own expense. The
                  indemnified party may settle or compromise such suit;
                  provided, however; the indemnifying party's indemnity
                  obligations under this Section shall only apply to settlements
                  or compromises made by the indemnified party with the
                  indemnifying party's prior written consent. The indemnifying
                  party may not settle or compromise such suit without the prior
                  written consent of the indemnified party unless such
                  settlement imposes no obligation, liability or responsibility
                  on the indemnified party, including, without limitation, any
                  obligation to do or refrain from doing any act or thing.

         4.3.     *** PATENTS. Stryker and CBM each severally and not jointly
                  covenants and agrees to use its best efforts to obtain the
                  right to sublicense the *** Patents to GI. If Stryker and/or
                  CBM have not obtained the right to sublicense the *** Patents
                  to GI pursuant to Sections 3.3 and/or 3.4, above, Stryker and
                  CBM shall not (a) enforce, or otherwise assert claims under,
                  the *** Patents against GI or its Affiliates or sublicensees
                  or (b) sublicense any rights obtained under this Agreement to
                  any third party which has the right to enforce, or otherwise
                  assert claims under, the *** Patents, unless said third party
                  agrees not to enforce, or otherwise assert claims under, the
                  *** Patents against GI or its Affiliates or sublicensees, and
                  GI and its Affiliates and sublicensees shall be named third
                  party beneficiaries of such agreement in such sublicense.


                                      -24-
<PAGE>   25



5.       CONFIDENTIALITY.

         5.1.     TREATMENT OF CONFIDENTIAL INFORMATION. Each party shall
                  maintain all information of another party, which is treated by
                  such other party as proprietary or confidential, in
                  confidence, and shall not disclose, divulge or otherwise
                  communicate such confidential information to others, or use it
                  for any purpose, except pursuant to, and in order to carry
                  out, the terms and objectives of this Agreement, and hereby
                  agrees to exercise every reasonable precaution to prevent and
                  restrain the unauthorized disclosure of such confidential
                  information by any of its Affiliates, directors, officers,
                  employees, consultants, subcontractors, sublicensees or
                  agents.

         5.2.     RELEASE FROM RESTRICTIONS. The provisions of Section 5.1 shall
                  not apply to any confidential information disclosed hereunder
                  which:

                  a. was known or used by the receiving party or its Affiliates
                     prior to its date of disclosure to the receiving party, as
                     evidenced by the prior written records of the receiving
                     party or its Affiliates; or

                  b. either before or after the date of the disclosure to the
                     receiving party is lawfully disclosed without restriction
                     to the receiving party or its Affiliates by an independent,
                     unaffiliated third party rightfully in possession of the
                     confidential information (but only to the extent of the
                     rights received from such third party); or

                  c. either before or after the date of the disclosure to the
                     receiving party becomes published or generally known to the
                     public through no fault or omission on the part of the
                     receiving party or its Affiliates; or

                  d. is required to be disclosed by the receiving party or its
                     Affiliates to comply with applicable laws, to defend or
                     prosecute litigation or to comply with governmental
                     regulations, or the rules of a stock exchange or NASDAQ,
                     provided that the receiving party provides prior written
                     notice of such disclosure to the other party and takes
                     reasonable and lawful actions to avoid and/or minimize the
                     degree of such disclosure.


                                      -25-
<PAGE>   26



6.       MISCELLANEOUS.

         6.1.     PUBLICITY. Subject to the parties' first obtaining the
                  authorizations, approvals and consents set forth in Section
                  6.16, below, the parties shall issue a joint press release
                  regarding the subject matter of this Agreement, but otherwise,
                  except as required by applicable law or regulation, no party
                  shall originate any publicity, news release or other public
                  announcement, written or oral, relating to this Agreement
                  without the prior written approval of the other parties, which
                  approval shall not be unreasonably withheld.

         6.2.     NO IMPLIED LICENSES. Only the licenses granted pursuant to the
                  express terms of this Agreement shall be of any legal force
                  and effect. No license rights shall be created by implication
                  or estoppel.

         6.3.     NO AGENCY. Nothing herein shall be deemed to constitute any
                  party as the agent or representative of the other parties, or
                  the parties as joint venturers or partners for any purpose.

         6.4.     NOTICE. All notices required under this Agreement to be given
                  by one party to another shall be in writing and shall be given
                  by addressing the same to the other at the address or
                  facsimile number set forth below, or at such other addresses
                  or facsimile numbers as the parties may specify in writing.
                  All notices shall become effective when deposited in the
                  United States Mail with proper postage for first class
                  registered or certified mail prepaid, return receipt
                  requested, or when delivered personally or by one-day courier
                  service, or, if promptly confirmed by mail or one-day courier
                  service as provided above, when dispatched by facsimile.

                  GI:      Genetics Institute, Inc.
                           87 CambridgePark Drive
                           Cambridge, Massachusetts 02140
                           Telecopier: (617) 876-5851
                           Attn: Gabriel Schmergel

                  Stryker: Stryker Corporation
                           2725 Fairfield Road
                           Kalamazoo, Michigan 49002
                           Telecopier: (616) 385-0030
                           Attn: John W. Brown


                                      -26-
<PAGE>   27




                  CBM:     Creative BioMolecules, Inc.
                           45 South Street
                           Hopkinton, Massachusetts 01748
                           Telecopier: (508) 435-6951
                           Attn: Michael Tarnow

         6.5.     ASSIGNMENT. This Agreement, and the rights and obligations
                  hereunder, may not be assigned or transferred, in whole or in
                  part, by any party without the prior written consent of the
                  other parties, except in connection with the merger,
                  consolidation or sale of all or substantially all of a party's
                  assets, or the assets of a party which are directly related to
                  the performance of its obligations under this Agreement,
                  provided that the assignee agrees to be bound by the terms and
                  conditions of this Agreement.

         6.6.     ENTIRE AGREEMENT. This Agreement constitutes the entire
                  agreement of the parties with regard to its subject matter,
                  and supersedes all previous written or oral representations,
                  agreements and understandings between the parties.

         6.7.     NO MODIFICATION. This Agreement may be changed only by a
                  writing signed by the parties.

         6.8.     HEADINGS. The headings contained in this Agreement are for
                  convenience of reference only and shall not be considered in
                  construing this Agreement.

         6.9.     WAIVER. The waiver by any party of a breach or a default of
                  any provision of this Agreement by another party shall not be
                  construed as a waiver of any succeeding breach of the same or
                  any other provision, nor shall any delay or omission on the
                  part of any party to exercise or avail itself of any right,
                  power or privilege that it has or may have hereunder operate
                  as a waiver of any right, power, or privilege by such party.

         6.10.    SEVERABILITY. In the event that any one or more of the
                  provisions contained in this Agreement shall, for any reason,
                  be held to be invalid, illegal or unenforceable in any
                  respect, such invalidity, illegality or unenforceability shall
                  not affect any other provisions of this Agreement, and all
                  other provisions shall remain in full force and effect. If any
                  of the


                                      -27-
<PAGE>   28



                  provisions of this Agreement is held to be excessively broad
                  or invalid, illegal or unenforceable in any jurisdiction, it
                  shall be reformed and construed by limiting and reducing it so
                  as to be enforceable to the maximum extent permitted by law in
                  conformance with its original intent.

         6.11.    SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  and inure to the benefit of the parties hereto and their
                  successors and permitted assigns.

         6.12.    COUNTERPARTS. This Agreement may be executed in any number of
                  counterparts, each of which shall be deemed an original but
                  all of which together shall constitute one and the same
                  instrument.

         6.13.    APPLICABLE LAW. This Agreement shall in all events and for all
                  purposes be governed by, and construed in accordance with, the
                  law of the Commonwealth of Massachusetts without regard to any
                  choice of law principle that would dictate the application of
                  the law of another jurisdiction.

         6.14.    ARBITRATION.

                  a. The parties shall attempt to resolve any dispute or
                     controversy arising under or relating to the interpretation
                     or meaning of this Agreement, but excluding any disputes or
                     controversies related to the validity, infringement or
                     enforceability of any Patents, by good faith negotiations.
                     Any matter that cannot be resolved by such good faith
                     negotiation shall be resolved by final and binding
                     arbitration conducted by three (3) arbitrators in Boston,
                     Massachusetts, in accordance with the then-current American
                     Arbitration Association ("AAA") Commercial Arbitration
                     Rules (the "AAA Rules") as modified by this Section 6.14.

                  b. The arbitrators shall be selected by mutual agreement of
                     the parties or, failing such agreement, in accordance with
                     the aforesaid AAA Rules. At least one (1) member of the
                     arbitration panel shall be reasonably familiar with the
                     biotechnology industry. Stryker and CBM shall bear one-half
                     of the cost of the arbitrators and GI shall bear one-half
                     of the costs of the


                                      -28-
<PAGE>   29



                     arbitrators. No arbitrator may be affiliated in any way
                     with any party.

                  c. The parties shall have the right of limited pre-hearing
                     discovery, in accordance with the U.S. Federal Rules of
                     Civil Procedure, as then in effect, for a period not to
                     exceed sixty (60) days.

                  d. As soon as the discovery is concluded, but in any event
                     within thirty (30) days thereafter, the arbitrators shall
                     hold a hearing in accordance with the AAA Rules.
                     Thereafter, the arbitrators shall promptly render a written
                     decision, together with a written opinion setting forth in
                     reasonable detail the grounds for such a decision.

                  e. Judgment may be entered in any court of competent
                     jurisdiction to enforce the award entered by the
                     arbitrators.

                  f. The duty of the parties to arbitrate any dispute thereunder
                     shall survive expiration or termination of this Agreement
                     for any reason.

         6.15.    HART-SCOTT-RODINO FILING. The parties shall cooperate fully
                  and use their best efforts to comply with the
                  Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
                  amended, and the rules and regulations issued thereunder (the
                  "HSR Act"), to determine if a Notification Report is required
                  thereunder, and to file any required Notification Report form
                  with the Federal Trade Commission and the Department of
                  Justice in accordance with such rules and regulations with
                  respect to the transactions contemplated in this Agreement. In
                  the event such Notification Report is required, this Agreement
                  shall become effective as of the Effective Date at such time
                  as the appropriate waiting periods as prescribed by such rules
                  and regulations have expired.

         6.16.    CONSENTS. This Agreement shall become effective as of the
                  Effective Date at such time as the following consents,
                  approvals and authorizations have been obtained by the
                  respective parties:

                  a. GI obtains (i) the waiver of American Home Products
                     Corporation's right of first refusal under its Governance
                     Agreement with GI, (ii) the consent of


                                      -29-
<PAGE>   30



                     GI's joint venture entities with Yamanouchi Pharmaceutical
                     Co., Ltd. and (iii) the authorization of the Intellectual
                     Property Committee of GI's Board of Directors, which
                     consents and authorization will be promptly sought and
                     provided to CBM and Stryker following receipt thereof.

                  b. CBM and Stryker each obtain all requisite consents and
                     approvals, including the authorization of each parties'
                     respective boards of directors, which consents and
                     authorization will be promptly sought and provided to GI
                     following receipt thereof.

                  [Remainder of Page Intentionally Left Blank]


                                      -30-
<PAGE>   31




         IN WITNESS WHEREOF, duly authorized representatives of the parties have
signed this Agreement as a document under seal as of the Effective Date.

GENETICS INSTITUTE, INC.


BY /s/Gabriel Schmergel
   _______________________
Gabriel Schmergel
President and CEO


STRYKER CORPORATION

By /s/John W. Brown
   _______________________
John W. Brown
Chairman of the Board,
CEO and President


CREATIVE BIOMOLECULES, INC.


By /s/Michael Tarnow
   _______________________
Michael Tarnow
CEO and President


ACKNOWLEDGMENT OF CONSENT:

         GPDC PARTNERSHIP:

                  GI JAPAN, INC.                  YAMANOUCHI USA, INC.


                  By /s/Tuan Ha-Ngoc              By /s/Shigeo Morioka
                     _____________________           _____________________




                                      -31-
<PAGE>   32


                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                  Schedule 2.5
                            CBM/Stryker Base Proteins
                                   (attached)


         ***********
         ***************************************************************
         ***************************************************************
         ***************************************************************
         HBMP7********************************************************
         ***************************************************************

         ***************************************************************

         ***************************************************************

         ***************************************************************

         ***************************************************************

         ***************************************************************
         ***************************************************************

         ***************************************************************
         ***************************************************************

         ***************************************************************
         ***************************************************************





NOTES:

                  1 Hbmp7=OP1
                  ************
<PAGE>   33

                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

         *****


         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************


                                      -2-
<PAGE>   34




                                  Schedule 2.8
                               CBM/Stryker Patents













                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


                                      -3-
<PAGE>   35



                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.


                                  Schedule 2.11
                                GI Base Proteins




         ***********
         Hbmp2 *********************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************
         ***************************************************************



         NOTES:

              **********
              **********
              **********
              **********
              **********
              **********


                                      -4-
<PAGE>   36
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.


         *****


         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************

         *********************************


                                      -5-
<PAGE>   37



                                  Schedule 2.13
                                   GI Patents


                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


                                      -6-
<PAGE>   38

                                  Schedule 3.1
                      GI Third Party License Agreements and
                     Maximum Royalty Obligations Thereunder

                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                       ASTERISKS DENOTE SUCH OMISSIONS.

<TABLE>
<CAPTION>

         Agreement                     Date      Maximum Royalty Obligation
         ---------                     ----      --------------------------

<S>                                    <C>       <C>
         MetaMorphix Collaboration     12-1-94   ***************
          Agreement                              ***************
                                                 ***************
                                                 ***************

         Stanford/Ringold              3-1-94    *****
          License Agreement

         Harvard ****************      8-18-95   *****
          License Agreement

         Stanford/Cohen and Boyer      12-2-80   **********
          License Agreement                      **********
</TABLE>


                                      -7-
<PAGE>   39





                                  Schedule 3.3
                   Stryker Third Party License Agreements and
                     Maximum Royalty Obligations Thereunder

<TABLE>
<CAPTION>
         Agreement                     Date      Maximum Royalty Obligation
         ---------                     ----      --------------------------


<S>                                    <C>       <C>
         --None--                      --        --
</TABLE>

                                      -8-
<PAGE>   40




                                  Schedule 3.4
                     CBM Third Party License Agreements and
                     Maximum Royalty Obligations Thereunder

<TABLE>
<CAPTION>

         Agreement                     Date        Maximum Royalty Obligation
         ---------                     ----        --------------------------
<S>                                    <C>         <C>
         Stanford/Cohen and Boyer      To be       To be
          License Agreement            Completed   Completed
</TABLE>


                                       -9-