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                         DEVELOPMENT AND SUPPLY AGREEMENT

This Development and Supply Agreement (the  "Agreement") effective as of
February 9, 1998  (the "Effective Date") is entered into by and  between
ArthroCare Corporation, a Delaware  corporation having an address at 595 North 
Pastoria Avenue, Sunnyvale, California 94086  ("ArthroCare"), and Boston
Scientific  Corporation, on its own behalf and on behalf of  its affiliates
("BSC"), a Delaware corporation  having an address at One Boston Scientific 
Place, Natick, Massachusetts 01760-1537.

                                   BACKGROUND

A.      ArthroCare owns certain technology  relating to the Field (as
such term is defined  in Article 1);

B.      BSC is a worldwide leader in the  sale of medical devices to
the interventional  cardiology market through its subsidiary, SCIMED  Life
Systems, Inc., and in the sale of textile  vascular grafts to the
cardio-thoracic surgery  market through BSC's subsidiary, Meadox  Medicals,
Inc.;

C.      BSC and ArthroCare desire that ArthroCare  manufacture Controllers and
certain Disposable  Products (as such terms are defined in Article  1) for BSC
for use in the Field, all on the  terms and conditions set forth herein; and

D.      On even date herewith, the parties are  entering into a License
Agreement pursuant to  which ArthroCare grants BSC a worldwide  exclusive
license under certain patent rights  relating to the Field (the "License
Agreement"). 

NOW, THEREFORE, in consideration of the promises  and the mutual covenants
contained herein, the  parties agree as follows:

                                   ARTICLE 1
                                  DEFINITIONS

1.1     "Affiliate" means any corporation or other  entity which is directly or
indirectly  controlling, controlled by or under the common  control with a
party hereto.  For the purpose of  this Agreement, "control" shall mean the
direct  or indirect ownership of at least 50% of the  outstanding shares or
other voting rights of the  subject entity to elect directors, or if not 
meeting the preceding definition, any entity  owned or controlled by or owning
or controlling  at the maximum control or ownership right  permitted in the
country where such entity  exists.

1.2     "ArthroCare Product" shall mean a Product  sold by ArthroCare
hereunder, and "ArthroCare  Products" shall mean Products sold by ArthroCare 
hereunder.

1.3     "BSC's Intellectual Property" shall have  the meaning set forth in
Section 9.5.A.

1.4     "Confidential Information" shall mean any:   (i)  information or
material in tangible form  disclosed hereunder or under the License  Agreement
that is marked as "Confidential" at  the time it is delivered to the receiving
party;  or (ii)  information disclosed orally hereunder  which is identified as
confidential or  proprietary when disclosed and such disclosure  of
confidential information is confirmed in  writing within 30 days after
disclosure by the  disclosing party.

1.5     "Controller" shall mean an RF power  supply, which is designed for use
with the  Disposable Products in Revascularization  procedures.

1.6     "Disposable Product(s)" shall mean  medical instruments and components
of such  medical instruments, designed for use in  Revascularization
procedures, certain of which  may have one or more electrode(s) and electrical 
connection(s) for coupling the electrode(s) to a  Controller.

1.7     "FDA" shall mean the U.S. Food and  Drug Administration.

1.8     "Field" shall mean the use of RF  energy in a procedure that is
intended to  promote Revascularization of the heart or other  muscle tissues.  


1.9     "Product" shall mean either a Controller  or a Disposable
Product, and "Products" shall  mean Controllers and Disposable Products.

1.10    [*****]

1.11    "RF" shall mean radiofrequency.

1.12    "Specifications" shall have the meaning  set forth in Section 3.1.A. 

                                   ARTICLE 2
                      PRODUCT MANUFACTURING AND SALE

2.1     Purchase and Sale of Controllers.  

A.      Subject to the terms and conditions of  this Agreement, including
without limitation  Sections 2.1.B. through 2.1.D., from the  Effective Date
through [*****], ArthroCare  agrees to manufacture and sell to BSC, and BSC 
agrees to exclusively purchase from ArthroCare,  BSC's requirements for
Controllers for use in  the Field during the periods, and for the  transfer
prices, set forth below:
       Periods         Transfer Price per Controller
       -------         -----------------------------
       [*****]         [*****]

After [*****], ArthroCare shall manufacture  Controllers, but only as may be
requested by  BSC, at mutually agreed upon fair and reasonable  prices.

B.      Such transfer prices shall be firm for any  Controller having
Specifications which do not  require any engineering design work to be 
performed by ArthroCare.  If any such  engineering design work is required to
be  performed by ArthroCare, the parties shall  promptly discuss such work in
good faith and  ArthroCare shall make any modifications  requested by BSC,
provided that BSC agrees to  pay the reasonable costs of such work.  Prior to 
performing any such work, ArthroCare will  prepare and submit to BSC for its
approval a  budget for the direct cost of such work on a  time and materials
basis. The time will include  the fully burdened rate for each employee 
involved in the work plus [*****] of the fully  burdened cost to account for
overhead.  

C.      Notwithstanding Section 2.1.A, if  BSC desires to manufacture some or
all of the  Controllers internally prior to [*****], BSC may  do so by
providing [*****] prior written notice  to ArthroCare.  For each such
Controller that is  internally manufactured by BSC prior to  [*****], BSC shall
make a payment to ArthroCare  in the amount specified for the applicable 
period:
       Periods         Payment per Controller
       -------         ----------------------
       [*****]         [*****]
If BSC internally manufactures Controllers after  [*****], no payments therefor
shall be due to  ArthroCare under this Section 2.1.C.

D.      Notwithstanding anything to the contrary  in this Agreement, BSC shall
not be  [*****].

2.2     First Right of Negotiation.  Beginning on  [*****] and on every [*****]
thereafter during the term of this Agreement, if BSC desires to  have the
Controllers manufactured by a third  party, BSC shall give 90 days prior
written  notice to ArthroCare.  ArthroCare will have the  first right of
negotiation on a Most Favored  Nations basis for the manufacture of BSC's 
Controllers for use in the Field for the next  [*****] commencing on such
[*****];  provided that ArthroCare commits in writing to  manufacture the
Controllers on such pricing and  other terms within 30 days after BSC gives the
 notice referenced in the preceding sentence; and  (ii) all terms and
conditions set forth in this  Agreement shall continue to apply, other than 
those terms that are modified because of the  terms offered by ArthroCare to
meet the terms  offered by the third party.  Most Favored  Nations means that
ArthroCare will have the  right to manufacture and supply Controllers to  BSC
at transfer prices at least as favorable to  BSC as the terms offered by a
third party, as  long as the quality of the Controllers and all  other terms
and conditions relating to such  transactions are on terms at least as
favorable  to BSC as those offered by such third party.  If  BSC desires to
internally manufacture the  Controllers, it shall give ArthroCare 90 days 
prior written notice, and BSC shall not be  required to offer ArthroCare an
opportunity to  manufacture the Controllers at a comparable  cost, subject to
Section 2.1.C.

2.3     Purchase and Sale of Disposable Products. Upon request by BSC,
ArthroCare shall   manufacture and sell to BSC such Disposable  Products within
the Field as may be requested by  BSC.  Pricing for each Disposable Product
sold  by ArthroCare to BSC shall be mutually agreed  upon, in writing, and
adjusted annually, in  writing, in December of each calendar year for  the next
calendar year.  Initial pricing will be  set within 60 days after the Effective
Date of  this Agreement. Pricing will be [*****].   If ArthroCare is
manufacturing any  Disposable Product for BSC and BSC determines, in its sole
discretion, that it desires to  internally manufacture or have manufactured by
a  third party any such Disposable Product or any  component thereof, BSC shall
give ArthroCare 90- days prior written notice of its intent to  discontinue
purchasing from ArthroCare such Disposable Product or component thereof.[*****].

2.4     Technology Transfer.  If BSC elects  to shift the manufacture of the
Controllers in  accordance with Section 2.1 or Section 2.9, or  the Disposable
Products from ArthroCare to BSC  or a third party, ArthroCare shall promptly 
transfer the necessary technology (including  without limitation manufacturing
know-how) to  BSC or the third party to enable BSC or such  third party to
manufacture the Controllers or  the Disposable Products, as the case may be, in
 accordance with the Specifications.  BSC will  reimburse ArthroCare for such
technology  transfer on a time and materials basis. Time  will include the
fully burdened rate for each  employee involved in the technology transfer 
plus [*****] of the burdened cost to account for  overhead. ArthroCare shall
also promptly  transfer such technology pursuant to this  Section 2.4 if BSC
requires a second source for  Controllers as described in Section 2.9.  Any 
technology transfer referenced in this Section  2.4 shall be for the purpose of
allowing BSC to  make and/or procure the ArthroCare Products  intended for use
in the Field.  The third party  receiving such technology transfer shall be 
required to maintain the confidentiality of such  information and technology
for the benefit of  both BSC and ArthroCare.

2.5     Orders.   BSC may initiate  purchases under this Agreement (the
"Orders") by  telephone contact, telex, fax or by sending  written purchase
orders to ArthroCare at the  address noted in Section 13.5.  Any Order 
initiated by telephone, fax or telex order must  be confirmed within 10 working
days by a written  purchase order.  The delivery date set forth in  each Order
shall be consistent with the then- current forecast. Orders shall be binding
when  accepted by ArthroCare.  ArthroCare shall  acknowledge each Order in
writing within 10  business days of receipt.  By written notice  given within
such 10-day period, ArthroCare may  reject any Order, but only to the extent
that  the Order exceeds the applicable, then-current  forecast, consistent with
Section 5.1.  Notice  of rejection must be given within 10 days to BSC  by
telex or fax, followed by notification in  writing. Once an Order is accepted
by  ArthroCare, BSC may cancel or reschedule such  Order only with approval of
ArthroCare.

2.6     Delivery and Acceptance.  Upon  delivery to BSC of the Product,
including  related documentation, BSC shall evaluate such  Products for
conformity to the Specifications.   Within 30 days after delivery of such
Products,  BSC shall provide ArthroCare with written  acceptance thereof, or a
statement of defects to  be corrected.  At ArthroCare's expense,  ArthroCare
shall promptly correct such defects  and return (or replace) the corrected
Products  for retesting and reevaluation, and BSC shall  within 30 days after
such redelivery provide  ArthroCare with written acceptance of such  corrected
Products.  No partial shipment of an  Order shall constitute acceptance of the
entire  Order, absent the written acceptance by BSC of  such Order.  BSC may
not return Products to  ArthroCare that do not contain defects without  the
prior written approval of ArthroCare.  If  ArthroCare approves of the return of
any  Products without defects, BSC will pay a  restocking fee of [*****] of the
transfer price  of such Products. ArthroCare will use its best  efforts to
obtain and maintain all licenses and  approvals necessary to ship any Products
to an  international destination.

2.7     Handling and Shipping.  ArthroCare shall  manufacture, store and
transport all Products  consistent with all applicable laws, regulations  and
requirements to ensure the quality of the  Products, including without
limitation all  requirements relating to storage, handling,  temperature,
humidity controls, etc.  ArthroCare  shall pack all Products for shipment in 
containers adequate to insure safe arrival of  the goods at BSC's designated
delivery  destination, properly addressed for delivery to  the address
specified in BSC's Order or such  other address as BSC shall specify in
writing,  and delivered to a carrier or forward agent  chosen by BSC.  BSC will
reimburse ArthroCare  for all actual, reasonable transportation,  shipping and
related insurance expenses.  In the  event that BSC requests special packaging
or  finishing for any Order, BSC shall pay the  incremental cost for such
special packaging or  finishing; provided, however, that ArthroCare  shall
include any special documentation  regarding the Products as may be requested
by  BSC, at  [*****] charge. Shipment will be [*****]. All shipping  papers
and/or invoices shall include the Order  number and serial numbers of Products
shipped.  

2.8     Terms and Conditions.  This Agreement  contains the exclusive terms and
conditions  which shall apply to all purchases of  Controllers and Disposable
Products by BSC.  In  ordering and delivering Products, ArthroCare and  BSC
will use their standard forms but nothing in  such forms shall amend or modify
the terms of  this Agreement.  In case of conflict between  such forms and this
Agreement, the terms of this  Agreement shall control.

2.9     Second Source.  Notwithstanding  Section 2.1 above, in the event that,
within  [*****], ArthroCare is unable to or fails  to meet BSC's Controller
requirements as  specified in the then-current forecast either:   (i) once, for
a period in excess of  [*****]; or  (ii) twice, for periods of at least 
[*****]  each, then in each case BSC shall have the right  to manufacture such
additional Controllers  itself or purchase such additional Controllers  from a
second source and BSC shall not owe  ArthroCare the price described in Section
2.1.C.  for any such Controllers manufactured by BSC or  a third party;
provided, however, that:  (a)  before internally manufacturing or placing a 
purchase order with any third party for such  Controllers, BSC shall notify
ArthroCare, and  provided that, as soon as BSC determines in good  faith that
ArthroCare is capable of meeting  BSC's Controller requirements, BSC shall
resume  its exclusive purchase of such Controllers from  ArthroCare subject to
Section 2.1; and (b) the  periods referenced in clause (i) and (ii) above 
shall not be subject to extension due to Force  Majeure as referenced in
Section 11.2.C.   Notwithstanding the foregoing, the parties  acknowledge and
agree that they shall cooperate  with one another to assure sufficient source
of  Products to BSC and its customers.

                                   ARTICLE 3
                        SPECIFICATIONS; MODIFICATIONS

3.1     Establishment of Specifications.   

A.      BSC will establish the specifications for  the Controllers (including
at a minimum those  set forth on Exhibit A hereto) and the  Disposable Products
as BSC refines the  Revascularization procedures based on animal and  human
testing, subject to change upon 90 days  prior written notice by BSC (the 
"Specifications").  After the Specifications  have been established, ArthroCare
will develop  the Products according to the Specifications.   BSC and
ArthroCare will mutually agree on a  schedule for completion of the Products
for  clinical trials. 

B.      ArthroCare shall ensure that all Products  supplied by ArthroCare meet
all standards and  Specifications established by BSC, and shall  comply with
all applicable international,  federal, state and local laws and regulations, 
including those relating to manufacturing,  packaging, labeling and sale of the
Products,  Good Manufacturing Practices and ISO 9001  standards. 

3.2     Requested Modifications.  BSC may  request or ArthroCare may suggest
changes to  improve the design or operation of the Products,  or the
reliability or serviceability of the  Products.  The parties shall promptly
discuss  such modifications in good faith and ArthroCare  shall perform the
engineering design work to  modify the Specifications as requested by BSC, 
provided that BSC agrees to pay the reasonable  costs of such work.  If the
changes require  engineering design work on the Specifications,  ArthroCare
will prepare and submit to BSC for  its approval a budget for the direct cost
of  making such work on a time and materials basis.  The time will include the
fully burdened rate  for each employee involved in such work plus  [*****] of
the fully burdened cost to account  for overhead. 

3.3     Approvals.  ArthroCare shall  cooperate and provide such documents and 
information as may be required to obtain a CE  Mark, U.S. FDA approval and any
other applicable  governmental or regulatory approvals or consents  for each
Product. 

                                   ARTICLE 4
                                   PAYMENTS

ArthroCare shall issue to BSC individual  invoices for each Product shipped. 
BSC shall  pay each invoice within 45 days after receipt of  such invoice or
the delivery date of the  applicable Products, whichever is later. Late 
payments shall bear interest at the lower of:   (i) [*****]; and (ii) the
maximum  interest rate permitted under applicable law.   Notwithstanding the
foregoing, upon the request  of any subsidiary of BSC, ArthroCare shall 
directly invoice such subsidiary for, and such  subsidiary shall directly be
responsible for  payment of, Products ordered by such subsidiary.

                                   ARTICLE 5
                            FORECASTS; NO BACKORDERS

5.1     Forecasts.  BSC shall furnish ArthroCare a  12-month forecast with
estimated purchase dates  and quantities of Products (including  Controllers as
well as any Disposable Products  that BSC desires to purchase from ArthroCare),
and shall deliver an updated forecast on a  rolling basis on the first day of
each month.   Such forecasts shall include monthly delivery  schedules. Based
on the then current forecast,  ArthroCare will maintain its production 
capability and adequate materials and labor to  meet the forecasted monthly
delivery schedule  for Products.  ArthroCare shall release Products  on a
monthly basis in accordance with the  delivery schedule set forth on the then
current  forecast; provided, however, that:  (a) BSC may  make changes to the
delivery schedule and the  quantities requested on the then current  forecast
at any time up to 90 days prior to a  scheduled delivery; (b) in the event that
BSC  desires to increase the volume of any Products  on an Order with less than
90 days notice to  ArthroCare, ArthroCare shall use its best  efforts to supply
such increased volume of  Products; and (c) ArthroCare shall not be  required
to accept any Order for a Product to  the extent that it is based on a forecast
that  shows an increase in the volume of Product  ordered that exceeds 25% of
the average volume  of such Product ordered during the preceding 90- day
period; provided that (c) shall not apply to  the three months following the
Effective Date or  for the first three months following initial 
commercialization of the Controller.  BSC may  place additional, unforecasted
Orders for  Products subject to ArthroCare's acceptance,  which acceptance
shall not be unreasonably  withheld.  [*****].  It  is understood that BSC
shall use all reasonable  efforts to make each forecast as accurate as 
possible, particularly as it pertains to the 90  days immediately following the
date of such  forecast. 

5.2     No Backorders.  ArthroCare shall plan  production schedules and provide
the Products,  without backorders, in accordance with the  Orders, to the
extent that such Orders are  consistent with the then current forecast.  At 
all times during the term of this Agreement,  ArthroCare shall maintain not
less than a one- month inventory of each Product, calculated  based on the
previous three months' purchases of  such Products; provided that initial
required  stock levels shall be based on BSC's initial  forecast. 

                                   ARTICLE 6
                 PRODUCT QUALITY; PRODUCT SUPPORT AND SERVICE

6.1     Quality Assurance.      

A.      ArthroCare shall maintain ongoing quality  assurance and testing
procedures to assure the  quality of Products through the use of a formal 
quality assurance program reasonably acceptable  to BSC and sufficient to
satisfy:  (i) ISO 9001  standards; (ii) ArthroCare's quality assurance 
policies and procedures; (iii) any applicable  regulatory requirements; and
(iv) BSC's standard  requirements to be approved as a vendor.  During  the term
of this Agreement, BSC shall have the  right to audit such quality assurance
program,  at its expense, during regular business hours.   If BSC determines
that any Products are subject  to review and periodic audits of supplied data, 
with each lot of such Products, ArthroCare shall  supply data of the nature and
in the form as may  be reasonably requested by BSC, which data shall  verify
compliance with minimum levels of  conformance established by BSC.  Upon BSC's 
request, ArthroCare shall perform any failure  analyses and take any necessary
corrective  action with respect to any defects in any  Product.

B.      ArthroCare agrees to trace and maintain  written records regarding the
source and lot  number of each Product. ArthroCare agrees to  maintain such
records for not less than five  years after the termination or expiration of 
this Agreement.  ArthroCare shall label each  Product as indicated by BSC.  

6.2     Inspection and Acceptance. BSC and its representatives shall have
the right,  during regular business hours, to enter upon and  examine the
plants and other facilities where  the Products are manufactured, packaged
and/or  stored, and to make any further examination  reasonably necessary to
properly ascertain  compliance with Specifications and this  Agreement.
ArthroCare shall cooperate to the  fullest extent practicable with respect to
such  inspections.  Final inspection and acceptance of  Products shall be at
BSC's facility, and shall  be performed within 30 days after BSC's receipt  of
the Products.  ArthroCare agrees to provide  BSC with copies of all:  (a)
requested  documentation related to Products,  Specifications, manufacturing
processes and  proof of manufacturability (including packaging  and labeling);
and (b) U.S. and international  regulatory approvals, regulatory inspections, 
and other communications with regulatory  authorities related to the Products. 
BSC may  observe and examine all operating methods,  quality control procedures
and production and  inventory records relevant to the business  conducted
pursuant to this Agreement.

6.3     Required Notification.  

A.      ArthroCare shall give BSC immediate  notice, by telecopy, with
confirming notice by  U.S. mail, if ArthroCare becomes aware of any  defect or
condition which in any way alters the  Specifications or quality of any Product
supplied by ArthroCare or which may render any  such Product ineffective,
dangerous and/or in  violation of any applicable law or regulation,  including
the Federal Food, Drug, and Cosmetic  Act and the Occupational Safety and
Health Act.   ArthroCare shall fully cooperate with BSC as to  any field action
taken with respect to any  Product.

B.      ArthroCare shall, at least six months  prior to making any substantial
changes in the  processing, composition, Specifications,  manufacturing
processes, or performance  characteristics of any Product thereof, or  changing
any vendor of a subcomponent or  critical raw material: (i) give written notice
to BSC of such proposed change; and (ii) provide  a sample of the affected
Product, incorporating  such proposed change, for BSC's review and  approval. 
ArthroCare shall not implement any  such change without BSC's prior written 
approval, which may be withheld by BSC as it  deems necessary or desirable.  

6.4     Support.  ArthroCare shall provide prompt,  professional, competent and
courteous support  for BSC and its Affiliates and their respective  customers
relating to the Products.  BSC shall  reimburse ArthroCare for any reasonable
costs it  incurs in providing such support, provided that  such costs represent
fair market value for the  support provided.

6.5     Service.  ArthroCare shall service any  Products that are returned to
ArthroCare for  maintenance or repair.  If such repair is the  responsibility
of ArthroCare as set forth in  Articles 6 or 8, ArthroCare shall provide such 
support at its own expense.  If it is not the  responsibility of ArthroCare,
BSC shall  reimburse ArthroCare for any costs that it  reasonably incurs in
providing such service,  provided that such costs represent fair market  value
for the services provided.

                                   ARTICLE 7
                              ADDITIONAL COVENANTS

7.1     Financial Statements.  From time to  time as requested by BSC (but not
more  frequently than once per calendar year),  ArthroCare will provide BSC
with copies of  audited financial statements and such other  information
reasonably requested by BSC to  demonstrate ArthroCare's financial ability to 
perform under this Agreement.  All information  provided to BSC under this
Section 6.3 will be  treated confidentially, unless such information  is
otherwise publicly available. 

7.2     Exclusivity.  Subject to Section  11.4.D., unless otherwise agreed by
the parties,  during the term of this Agreement, ArthroCare  shall not be
involved with the design,  manufacture and/or sale, to or on behalf of any 
other person or entity, of any equipment or  supplies which are intended to be
used as a  power supply, medical instrument or disposable  device for
Revascularization procedures in the  Field.

7.3     ArthroCare's Assets.  ArthroCare  shall not sell, transfer, assign,
pledge, grant  a security interest in, or otherwise encumber or  allow any
third party to obtain an interest in,  any prints, designs, tools, fixtures,
raw  materials, moldings or other equipment used or  useful in manufacturing
and/or supplying the  Products without giving BSC at least 60 days  prior
written notice. 

7.4     Change of Control of ArthroCare.  For  purposes of this Agreement
"Change in Control"  means:

(a)     the sale, lease, exchange or other  transfer, directly or indirectly,
of  substantially all of the assets of ArthroCare  (in one transaction or in a
series of related  transactions) to one or more persons or entities  that are
not Affiliates of ArthroCare;

(b)     the approval by the shareholders of  ArthroCare of any plan or proposal
for its  liquidation or dissolution;

(c)     a merger or consolidation to which  ArthroCare is a party if the
shareholders of  ArthroCare immediately prior to the effective  date of such
merger or consolidation have  beneficial ownership, immediately following the 
effective date of such merger or consolidation,  of securities of the surviving
corporation  representing 50% or less of the combined voting  power of the
surviving corporation's then  outstanding securities ordinarily having the 
right to vote at elections of directors; or

(d)     any other change in control of ArthroCare  of a nature that would be
required to be  reported pursuant to Section 13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  whether or not ArthroCare is then subject to
such reporting requirements.

To the extent not prohibited under applicable  law, ArthroCare shall gave BSC
not less than 30  days' prior written notice of any Change of  Control, and
shall provide BSC with such  information regarding the proposed Change of 
Control as it may reasonably request.  All such  information shall be treated
as ArthroCare's  Confidential Information hereunder, and BSC  acknowledges that
such Confidential Information  may constitute "inside" information.  
Notwithstanding any such Change of Control,  ArthroCare shall continue to be
obligated to  perform its obligations under this Agreement.   However, BSC
would have the option to terminate  this Agreement upon any such Change of
Control,  and in such event:

(i)     BSC shall be required to pay for all  Products that are scheduled for
release within  60 days after such termination based on the then  current
forecast, provided that such Products  are provided on a timely basis and in
accordance  with the terms and conditions of this Agreement;

(ii)    ArthroCare shall cooperate with BSC to  ensure a continuous and
sufficient supply of  Products during a reasonable transition period;  and

(iii)   ArthroCare shall transfer the necessary  technology to BSC and/or a
third-party  designated by BSC to enable BSC or such third  party to
manufacture the Products in accordance  with the Specifications.  BSC would be
required  to reimburse ArthroCare for such technology  transfer consistent with
the terms of Section  2.4. 

                                   ARTICLE 8
                         REPRESENTATIONS AND WARRANTIES

8.1     Limited Warranty.  ArthroCare hereby  represents and warrants to BSC
that:

(a)     on the date of shipment, all ArthroCare  Products will be new, of good
and merchantable  quality,  suitable for use as Controllers for 
Revascularization Procedures in the Field, and  will comply with the
Specifications for such  Products;

(b)     all ArthroCare Products shall be free from  any defects in material or
workmanship;  provided, however, that such warranty shall  apply only for
[*****] from the date of  ArthroCare's shipment of such Product in the 
case of a defect which does not result in any  personal injury or damage, or in
any field  action, or retrieval or recall action;

(c)     ArthroCare shall ensure that all  ArthroCare Products shall:  (i)
conform in all  respects with the requirements of this Agreement  and the
applicable Order; (ii) meet all  standards and Specifications established by
BSC;  and (ii) comply with all applicable  international, federal, state and
local laws and  regulations, including those relating to  manufacturing,
packaging, labeling and sale of  the Products, Good Manufacturing Practices and
ISO 9001 standards; 

(d)     title to all ArthroCare Products shall  pass to BSC free and clear of
any security  interest, lien or other encumbrance, or any  other defect in
title; 

(e)     the ArthroCare Products shall have been  manufactured, packaged and
stored in facilities  which are approved by the FDA and/or other  applicable
regulatory authorities at the time of  such manufacture, packaging and storage
to the  extent such approval is required by law; 

(f)     the ArthroCare Products shall have been  manufactured in accordance
with "Good  Manufacturing Practices" as required by any  regulatory authority,
ISO 9001 standards, and  all other applicable international, federal,  state,
and other laws, rules and regulations,  including without limitation the Fair
Labor  Standards Act and all regulations and orders  issued thereunder; and

(g)     the Controllers sold by ArthroCare  hereunder shall operate fully and
without  interruption, [*****], without significant  repair or maintenance
expense, in the case of  [*****] of such Controllers; provided, however,  that
if the Controllers do not meet such  standards [*****] of the time:  (i)
ArthroCare  shall pay the costs of such repair and  maintenance; or (ii) if
less than [*****] of  such Controllers meet such standards, BSC may  declare a
breach of this Agreement as a ground  for termination of this Agreement under
Section  11.2.A., in addition to other remedies which may  be available.

The foregoing representations and warranties  shall survive inspection,
delivery, and payment  of the applicable Products, and shall be for the 
benefit of BSC and its customers.  The above  limited warranty is contingent on
proper use of  the Products in the applications in which they  are intended as
indicated in the Product label  claims.  The above limited warranty does not 
apply to any product that has been, after  dispatch from the F.O.B. shipping
point: (1)  altered; (2) not maintained in accordance with  the handling,
storage or transportation  instructions supplied by ArthroCare; (3) damaged  by
negligence or accident; or (4) damaged by  acts of nature, vandalism, burglary,
neglect or  misuse.

8.2     Effect of Warranty; Field Actions.

A.      If any ArthroCare Products do not  meet the warranties specified
herein, BSC may,  at its option:  (i) require ArthroCare (at  ArthroCare's
option) to replace or correct at no  cost to BSC any defective or nonconforming
Products, or (ii) return any nonconforming  Products to ArthroCare at
ArthroCare's expense  and recover from ArthroCare the full transfer  price
thereof. 

B.      Notwithstanding anything to the  contrary in this Article 8, ArthroCare
shall  indemnify and reimburse BSC for any field  action, recall, retrieval or
other type of  removal or alteration which is required due to  any failure of
the Products to meet the  Specifications.

8.3     Exclusions.  EXCEPT AS OTHERWISE  STATED IN THIS AGREEMENT OR THE
LICENSE  AGREEMENT,  ARTHROCARE AND ITS THIRD PARTY  SUPPLIERS GRANT NO OTHER
WARRANTIES AND  CONDITIONS, EXPRESS OR IMPLIED, BY STATUTE OR  OTHERWISE, WITH
RESPECT TO THE PRODUCTS,  AND  ARTHROCARE AND ITS THIRD PARTY SUPPLIERS 
SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF  MERCHANTABILITY, FITNESS FOR A
PARTICULAR  PURPOSE, AND NON-INFRINGEMENT. OTHER THAN AS  EXPRESSLY SET FORTH
IN ARTICLE 8 AND/OR ARTICLE  10, ARTHROCARE SHALL NOT BE LIABLE TO BSC OR ANY 
THIRD PARTY FOR LOST PROFITS, OR FOR ANY  SPECIAL, CONSEQUENTIAL, OR INCIDENTAL
DAMAGES  FOR BREACH OF WARRANTY. 

8.4     Representations and Warranties of BSC.   BSC hereby represents and
warrants to ArthroCare  and its Affiliates that:  (a) BSC is a  corporation
duly organized, validly existing and  in good standing under the laws of the
state of  Delaware;  (b) it has full power and authority  required to enter
into, execute and deliver this  Agreement and to carry out its obligations
under  this Agreement and to perform the transactions  contemplated herein; (c)
this Agreement has been  duly executed and delivered by, is the valid and 
binding obligation of, and is enforceable  against it in accordance with its
terms; (d) the  execution, delivery and performance of this  Agreement by it
does not violate any other  agreement to which it is a party or by which it  is
bound, or any applicable law to which it is  bound or subject; and (e) it has
the  unrestricted right to disclose any information  it submits to ArthroCare,
free of all claims of  third parties, and that such disclosures do not  breach
or conflict with any confidentiality  provisions of any agreement to which it
is a  party.  

8.5     Other Representations and Warranties of  ArthroCare.  ArthroCare hereby
represents and  warrants to BSC and its Affiliates that:  (a)  ArthroCare is a
corporation duly organized,  validly existing and in good standing under the 
laws of the state of Delaware; it has full power  and authority required to
enter into, execute  and deliver this Agreement and to carry out its 
obligations under this Agreement and to perform  the transactions contemplated
herein; (c) this  Agreement has been duly executed and delivered  by, is the
valid and binding obligation of and  is enforceable against it in accordance
with its  terms; (d) the execution, delivery and  performance of this Agreement
by it does not  violate any other agreement to which it is a  party or by which
it is bound, or any applicable  law to which it is bound or subject; (e) it has
the unrestricted right to disclose any  information it submits to BSC, free of
all  claims of third parties, and that such  disclosures do not breach or
conflict with any  confidentiality provisions of any agreement to  which it is
a party; and (f) any and all  consents, waivers, authorizations and approvals 
of any federal, state, local or foreign  governmental or regulatory authority
and of any  other person, firm or corporation, required in  connection with the
execution, delivery and  performance of this Agreement or any of the 
transactions contemplated under this Agreement  will have been duly obtained
and be in full  force and effect as of the date that such  consents, waivers,
authorizations and approvals  are required for ArthroCare to perform its 
obligations under this Agreement. 

                                   ARTICLE 9
          CONFIDENTIALITY; PROTECTION OF BSC'S INTELLECTUAL PROPERTY

9.1     Confidential Information.  Except as  expressly provided herein, the
parties agree  that, for the term of this Agreement and for  [*****]
thereafter, the receiving party shall  keep completely confidential and shall
not  publish or otherwise disclose and shall not use  for any purpose except
for the purposes  contemplated by this Agreement any Confidential  Information
furnished to it by the disclosing  party hereto, except that to the extent that
it  can be established by the receiving party by  written proof that such
Confidential  Information:

        (i)     was already known to the receiving  party, other than under an
obligation of  confidentiality, at the time of disclosure;

        (ii)    was available to the public or  otherwise part of the public
domain at the time  of its disclosure to the receiving party;

        (iii)   became available to the public or  otherwise part of the public
domain after its  disclosure and other than through any act or  omission of the
receiving party in breach of  this Agreement; 

        (iv)    was subsequently lawfully disclosed  to the receiving party by
a person other than a  party hereto; or

        (v)     was independently developed by a  person having no knowledge of
or access to any of the other party's Confidential Information. 

9.2     Permitted Use and Disclosures.  Each  party hereto may use or disclose
information  disclosed to it by the other party to the extent  such use or
disclosure is reasonably necessary  in complying with applicable law or
governmental  regulations, conducting clinical trials, or  exercising its
rights hereunder to develop or  commercialize Licensed Products, provided that 
if a party is required to make any such  disclosure of another party's
confidential  information, other than pursuant to a  confidentiality agreement,
it will give  reasonable advance notice to the latter party of  such disclosure
and, will use its best efforts  to secure confidential treatment of such 
information prior to its disclosure (whether  through protective orders or
otherwise). 

9.3     Confidential Terms.  Except as expressly  provided herein, each party
agrees not to  disclose any terms of this Agreement to any  third party without
the consent of the other  party; provided, disclosures may be made as  required
by securities or other applicable laws,  or to Affiliates, or to a party's
accountants,  attorneys and other professional advisors  provided that such
accountants, attorneys and  other professional advisors are bound to retain 
the terms of this Agreement confidential.   Disclosure to prospective corporate
partners or  Affiliates is prohibited absent written consent  from the
non-disclosing party.  Neither party  shall issue a press release or other
public  announcement concerning this Agreement, the  transactions contemplated
herein or the  relationship between  BSC and ArthroCare without  the prior
consent of an authorized  representative of the other party.

9.4     Other Prohibited Uses.  Neither  party shall appropriate or use the
other party's  Confidential Information other than in  furtherance of its
obligations under this  Agreement and/or the License Agreement.  Neither  party
shall, by virtue of this Agreement alone,  obtain any title to, or any interest
or license  in, any of the other party's Confidential  Information.

9.5     Protection of BSC's Intellectual Property.  

A.      ArthroCare acknowledges and agrees that  BSC has the sole and exclusive
rights to use all  trademarks, service marks, trade names, patents,  copyrights
and trade secrets owned by,  registered in the name of, licensed to or used  in
BSC's business (collectively, "BSC's  Intellectual Property"). 

B.      ArthroCare hereby acknowledges and agrees  that it does not now have
and shall not gain any  right, title, or interest in BSC's Intellectual 
Property, other than the limited right to  incorporate certain BSC Intellectual
Property,  as directed by BSC, in connection with its  manufacture of the
Products solely for the  benefit of BSC as set forth in this Agreement or  in
the License Agreement.  Any use by ArthroCare  of BSC's Intellectual Property
shall be in  accordance with this Agreement and the License  Agreement, and
shall be solely for the benefit  of BSC and deemed a use by BSC.

C.      ArthroCare shall not manufacture,  supply and/or sell, for any party
other than  BSC, any products which use or bear any of BSC's  Intellectual
Property.  ArthroCare shall  cooperate with BSC to protect BSC's and its 
Affiliates' rights to BSC's Intellectual  Property.  ArthroCare shall not, and
it shall  not permit any of its Affiliates to, take any  action or fail to take
any action which would in  any way infringe upon or compromise BSC's or any  of
its corporate Affiliates' rights in BSC's  Intellectual Property.

                                   ARTICLE 10
                           INDEMNIFICATION; INSURANCE

10.1    BSC Indemnity.  BSC agrees to indemnify,  defend and hold ArthroCare
and its directors,  officers, employees, insurers, shareholders and  agents
harmless from and against any and all  liabilities, claims, suits, demands,
expenses  (including, without limitation, attorneys and  professional fees and
other costs of handling  such claim or litigation), losses or causes of  action
(each, a "Liability") arising out of or  based upon:  (a) injury to or death of
any  person or damage to property arising out of or  in connection with the
distribution or use of  any Products (unless such injury or death arises  from
or relates to any matter which would give  rise to a claim by BSC of indemnity
from  ArthroCare under Section 10.2); (b) any material  breach of this
Agreement by BSC; or (c) BSC's  negligence or misconduct, or violation of any 
state, federal, or international law or  regulation, in connection with the
performance  of its obligations hereunder; provided, however,  that ArthroCare
shall:  (i) give BSC prompt  notice of any such Liability; (ii) permit BSC to 
participate in the defense of the same through  its counsel; (iii) give BSC all
information in  its possession relating to such Liability; and  (iv) give its
authorization for and assistance  in such defense.

10.2    ArthroCare Indemnity. ArthroCare agrees to  indemnify, defend and hold
BSC and its  Affiliates, and its and their respective  directors, officers,
employees, insurers,  shareholders, and agents harmless from and  against any
and all Liabilities arising out of  or relating in any way to: (a) any failure
of  any ArthroCare Product to meet the  Specifications, or any defect in any
ArthroCare  Product; (b) ArthroCare's negligence or  misconduct, or violation
of any state, federal,  or international law or regulation, in  connection with
the performance of its  obligations hereunder; or (c) any material  breach of
this Agreement by ArthroCare;  provided, however, that BSC shall:  (i) give 
ArthroCare prompt notice of any such Liability;  (ii) permit ArthroCare to
participate in the  defense of the same through its counsel; (iii)  give
ArthroCare all information in its  possession relating to such Liability; and
(iv)  give its authorization for and assistance in  such defense.

10.3    Insurance.  ArthroCare shall  purchase and maintain in full force and
effect,  during the term hereof and for a period of 10  years after the
termination or expiration of  this Agreement, comprehensive general liability 
insurance,  in an amount not less than $5  million in the aggregate and $1
million per  occurrence, and product liability insurance, in  an amount not
less than $5 million in the  aggregate and $5 million per occurrence, and 
shall name BSC, its officers, directors, agents,  employees, shareholders,
Affiliates and  customers, as additional insureds on such  policies. 
ArthroCare shall direct its insurer  to notify BSC immediately in writing upon 
receipt from ArthroCare of, or upon the  insurer's giving to ArthroCare, any
notice  relating to the cancellation or reduction in  coverage of such
insurance.  ArthroCare shall,  upon request from BSC from time to time, provide
BSC with certificates of insurance showing  compliance with the foregoing
provisions.

                                   ARTICLE 11
                              TERM AND TERMINATION

11.1    Term.  The term of this Agreement shall  commence on the Effective Date
of this Agreement  and shall have a term of  [*****] unless  earlier
terminated in accordance with this  Article 11.  This Agreement may be extended
by  mutual written agreement of the parties.


11.2    Termination for Cause.

A.      Either party may terminate this Agreement  in the event the other party
has materially  breached or defaulted in the performance of any  of its
obligations hereunder, and such default  has continued for 60 days after
written notice  thereof was provided to the breaching party by  the
nonbreaching party.  Any termination shall  become effective at the end of such
60-day  period unless the breaching party has cured any  such breach or default
prior to the expiration  of such period.  Notwithstanding the above, in  the
case of a failure to pay any amount due  hereunder that is not disputed by BSC,
the  period for cure of any such default following  notice thereof shall be 10
days, but only if  such notice is given via facsimile and overnight  courier,
otherwise such period shall be 30 days  and, unless payment is made within such
period,  the termination shall become effective at the  end of such period.

B.      Notwithstanding Section 11.1 hereof,  BSC shall also have the right to
terminate this  Agreement immediately upon notice to ArthroCare  if BSC
believes in good faith that any breach by  ArthroCare hereunder does or may
negatively  affect patient safety.  

C.      Notwithstanding Section 11.1 hereof,  neither party shall be in default
in the  performance of its obligations under this  Agreement if such
performance is prevented or  delayed because of war or similar unrest, labor 
dispute or strike, transportation difficulties,  unavailability of necessary
raw materials,  epidemic, fire, natural disaster, any law, rule  or regulation
of any governmental or other  authority, acts of God, or other similar cause, 
that is beyond the control of the party whose  performance is affected;
provided, however, that  if such delay continues for 90 days or more,  then BSC
may give ArthroCare written notice of  default under Section 11.2.A. 

D.      This Agreement shall automatically  terminate upon any termination of
the License  Agreement.  The termination of this Agreement  shall not
automatically terminate the License  Agreement.

11.3    Termination for Insolvency.  If voluntary  or involuntary proceedings
by or against a party  are instituted in bankruptcy under any  insolvency law,
or a receiver or custodian is  appointed for such party, or proceedings are 
instituted by or against such party for  corporate reorganization or the
dissolution of  such party, which proceedings, if involuntary,  shall not have
been dismissed within 60 days  after the date of filing, or if such party makes
an assignment for the benefit of creditors, or  substantially all of the assets
of such party  are seized or attached and not released within  60 days
thereafter, the other party may  immediately terminate this Agreement effective
upon notice of such termination. 

11.4    Effect of Termination. 

A.      Termination of this Agreement for  any reason shall not release any
party hereto  from any liability which, at the time of such  termination, has
already accrued to the other  party or which is attributable to a period prior 
to such termination nor preclude either party  from pursuing any rights and
remedies it may  have hereunder or at law or in equity with  respect to any
breach of this Agreement.  It is  understood and agreed that monetary damages
may  not be a sufficient remedy for any breach of  this Agreement and that the
non-breaching party  may be entitled to injunctive relief as a remedy  for any
such breach.  Such remedy, in addition  to any other remedies provided in this 
Agreement,  shall not be deemed to be the  exclusive remedy for any such breach
of this  Agreement, but shall be in addition to all other  remedies available
at law or in equity.

B.      Upon any termination or expiration  of this Agreement, BSC and
ArthroCare shall  promptly return to the other party all  Confidential
Information, copies of which may be  retained for archival purposes.

C.      Any Orders placed by BSC and  accepted by ArthroCare upon or after
termination  of this Agreement shall be subject to the terms  and conditions of
this Agreement, unless BSC and  ArthroCare expressly agree in writing on other 
terms of sale.  Upon termination of this  Agreement, BSC and ArthroCare shall
cooperate  with one another to ensure a smooth transition,  and also to ensure
that BSC has a reasonably  adequate inventory of Products.  If the parties  do
not renew this Agreement, ArthroCare shall  promptly make available for
purchase by BSC, at  BSC's option and request, not less than a three- month
inventory of each Product (based on the  previous three months' average
purchases of each  Product), and any such purchases made by BSC  shall be at a
price equal to the price in effect  for such Products immediately prior to 
termination/expiration of this Agreement.

D.      If BSC terminates this Agreement for  cause due to a breach by
ArthroCare,  ArthroCare's exclusivity obligations under  Section 7.2 shall
remain in effect for the one- year period immediately following any such 
termination.

11.5    Survival.  Section 7.2 and Articles 1, 4,  6, 8, 9, 10, 11 and 13 of
this Agreement shall  survive the expiration or termination of this  Agreement
for any reason.

                                   ARTICLE 12
                    CONDITIONS TO EFFECTIVENESS OF AGREEMENT 

        The obligations of the parties to  consummate the transactions
contemplated in this  Agreement are conditioned on each of the parties 
executing and delivering to the other party both  executed copies of this
Agreement and the  License Agreement via facsimile no later than  6:00 p.m.
(Central time) on February 9, 1998.   Such delivery shall constitute effective 
delivery of such Agreements, and such Agreements  shall then be immediately
binding on the  parties.  In addition, the parties shall execute  and exchange
multiple original copies of the  Agreements; provided, however, that the
parties'  delay or failure to so exchange such documents  shall not affect the
validity or enforceability  of the Agreements and it shall not negate the 
validity of the execution and delivery that were  accomplished via the
execution and delivery of  the Agreements by facsimile.

                                   ARTICLE 13
                            MISCELLANEOUS PROVISIONS

13.1    Governing Law; Venue.  This Agreement and  any dispute, including
without limitation any  arbitration, arising from the performance or  breach
hereof shall be governed by and construed  and enforced in accordance with the
laws of the  Commonwealth of Massachusetts, without reference  to conflicts of
laws principles. 

13.2    Assignment.  The parties may not transfer  or assign this Agreement or
any of the parties'  rights or obligations hereunder to any non- Affiliated
person without the written consent of  the other party.  Any such attempted
transfer or  assignment shall be void. This Agreement shall  be binding upon
and inure to the benefit of the  parties and their present and past agents, 
servants, officers, directors, partners, related  companies, and the
predecessors, employees,  franchisees, trustees, representatives, 
shareholders, successors and assigns of each.   In addition, BSC's rights under
this Agreement  are intended to be for the benefit of BSC as  well as its
Affiliates.

13.3    Waiver.  No waiver of any rights, shall be  effective unless consented
to in writing by the  party to be charged and the waiver of any breach  of
default shall not constitute a waiver of any  other right hereunder or any
subsequent breach  or default.

13.4    Severability.  In the event that any  provisions of this Agreement are
determined to  be invalid or unenforceable by a court of  competent
jurisdiction, the remainder of this  Agreement shall remain in full force and
effect  without said provision.

13.5    Notices. All notices, requests and other  communications hereunder
shall be in writing and  shall be personally delivered or sent by  telecopy or
other electronic facsimile  transmission or by certified mail-return receipt 
requested, postage prepaid, or delivered by a  nationally recognized courier
who guarantees  next-day delivery in each case to the respective  address
specified below, or such other address  as may be specified in writing to the
other  parties hereto:

BSC:            Boston Scientific Corporation
                One Boston Scientific Place,
                Natick, Massachusetts 01760-1537
                Attn:  John Pedersen
                Fax:  508/650-8922

                with a copy to:

                SCIMED Life Systems, Inc.
                One SCIMED Place
                Maple Grove, Minnesota 55311-1566
                Attn:  Jean Fitterer Lance
                Fax:  612/494-2616

ArthroCare:     ArthroCare Corporation
                595 North Pastoria Avenue
                Sunnyvale, California 94086
                Attn:  Michael Baker, C.E.O.
                Fax:  408/732-2752

with a copy to:

                John Raffle
                ArthroCare Corporation
                595 North Pastoria Avenue
                Sunnyvale, California 94086
                Fax:  408/736-0226  (cover page marked confidential)

13.6    Independent Contractors.  Both parties are  independent contractors
under this Agreement.   Nothing contained in this Agreement is intended  nor is
to be construed so as to constitute  ArthroCare or BSC as partners or joint
venturers  with respect to this Agreement.  Neither party  shall have any
express or implied right or  authority to assume or create any obligations on 
behalf of or in the name of the other party or  to bind the other party to any
other contract,  agreement, or undertaking with any third party.

13.7    Patent Marking.  BSC agrees to mark (or  give directions to ArthroCare
and/or any other  manufacturer to mark) all Products sold pursuant  to this
Agreement in accordance with the  applicable statute or regulations relating to
patent marking in the country or countries of  manufacture and sale thereof.

13.8    Compliance with Laws.  In performing their  respective obligations
under this Agreement, the  parties shall fully comply in all material  respects
with the requirements of any and all  applicable laws, regulations, rules and
orders  of any governmental body having jurisdiction  over the exercise of
rights under this  Agreement.

13.9    Use of Name.  Other than as expressly set  forth in this Agreement or
the License  Agreement, neither party shall use the name or  trademarks of the
other party without the prior  written consent of such other party.

13.10   Entire Agreement; Amendment.  This  Agreement constitutes the entire
and exclusive  Agreement between the parties with respect to  the subject
matter hereof and supersedes and  cancels all previous discussions, agreements,
commitments and writings in respect thereof  except for the License Agreement. 
No amendment  or addition to this Agreement shall be effective  unless reduced
to writing and executed by the  authorized representatives of the parties.

13.11   Counterparts.  This Agreement may be  executed in any number of
counterparts and on  separate signature pages by each party, each  copy of
which shall for all purposes be deemed  an original.

IN WITNESS WHEREOF, ArthroCare and BSC have  executed this Agreement in
duplicate originals  by duly authorized officers.


ARTHROCARE CORPORATION                  BOSTON SCIENTIFIC CORPORATION
By: /s/Michael A. Baker                 By:  /s/Michael Berman
----------------------------            --------------------------
Print Name: Michael A. Baker            Print Name: Michael Berman   
----------------------------            --------------------------
Title: President & CEO                  Title: President, SciMed
----------------------------            --------------------------


<PAGE>
                                   EXHIBIT A
                            Minimum Specifications

At a minimum, the Controller shall have the  capabilities of ArthroCare's
currently  commercially available RF generator to meet  worldwide regulatory
requirements for commercial  release of an intracardiac medical electronic 
device (CF rating).  The Controller must be  designed and manufactured to
operate fully and  without interruption, at a minimum, for a  [*****] period
with average use, without  significant repair or maintenance expense, in  the
case of [*****] of all Controllers supplied  by ArthroCare; provided, however,
that the  remedies applicable to a failure by ArthroCare  to meet such [*****]
standard shall be as set  forth in clause (g) of Section 8.1.

--------------------------------------------
***** Certain information in this document has been  omitted and filed
separately with the  Commission.  Confidential treatment has been  requested
with respect to the omitted portions.