<PAGE>   1

                                                                  EXHIBIT 10.27


                          [ARTHROCARE CORPORATION LOGO]

                       LICENSE AND DISTRIBUTION AGREEMENT

         This License and Distribution Agreement (the "Agreement") effective as
of January 27, 1999 (the "Effective Date") is entered into by and between
ArthroCare Corporation, on its own behalf and on behalf of its Affiliates
("ArthroCare"), a Delaware corporation having an address at 595 North Pastoria
Avenue, Sunnyvale, California 94086, and Collagen Aesthetics, Inc., on its own
behalf and on behalf of its Affiliates ("Collagen"), a Delaware corporation
having an address at 1850 Embarcadero Road, Palo Alto, California 94303.

                                   BACKGROUND

         A. ArthroCare owns certain Patent Rights (as defined in Article 1.21)
relating to radio frequency ("RF") energy;

         B. Collagen is a worldwide leader in marketing products for
dermatology, facial plastic surgery, cosmetic and aesthetic surgery;

         C. Collagen desires to obtain a license under the Patent Rights in
order to commercialize Licensed Products in the Field, and ArthroCare desires to
grant such a license to Collagen, all on the terms and conditions set forth
herein; and

         D. ArthroCare shall be Collagen's exclusive third party contract
manufacturer for certain Licensed Products and/or components of such Licensed
Products, all on the terms and conditions set forth herein.

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

------------

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as * * *. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
<PAGE>   2
                                    ARTICLE 1

                                   DEFINITIONS

         1.1 "Adverse Quantity" shall mean a quantity of Licensed Products
greater than * * * based on the transfer prices of such Licensed Products
described in Exhibit B.

         1.2 "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.

         1.3 "Alternative Product(s)" shall mean: (1) any product within the
scope of a Valid Claim; * * *

         1.4 "Change in Control" shall mean (i) the sale, lease, exchange or
other transfer, directly or indirectly, of substantially all of the assets of
one of the parties (in one transaction or in a series of related transactions)
to one or more persons or entities that are not affiliates of that party; (ii)
the approval by the shareholders of one of the parties of any plan or proposal
for its liquidation or dissolution; (iii) a merger or consolidation of one of
the parties if the shareholders of that party 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 fifty percent (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 (iv) any other
change in control 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 the party is then subject to such reporting requirements

         1.5 * * *

         1.6 "Co-exclusive ENT License Rights" shall mean a co-exclusive,
non-transferable, worldwide license under the Patent Rights and the Trademark
Rights, with the right to use, market, sell and distribute Licensed Products in
the "ENT Field". The term "co-exclusive" shall mean that only Collagen and one
other party (which may include ArthroCare) shall have such rights.

         1.7 "Competent Authority" shall mean an EU Member States' public
officer with jurisdiction to appoint a body to test or audit medical devices for
conformity to EU registration laws.

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         1.8 "Confidential Information" shall mean any: (i) information or
material in tangible form disclosed hereunder 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.

         1.9 "Controller(s)" shall mean an RF power supply.

         1.10 "Disposable Wand(s)" shall mean medical instruments and components
of such medical instruments certain of which may have one or more electrode(s)
and electrical connection(s) for coupling the electrode(s) to a Controller

         1.11 "ENT" shall mean ear, nose and throat.

         1.12 "ENT Field" shall mean the use of RF technology in dermatology,
facial plastic surgery, cosmetic and aesthetic surgery, to the extent permitted
by the FDA and other regulatory bodies, * * *

         1.13 "Exclusive ENT License Rights" shall mean an exclusive,
non-transferable, worldwide license under the Patent Rights and the Trademark
Rights, with the right to use, market, sell and distribute Licensed Products in
the ENT Field.

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

         1.15 "Field" shall mean the use of RF energy in dermatology, cosmetic
and aesthetic surgery to the extent permitted by the FDA and other regulatory
bodies, * * *

         1.16 "Licensed Product(s)" will mean * * *

         1.17 "Marketing Authorizations" shall mean any regulatory approvals or
authorizations required by the FDA, Competent Authority or other regulatory
bodies to comply with the laws and regulations of any country or other
jurisdiction for sale, marketing and distribution of the Licensed Products.

         1.18 "MDA Product(s)" shall mean a product that is designed for use in
a cosmetic or aesthetic procedure * * *

         1.19 "Net Sales" shall mean the invoice price of Licensed Products sold
by Collagen to unaffiliated third parties (including sales made in connection
with clinical trials), less, to the

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extent included in such invoice price the total of: (1) ordinary and customary
trade discounts actually allowed; (2) credits, rebates and returns (including,
but not limited to, wholesaler and retailer returns); (3) freight, postage,
insurance and duties paid for and separately identified on the invoice or other
documentation maintained in the ordinary course of business, and (4) excise
taxes, other consumption taxes, customs duties and compulsory payments to
governmental authorities actually paid and separately identified on the invoice
or other documentation maintained in the ordinary course of business. Net Sales
shall also include the fair market value of all other consideration received by
Collagen in respect of Licensed Products, whether such consideration is in cash,
payment in kind, exchange or another form.

         1.20 "Notified Body" shall mean that body appointed by a Competent
Authority to test or audit medical devices for conformity with EU registration
laws.

         1.21 "Patent Rights" shall mean all patents and patent applications in
the Field owned by or licensed to ArthroCare, including, but not limited to, the
patent applications and patents listed on Exhibit A hereto; all priority
applications, divisionals, continuations, continuations-in-part, and
substitutions thereof; all patent applications and patents relating to
improvements thereof; all foreign patent applications corresponding to the
preceding applications; and all U.S. and foreign patents issuing on any of the
preceding applications, including extensions, reissues, and re-examinations. In
addition, the term "Patent Rights" includes any and all, inventions,
discoveries, know-how, trade secrets, data, information, technology, processes,
formulas, drawings, designs, computer programs, and licenses of ArthroCare which
are necessary or useful for designing, developing, manufacturing, using or
selling Licensed Products within the Field, and all amendments, modifications,
and improvements to any of the foregoing

         1.22 "Potentially Infringing Product(s)" shall mean: (1) any product
within the scope of a Valid Claim that is not manufactured by ArthroCare; or * *
*

         1.23 "RF" shall mean radiofrequency.

         1.24 "Trademark Rights" shall mean all registered trademarks, trademark
applications, common law trademarks, domestic or foreign, to the marks listed in
Exhibit E, all foreign trademark applications or registrations corresponding to
the preceding applications, and all marks similar thereto.

         1.25 "Valid Claim" shall mean * * *

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                                    ARTICLE 2

                                     LICENSE

         2.1 Exclusive License Grant. Subject to the terms and conditions of
this Agreement, ArthroCare and its Affiliates hereby grant to Collagen and its
Affiliates an exclusive, non-transferable, worldwide license under the Patent
Rights, to import, have imported, use, offer for sale and sell Licensed Products
in the Field. ArthroCare hereby grants to Collagen and its Affiliates an
exclusive, non-transferable, worldwide license under the Trademark Rights to use
marks and tradenames within the Trademark Rights in connection with the sale of
Licensed Products in the Field. * * *

         2.2 No Implied Rights. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be granted or created by implication, estoppel or
otherwise.

         2.3 Exclusive to ArthroCare. Under the exclusive license granted by
ArthroCare to Collagen in section 2.1, ArthroCare shall not have the right to
import, have imported, use, offer for sale or sell Licensed Products in the
Field during the Term of this Agreement and any renewals thereof; provided that
ArthroCare shall not have made the election to convert the license into a
non-exclusive license pursuant to sections 5.3(f) or 7.5(f).

         2.4 * * *

                                    ARTICLE 3

                      APPOINTMENT AND AUTHORITY OF COLLAGEN

         3.1 Exclusive Distributor. Subject to the terms and conditions herein,
ArthroCare hereby appoints Collagen as ArthroCare's authorized exclusive
worldwide sales distributor for the Licensed Products in the Field, and Collagen
hereby accepts such appointment. Collagen's sole authority shall be to purchase
Licensed Products from ArthroCare and to promote, market and resell such
Licensed Products in the Field in accordance with the terms of this Agreement.

         3.2 * * *

         3.3 Reservation of Rights; No Rights Beyond Licensed Products. Except
as expressly provided in this Article 3, and by the license granted in Article
2, no right, title, or interest is granted, whether express or implied, by
ArthroCare to Collagen, and nothing in this Agreement shall be deemed to grant
to Collagen rights in any Licensed Products or technology other than the
Licensed Products, nor shall any provision of this Agreement be deemed to
restrict

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ArthroCare's rights to exploit technology, know-how, patents or any other
intellectual property rights relating to the Licensed Products outside of the
Field.

         3.4 Sale Conveys No Right to Manufacture or Copy. The Licensed Products
are offered for sale and are sold by ArthroCare subject in every case to the
condition that such sale does not convey any license, expressly or by
implication, to manufacture, duplicate or otherwise copy or reproduce any of the
Licensed Products.

         3.5 Alternative Products. If at any time during the Term of this
Agreement, Collagen itself, or through its distributors, sells Alternative
Products that compete with the Licensed Product, ArthroCare shall have the right
to terminate this Agreement in accordance with Section 18.2. ArthroCare
recognizes that Collagen already distributes the Alternative Products set forth
on Exhibit D and that such Licensed Products are not competitive with the
Licensed Products, and the distribution of such Licensed Products will not
constitute a breach pursuant to this Section 3.5. The obligations of Collagen
under this Article 3.5 shall remain in force during the entire Term of this
Agreement and any extensions thereof, and for a period of * * * thereafter.

         3.6 * * *

                                    ARTICLE 4

                                   ENT RIGHTS

         4.1 Exclusive ENT License Rights. In addition to the above rights and
licenses, if ArthroCare is able to, ArthroCare will offer the "Exclusive ENT
License Rights" to Collagen. In such event, Collagen will accept such rights and
* * *

If ArthroCare offers and Collagen accepts the Exclusive ENT License Rights,
Collagen will have, in combination with the rights granted in section 2, an
exclusive, non-transferable, worldwide license under the Patent Rights and the
Trademark Rights, with the right to use, market, sell and distribute Licensed
Products to all physicians in the Field and the ENT Field.

In addition, if ArthroCare offers and Collagen accepts the Exclusive ENT License
Rights, Collagen's minimum annual royalty payments for Disposable Wands and
minimum purchase requirements for the Licensed Products will be increased
pursuant to sections 5.3(b) and 7.5(b), respectively.

         4.2 Co-exclusive ENT License Rights. In addition to the above rights
and licenses, if ArthroCare is able to, ArthroCare will offer the "Co-exclusive
ENT License Rights" to Collagen. In such event, Collagen will accept such rights
* * *
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In addition, if ArthroCare offers and Collagen accepts the Co-exclusive ENT
License Rights, Collagen's minimum annual royalty payments for Disposable Wands
and minimum purchase requirements for the Licensed Products will be increased
pursuant to sections 5.3(c) and 7.5(c), respectively.

                                    ARTICLE 5

                                  CONSIDERATION

         5.1 License Fee. In partial consideration for the license granted
herein, Collagen shall pay ArthroCare a license fee of * * * in accordance with
the schedule set forth in Section 5.1(b).

                  (a) The parties hereto acknowledge and agree that Collagen has
paid and ArthroCare has accepted * * * of such license fee.

                  (b) License Payment Schedule. Within three (3) days following
the Effective Date of this Agreement, Collagen shall make a payment to
ArthroCare of * * * In addition, within thirty (30) days following the
achievement by ArthroCare of each of the following milestones, Collagen shall
pay ArthroCare the applicable payments below:

<TABLE>
<CAPTION>
Event                                                      Payment (U.S.$)
-----                                                      ---------------
<S>                                                        <C>
(1) * * *                                                      * * *

(2) * * *                                                      * * *
</TABLE>

         5.2 Royalties. As additional consideration for the rights and licenses
granted by ArthroCare to Collagen herein, Collagen shall pay to ArthroCare
running royalties on * * * sold by Collagen worldwide. The running royalties for
all * * * sold worldwide shall be * * * payable within * * * after the close of
a calendar quarter in which the * * * are sold or otherwise distributed by
Collagen.

         * * *

         5.3 Minimum Royalties.

         (a) If ArthroCare does not offer to Collagen either the Exclusive ENT
License Rights or the Co-exclusive ENT License Rights pursuant to sections 4.1
and 4.2, respectively, then, in addition to the license payments made by
Collagen pursuant to Section 5.1, Collagen's minimum annual royalty payments for
the Licensed Products * * * for each Period will total at least the following:

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<TABLE>
                  Period                         Minimum Annual Royalty
                  ------                         ----------------------
<S>                                              <C>
                  Year 1                                 * * *
                  Year 2                                 * * *
                  Year 3                                 * * *
                  Year 4                                 * * *
                  Year 5                                 * * *
</TABLE>

         (b) If ArthroCare offers to Collagen, and Collagen accepts, the
Exclusive ENT License Rights pursuant to section 4.1, then, in addition to the
license payments made by Collagen pursuant to Section 5.1, Collagen's minimum
annual royalty payments for the Licensed Products * * * for each Period will
total at least the following:

<TABLE>
<CAPTION>
                  Period                         Minimum Annual Royalty
                  ------                         ----------------------
<S>                                              <C>
                  Year 1                                 * * *
                  Year 2                                 * * *
                  Year 3                                 * * *
                  Year 4                                 * * *
                  Year 5                                 * * *
</TABLE>

         (c) If ArthroCare offers to Collagen, and Collagen accepts, the
Co-exclusive ENT License Rights pursuant to section 4.2, then, in addition to
the license payments made by Collagen pursuant to Section 5.1, Collagen's
minimum annual royalty payments for the Licensed Products * * * for each Period
will total at least the following:

<TABLE>
                  Period                         Minimum Annual Royalty
                  ------                         ----------------------
<S>                                              <C>
                  Year 1                                 * * *
                  Year 2                                 * * *
                  Year 3                                 * * *
                  Year 4                                 * * *
                  Year 5                                 * * *
</TABLE>

         (d) After year 5, the minimum annual royalty payment for the applicable
section 5.3(a), (b) or (c) will * * * each year thereafter.

         (e) In the event the Agreement is renewed pursuant to Section 18.1, the
minimum annual royalty for each renewal year will be mutually agreed upon in
writing by the parties. If

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<PAGE>   9
the new minimums cannot be agreed upon by the parties, an arbitrator will be
appointed by the parties to determine the new minimums according to Article 21.

         (f) In the event Collagen fails to meet the minimum royalty amount of
the applicable section 5.3(a), (b) or (c) by the last day of any Period,
Collagen shall pay ArthroCare, within thirty (30) days, the difference between
the minimum royalty and the royalties actually paid during such year. In the
event Collagen fails to pay the minimum royalties in any Period, then ArthroCare
has the right to: (i) continue under the terms of the existing Agreement; or * *
*

                                    ARTICLE 6

* * *

                                    ARTICLE 7

                   MANUFACTURE; PURCHASE OF LICENSED PRODUCTS

         7.1 Product Manufacture. ArthroCare shall manufacture and sell to
Collagen, and Collagen agrees to exclusively purchase from ArthroCare,
Collagen's requirements for Licensed Products in the Field. ArthroCare will
manufacture Licensed Products in accordance with ISO 9000 Standards, EN 46000
Standards, FDA Quality Systems Regulations (including Current Good Manufacturing
Practices), and requirements of the Medical Device Directives ("MDD") and the
then-current product specifications, as may be modified from time to time by the
mutual written consent of the parties hereto.

         7.2 Product Development. During the Term of this Agreement, ArthroCare,
at its expense and initiative, will continue to pursue clinical studies and
product development efforts in collaboration with Collagen. ArthroCare shall
supply Collagen with any improvements and upgrades to the Licensed Products
developed by ArthroCare for use in the Field. ArthroCare agrees that any
substantial change to the Licensed Products during the Term shall be subject to
Collagen's prior written approval, which shall not be unreasonably withheld. If
Collagen requests additional product development beyond ArthroCare's planned
efforts, ArthroCare will provide a budget, for Collagen's approval, for the
direct cost of such product development on a time and materials basis.* *
*ArthroCare agrees to supply Collagen documentation or information as requested
for such changes to the Licensed Products in meeting regulatory compliances.

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         7.3 Terms and Conditions. All product purchases hereunder shall be
subject to the terms and conditions of this Agreement. Unless otherwise agreed
in writing, nothing contained in any purchase order or other document submitted
pursuant to this Agreement shall in any way modify or add to the terms and
conditions contained in this Agreement.

         7.4 Order and Acceptance. All orders shall be by means of signed
written purchase orders, sent to ArthroCare at ArthroCare's address for notice
hereunder and requesting a delivery date that is consistent with the Forecasts
and not less than thirty (30) days after ArthroCare's receipt of such purchase
order. Orders may initially be placed by telephone or telecopy, provided that a
signed written confirming purchase order is received by ArthroCare within ten
(10) days after such telephonic or telegraphic order. ArthroCare shall use
reasonable best efforts to fulfill purchase orders submitted in accordance with
ArthroCare's lead times, it being understood that no purchase order shall be
binding upon ArthroCare until accepted by ArthroCare by telecopy or in writing,
and ArthroCare shall have no liability to Collagen with respect to purchase
orders that are not accepted. 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 8.1.
Notice of rejection must be given within 10 days to Collagen by telex or fax,
followed by notification in writing. Once an Order is accepted by ArthroCare,
Collagen may cancel or reschedule such Order only with approval of ArthroCare.

         7.5 Minimum Purchase Requirements.

         (a) If ArthroCare does not offer to Collagen either the Exclusive ENT
License Rights or the Co-exclusive ENT License Rights pursuant to sections 4.1
and 4.2, respectively, then, in addition to the minimum royalty payments made by
Collagen pursuant to Section 5.3, Collagen's minimum annual purchase
requirements for the Licensed Products * * * for each Period will total at least
the following:

<TABLE>
<CAPTION>
                  Period                      Minimum Purchase Requirements
                  ------                      -----------------------------
                  <S>                         <C>
                  Year 1                                  * * *
                  Year 2                                  * * *
                  Year 3                                  * * *
                  Year 4                                  * * *
                  Year 5                                  * * *
</TABLE>

         (b) If ArthroCare offers to Collagen, and Collagen accepts, the
Exclusive ENT License Rights pursuant to section 4.1, then, in addition to the
minimum royalty payments made by Collagen pursuant to Section 5.3, Collagen's
minimum annual purchase requirements for the Licensed Products * * * for each
Period will total at least the following:

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<TABLE>
<CAPTION>
                  Period                   Minimum Purchase Requirements
                  ------                   -----------------------------
<S>                                        <C>
                  Year 1                                * * *
                  Year 2                                * * *
                  Year 3                                * * *
                  Year 4                                * * *
                  Year 5                                * * *
</TABLE>

         (c) If ArthroCare offers to Collagen, and Collagen accepts, the
Co-exclusive ENT License Rights pursuant to section 4.2, then, in addition to
the minimum royalty payments made by Collagen pursuant to Section 5.3,
Collagen's minimum annual purchase requirements for the Licensed Products * * *
for each Period will total at least the following:

<TABLE>
<CAPTION>
                  Period                   Minimum Purchase Requirements
                  ------                   -----------------------------
<S>                                        <C>
                  Year 1                                * * *
                  Year 2                                * * *
                  Year 3                                * * *
                  Year 4                                * * *
                  Year 5                                * * *
</TABLE>

         (d) After year 5, the minimum annual purchase requirements for the
applicable section 7.5(a), (b) or (c) will * * * each year thereafter.

         (e) In the event the Agreement is renewed pursuant to Section 18.1, the
minimum annual purchase requirements for each renewal year will be mutually
agreed upon in writing by the parties. If the new minimums cannot be agreed upon
by the parties, an arbitrator will be appointed by the parties to determine the
new minimums according to Article 21.

         (f) In the event Collagen fails to meet the minimum purchase
requirements for the applicable section 7.5(a), (b) or (c) by the last day of
any Period, ArthroCare has the right to: (i) continue under the terms of the
existing Agreement; or * * *

         7.6 Collagen's Initial Stocking Order. Collagen has made an initial
stocking order of approximately * * * of Licensed Products on * * *. At
Collagen's request and at ArthroCare's expense, ArthroCare shall relabel the
Licensed Products within this stocking order according to Collagen's
specifications and the terms and conditions of this Agreement.

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                                    ARTICLE 8

                            FORECASTS; NO BACKORDERS

         8.1 Forecasts. Commencing no later than thirty (30) days after the
achievement by ArthroCare of milestone one (1) in section 5.1(b), Collagen shall
furnish ArthroCare a 6-month Forecast with estimated purchase dates and
quantities of Licensed Products, 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 Licensed Products. ArthroCare shall
release Licensed Products in accordance with the delivery schedule set forth on
the then current Forecast; provided, however, that: (a) Collagen may make
changes to the delivery schedule and the quantities requested on the then
current Forecast at any time up to * * * prior to a scheduled delivery; (b) in
the event that Collagen desires to increase the volume of any Licensed Products
on an Order with less than * * * notice to ArthroCare, ArthroCare shall use its
best efforts to supply such increased volume of Licensed Products; and (c)
ArthroCare shall not be required to accept any Order for a Licensed Product to
the extent that it is based on a forecast that shows an increase in the volume
of Licensed Product ordered that exceeds * * * of the average volume of such
Licensed Product ordered during the preceding * * * period; provided that (c)
shall not apply to the three months following the Effective Date. Collagen may
place additional, unforecasted Orders for Licensed Products subject to
ArthroCare's acceptance, which acceptance shall not be unreasonably withheld.
Such Forecasts shall create a firm commitment on Collagen to purchase and on
ArthroCare to manufacture and supply Licensed Products according to the forecast
for the upcoming two calendar months of such Forecast and shall be accompanied
by an Order for such purchases, but shall not create a binding obligation on
Collagen or ArthroCare for the remainder of such 6-month period.

         8.2 No Backorders. ArthroCare shall plan production schedules and
provide the Licensed 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 Licensed Product,
calculated based on the previous three months' purchases of such Licensed
Products; provided that initial required stock levels shall be based on
Collagen's initial forecast.

         8.3 Second Source. In the event that, within any contract year,
ArthroCare is unable to or fails to meet Collagen's requirements * * * provided,
however, that: (1) the periods referenced above shall be subject to extension
due to Force Majeure as referenced in Section 22.12; and provided that (2)
before internally manufacturing or placing a purchase order with any third party
for such Licensed Products, Collagen shall notify ArthroCare, and if ArthroCare
is capable of meeting Collagen's requirements within thirty (30) days, Collagen
shall resume its

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                                      -12-
<PAGE>   13
exclusive purchase of Licensed Products from ArthroCare subject to this
Agreement; and provided that (3) this section shall not apply to any Licensed
Products that have not been placed on Collagen's forecast pursuant to Section
8.1 at least six (6) months prior to the delivery date of said Licensed
Products. If Collagen internally manufactures the Licensed Products or purchases
Licensed Products from a second source, * * *

If Collagen * * * manufacture the Licensed Products itself or purchase the
Licensed Products from a second source under section 8.3, and if: (1) ArthroCare
is able to fill all such backorders for the Licensed Products ordered by
Collagen that led to Collagen's acquisition of such rights as described above;
and (2) ArthroCare builds a one-month inventory of such Licensed Products based
on the average volume of such Licensed Products ordered during the preceding
ninety (90) day period, * * * Notwithstanding the foregoing, the parties
acknowledge and agree that they shall cooperate with one another to assure
sufficient source of Licensed Products to Collagen and its customers.

                                    ARTICLE 9

                                    PAYMENTS

         9.1 Prices. All prices shall be F.C.A. ArthroCare's facility currently
located at the address listed for ArthroCare at the beginning of this Agreement
("F.C.A. Point"). ArthroCare may, upon thirty (30) days' notice to Collagen,
designate another facility as the F.C.A. Point. The difference between
Collagen's purchase price and Collagen's price to its Customers shall be
Collagen's sole remuneration for the sale of the Licensed Products. The initial
price to Collagen for each Licensed Product shall be as set forth in Exhibit B
attached hereto. Collagen's sales prices to its customers shall be subject to
Collagen's sole discretion.

         9.2 Taxes. Collagen's purchase price shall not include any government
taxes (including, without limitation, sales, use, excise, withholding, and
value-added taxes) or duties imposed by any governmental agency that are
applicable to the export, import, license or purchase of the Licensed Products
(other than taxes on the income of ArthroCare), and Collagen shall bear all such
taxes and duties. When ArthroCare has the legal obligation to collect and/or pay
such taxes, the appropriate amount shall be added to Collagen's invoice and paid
by Collagen, unless Collagen provides ArthroCare with a valid tax exemption
certificate authorized by the appropriate taxing authority.

         9.3 Invoicing. ArthroCare shall submit an invoice to Collagen upon
shipment of each Licensed Product ordered by Collagen. Each such invoice shall
state Collagen's aggregate and unit purchase price for Licensed Products in a
given shipment, plus any freight, taxes or other costs incident to the purchase
or shipment initially paid by ArthroCare but to be borne by Collagen hereunder.

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       request and filed separately with the Commission.


                                      -13-
<PAGE>   14
         9.4 Payment and Terms. Collagen shall make payments to ArthroCare under
this Agreement by wire transfer or check in United States dollars in immediately
available funds to a bank designated by ArthroCare. Payment shall be made (i) in
the case of Collagen purchases of Licensed Products, net * * * after the date of
invoice and (ii) in the case of running royalties, net * * * after the last day
of each quarter. Collagen shall use its best efforts to submit a royalty
schedule to ArthroCare for the preceding quarter within * * * after the last day
of such quarter.

         9.5 Shipping. All Licensed Products delivered pursuant to the terms of
this Agreement shall be suitably packed for shipment in ArthroCare's standard
shipping cartons, marked for shipment at Collagen's address set forth above
(unless otherwise agreed in writing by both parties), and delivered to Collagen
or its carrier agent at the F.C.A. Point, at which time risk of loss shall pass
to Collagen. The Licensed Products will be produced to the final saleable form
with Collagen's trade address, tradenames, and all language compliant labeling,
instructions for use and carton labeling affixed by ArthroCare. Unless otherwise
instructed in writing by Collagen, ArthroCare shall select the carrier. Collagen
agrees to undertake all import formalities required to import the Licensed
Products into the territory. All customs, freight, insurance, and other shipping
expenses, as well as any special packing expense, shall be paid by Collagen.
Collagen shall also bear all applicable taxes, duties, and similar charges that
may be assessed against the Licensed Products after delivery to the carrier at
the F.C.A. Point. All shipments and freight charges shall be deemed correct
unless ArthroCare receives from Collagen, no later than forty-five (45) days
after the shipping date of a given shipment, a written notice specifying the
shipment, the purchase order number, and the exact nature of the discrepancy
between the order and shipment or discrepancy in the freight cost, as
applicable.

         9.6 Records; Audit. Collagen shall keep complete, true and accurate
books of account and records for the purpose of determining the amounts payable
under Article 5 and Exhibit B. Such books and records shall be kept at
Collagen's principal place of business for at least three (3) years following
the end of the calendar quarter to which they pertain. Such records will be open
for inspection during such three (3)-year period by a representative or agent of
ArthroCare for the purpose of auditing sales and inventory records and for
verifying the amounts payable under Article 5. Upon prior written notice,
Collagen shall provide reasonable access to such records during normal business
hours at Collagen's business locations, no more than twice each calendar year.

         9.7 Returns. Except as set forth in Section 10.3, Collagen may return
Licensed Products only with ArthroCare's prior written approval. Licensed
Products returned to ArthroCare other than under Section 10.3 shall be returned
F.C.A. the destination point designated by ArthroCare and shall be subject to a
restocking fee in an amount equal to * * * of the price paid by Collagen to
ArthroCare for such Licensed Products computed in accordance with Exhibit B.

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       request and filed separately with the Commission.


                                      -14-
<PAGE>   15
                                   ARTICLE 10

                                    WARRANTY

         10.1 Standard Limited Warranty. ArthroCare warrants to Collagen that,
subject to the exclusions set forth in Section 10.2 below, at the time of
shipment, the Licensed Products (i) shall be substantially free from defects in
material and workmanship for the applicable warranty period as set forth in
Exhibit C hereto; and (ii) shall have been manufactured in accordance with
Current Good Manufacturing Practices ("CGMP"). Collagen's exclusive remedy and
ArthroCare's sole liability for breach of the foregoing warranty shall be the
remedy set forth in Section 10.3. All defective Licensed Products shall be
returned to ArthroCare in accordance with Section 10.3. Collagen shall not pass
on to its Customers a warranty or limitation of liability which is more
protective of such Customers than the warranty (including the limited remedy and
exclusions) set forth in this Article 10 and the limitation of liability set
forth in Article 19.

         10.2 Warranty Limitations. The warranties in Section 10.1 are
contingent upon proper use of Licensed Products in the applications for which
they were intended, and ArthroCare makes no warranty (express, implied or
statutory) for Licensed Products or spare parts that have been modified or
altered in any manner by anyone other than ArthroCare, or to defects caused (i)
through no fault of ArthroCare during shipment to or from Collagen; (ii) by the
use or operation in an application or environment other than that intended or
recommended by ArthroCare; (iii) by service by anyone other than employees of,
or persons approved in writing by, ArthroCare; or (iv) by accident, negligence,
misuse, or unusual physical or electrical stress. ArthroCare shall not be liable
for misbranding with respect to any product labeling or package insert text
provided or used by Collagen, or any translation thereof.

         10.3 Return of Defective Product. In the event that any Licensed
Product purchased by Collagen from ArthroCare fails to conform to the warranty
set forth in Section 10.1, ArthroCare's sole and exclusive liability and
Collagen's exclusive remedy shall be, at ArthroCare's sole election, to repair
or replace the Licensed Product or credit Collagen's account for the net amount
actually paid for any such Licensed Product, provided that Collagen promptly
notifies ArthroCare in writing that such Licensed Product failed to conform and
furnishes a detailed explanation of any alleged nonconformity and requests a
return material authorization number.

         10.4 Exclusion of Other Warranties. Except for the limited warranty
provided in section 10.1 above, ArthroCare grants no other warranties or
conditions, express or implied, by statute, in any communication with Collagen
or the customer, or otherwise, regarding the Licensed Products, their fitness
for any purpose, their quality or their merchantability.


                                      -15-
<PAGE>   16

                                   ARTICLE 11

                       ADDITIONAL OBLIGATIONS OF COLLAGEN

         11.1 Registrations, Licenses and Permits. * * * shall obtain all
Marketing Authorizations required for sale and distribution of the Licensed
Products. With the exception of these Marketing Authorizations, * * * shall
obtain all other registrations, licenses and permits (such as import licenses
and the like) required by any country or other jurisdiction for sale and
distribution of the Licensed Products. All such Marketing Authorizations,
registrations, licenses and permits, whether obtained by ArthroCare or Collagen,
shall be obtained in ArthroCare's name, if allowed by the law of the relevant
jurisdiction. Collagen shall provide to ArthroCare complete copies of all
applications, and all registrations, licenses and permits obtained therefrom
relating to the Licensed Products. Upon the expiration, cancellation, or
termination of this Agreement, all Marketing Authorizations, registrations,
approvals, and government authorizations shall be transferred and delivered to,
and shall inure to the benefit of ArthroCare or its designee, to the extent that
this is permissible under applicable law.

         11.2     Product Complaints.

                  (a) Collagen will receive locally, and promptly investigate
and monitor, all Customer complaints and/or correspondence concerning the use of
the Licensed Products worldwide. Collagen will maintain complaint files during
the course of this Agreement, its extensions and for a period of * * *

                  (b) Collagen shall advise ArthroCare of all complaints
relating to the Licensed Products as promptly as possible but not more than * *
* following the date Collagen receives such complaint. In addition, within * * *
following the date Collagen receives such complaint, Collagen shall also provide
ArthroCare with a written or electronic report of such complaint. Upon
ArthroCare's request, Collagen shall either: (1) investigate and gather any
reasonable additional information regarding such complaints that is requested by
ArthroCare; or (2) provide ArthroCare with the relevant Customer names, phone
numbers and/or addresses so that ArthroCare may gather this information. Any
notice to ArthroCare under this Section 11.2 shall be sent via facsimile and
overnight delivery service to the attention of ArthroCare's Vice President of
Quality and Regulatory Affairs at (408) 736-0224 or to such other address or
person as ArthroCare may designate by notice. Collagen shall also provide to
ArthroCare a written quarterly listing of Customer and/or regulatory complaints
received by Collagen during the previous quarter.

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                                      -16-
<PAGE>   17

                  (c) Any and all MDR (FDA 21 CFR Sections 803, 804) near
incident or incident (per EC Vigilance requirements) complaint reporting shall
be mutually reviewed prior to submission of the same to the FDA or Competent
Authority. ArthroCare's decision to file adverse incident reports shall be final
and any such reports shall be reported in ArthroCare's name. Any reports of
substantial unanticipated adverse effects for injury or potential injury by the
Licensed Products shall be reported to the other party within seven (7) days.

         11.3 Corrections, Withdrawals, and Alert Notices. In the event that
ArthroCare is required by any regulatory agency to recall the Licensed Products
or if ArthroCare voluntarily initiates a correction, withdrawal of alert notice
for the Licensed Products, Collagen shall, at ArthroCare's expense, cooperate
with and assist ArthroCare in locating and retrieving, if necessary, the
recalled Licensed Products from the Customers. ArthroCare shall give prompt
notice to Collagen of any such correction, withdrawal or alert notice, along
with details of the concern and instructions for the recall. Except as required
by applicable law, Collagen shall not initiate any correction, withdrawal or
alert notice without the prior written consent of ArthroCare.

         11.4 Materials. Collagen shall, from time to time, copy ArthroCare on
Collagen's Green Sheet of Claims for ArthroCare's Licensed Products. Collagen
represents that such Green Sheet of Claims will be consistent with any and all
promotional, advertising and educational materials and programs, package data
sheets, and other literature relating to the Licensed Products. Collagen
warrants and represents to ArthroCare that all such promotional, advertising and
educational materials and programs, package data sheets, and other literature
relating to the Licensed Products shall be consistent with the current Marketing
Authorizations or other regulatory approvals. During the Term of this Agreement,
ArthroCare will have the right, at ArthroCare's expense, to conduct an audit of
Collagen's promotional material for the sole purpose of determining whether such
promotional material complies with this section.

         11.5 Product Packaging and Labeling. ArthroCare shall, * * * provide
with the Licensed Products, any labels, instructions for use and other support
materials used in connection with the sale of the Licensed Products within the
United States. ArthroCare shall, at * * *, provide with the Licensed Products
translations of any labels, instructions for use, and other support materials
used in connection with the sale of the Licensed Products outside of the United
States. Collagen shall not repackage Licensed Products supplied to Collagen by
ArthroCare hereunder without the prior written consent of ArthroCare. In
addition, except for the addition of information required by applicable laws and
regulations, Collagen shall not relabel Licensed Products supplied to Collagen
by ArthroCare hereunder without the prior written consent of ArthroCare.

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                                      -17-
<PAGE>   18
         11.6 Proprietary Notices. Collagen shall not remove, alter, cover or
obfuscate any logo, trademark notice or other proprietary rights notices placed
or embedded by ArthroCare on or in any package or any of the items contained
therein.

         11.7 Reporting Requirements. Pursuant to the FDA's medical device
reporting (MDR) Regulations, ArthroCare may be required to report to the FDA
information that reasonably suggests that a Licensed Product may have caused or
contributed to death or serious injury or has malfunctioned and that the device
would be likely to cause or contribute to a death or serious injury if the
malfunction were to recur. The parties hereto agree to supply to the other any
such information twenty-four (24) hours after becoming aware of it so that each
can comply with governmental reporting requirements. In the event that
ArthroCare is required by any regulatory agency to correct or withdraw the
Licensed Products or if ArthroCare voluntarily initiates such correction or
withdrawal, Collagen shall cooperate with and assist ArthroCare in locating and
retrieving if necessary, the recalled Products from Collagen's customers.
Collagen shall maintain all records of Licensed Products sales to customer by
lot number, and/or serial number in the event of a Licensed Product recall or
other quality related issue. Collagen shall only be required to make such sales
records available to ArthroCare in the event of a Product correction,
withdrawal, alert notice or other quality related issue.

                                   ARTICLE 12

                      ADDITIONAL OBLIGATIONS OF ARTHROCARE

         12.1 Promotional Materials. ArthroCare shall make available to Collagen
English language samples of promotional support materials, in quantities deemed
reasonable by ArthroCare, at ArthroCare's standard charges to distributors for
such items. Such materials shall include, without limitation, marketing and
technical information concerning the Licensed Products, brochures, advertising
literature, and other product data.

         12.2 Telephone Marketing and Technical Support. ArthroCare shall
provide a reasonable level of telephone marketing and technical support to
employees of Collagen who have been trained by ArthroCare and/or customers of
Collagen to answer Collagen's questions related to Licensed Products. ArthroCare
agrees to inspect any Licensed Product delivered by Collagen and to report
within reasonable time whether repair is possible and the materials, time and
cost necessary for such repair. Upon Collagen's request, ArthroCare shall use
best efforts to repair the Licensed Product. This repair shall be at Collagen's
cost (including shipping expenses) unless such repair falls under ArthroCare's
limited warranty in section 11.1. All such warranty repairs and all service or
maintenance repairs shall be performed to meet and conform to current or latest
revisions of the product specifications.

         12.3 Books and Records. ArthroCare agrees to keep documented records of
all repairs and servicing provided by ArthroCare by product number, serial
number, and description of each Licensed Product and to identify the type of
repair or service completed on the Licensed Product,


                                      -18-
<PAGE>   19
inclusive of the name of the individual servicing, the date of the
service/repair, and test and inspection data as required by 21 C.F.R. Section
820.200. During the Term and for one (1) year thereafter, Collagen shall have
the right during normal business hours and upon five (5) days' prior written
notice to audit such records for the sole purpose of determining that ArthroCare
is meeting such obligations.

         12.4 Registrations, Licenses and Permits.

                  (a) ArthroCare shall maintain all regulatory approvals in
ArthroCare's name for the marketing of the Licensed Products for the Term of
this Agreement

                  (b) ArthroCare will maintain the "Technical File" required by
MDD 93/42 EEC (Medical Device Directives), design history records, device master
records, and history records, and the quality system records for the Licensed
Products for the period of time required by the directives of its Notified Body
and other regulatory agencies requirements.

                  (c) ArthroCare will maintain for the period of this Agreement
and its extensions a certified quality system in compliance with and maintain
certifications with its Notified Body for valid standing to CE conformity of its
manufacturing facility and the Licensed Products. ArthroCare shall use best
efforts to supply to Collagen the information necessary to fulfill any request
by the EC Competent Authority or Notified Body to Collagen for information
contained in the records within the requested time period. Changes in
Specifications, manufacturing, including change of sterilization process or
provider, labeling, or packaging agreed to by Collagen and ArthroCare may result
in amendments to the Technical File. ArthroCare will provide to Collagen a copy
of any FDA or other regulatory agency correspondence within seven (7) days of
receipt that is directly relating to the Licensed Products which are reasonably
necessary to Collagen's performance under this Agreement or which could
adversely affect Collagen or its Customers.

                  (d) ArthroCare understands that Collagen or any government
regulatory agency or third party observers may send representatives to
ArthroCare's facility to observe, inspect and audit the production facilities
related to the Licensed Products. ArthroCare will allow such representatives
reasonable access to all manufacturing facilities and records for the Licensed
Products so as to ensure


                                      -19-
<PAGE>   20
applicable regulations are in compliance. Collagen will provide at least ten
(10) days advance notice of such observation and provide the names, meeting
agenda and provide proper identification of such representatives. ArthroCare
will use reasonable commercial efforts to correct any material non-compliance
brought to its attention as a result of such inspections and audits. ArthroCare
also agrees, during the Term of this Agreement, to allow Collagen access to all
clinical and pre-clinical data involving the Licensed Products for use in the
Field. Collagen understands that ArthroCare or any government regulatory agency
or third party observers may send representatives to Collagen's facility to
observe, inspect and audit promotional, advertising and educational materials
and programs, and other literature relating to the sales and marketing to the
Licensed Products. Collagen will allow such representatives reasonable access to
all such promotional literature for the Licensed Products so as to ensure
applicable regulations are in compliance. ArthroCare will provide at least ten
(10) days advance notice of such observation and provide the names, meeting
agenda and provide proper identification of such representatives. Collagen will
use reasonable commercial efforts to correct any material non-compliance brought
to its attention as a result of such inspections and audits.

                                   ARTICLE 13

                       ADDITIONAL COVENANTS OF ARTHROCARE

         13.1 Financial Statements. From time to time as requested by Collagen
(but not more frequently than once per calendar year), ArthroCare will provide
Collagen with copies of audited financial statements and such other information
reasonably requested by Collagen to demonstrate ArthroCare's financial ability
to perform under this Agreement. From time to time as requested by ArthroCare
(but not more frequently than once per calendar year), Collagen will provide
ArthroCare with copies of audited financial statements and such other
information reasonably requested by ArthroCare to demonstrate Collagen's
financial ability to perform under this Agreement. All information provided to
either party under this Section 13.1 will be treated confidentially, unless such
information is otherwise publicly available.

         13.2 Exclusivity. 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
Licensed Products intended for use in procedures in the Field.

         13.3 ArthroCare's Assets. With the exception of standard financing
mechanisms, 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 Collagen at least sixty (60) days prior written notice.

                                   ARTICLE 14

                              INTELLECTUAL PROPERTY

         14.1 Enforcement. In the event that any Patent Right necessary for use
and sale of a Licensed Product is infringed or misappropriated by a third party
in any country or is subject to a declaratory judgment action arising from such
infringement or


                                      -20-
<PAGE>   21
misappropriation in such country, or is the subject of an interference,
re-examination, reissue or opposition proceeding, the party becoming aware
thereof shall promptly notify the other party hereto. ArthroCare shall have the
initial right (but not the obligation), at its expense, to bring suit to abate
any infringement or misappropriation of the Patent Rights, using counsel of its
choice. In addition, ArthroCare shall have the obligation, at its expense, to
take action to abate any commercially significant infringement or
misappropriation of the Patent Rights. In the event that ArthroCare fails to
initiate a suit to enforce such Patent Rights against a commercially significant
infringement in the Field by a third party within * * *, Collagen may initiate
such suit to abate such infringement or misappropriation, * * *; provided,
Collagen may not enter into any settlement without the prior consent of
ArthroCare, and may not make any statement which admits that any of the Patent
Rights or other intellectual property licensed to Collagen pursuant to this
Agreement are invalid or unenforceable; and provided that, * * * If Collagen
initiates a suit under this section, ArthroCare shall cooperate with, and
provide reasonable support to, Collagen's counsel, including providing
ArthroCare personnel for a reasonable amount of deposition testimony or expert
assistance, and, if requested by Collagen, provide copies of all documents
related to such suit. The party involved in any such claim, suit or proceeding,
shall keep the other party hereto reasonably informed of the progress of any
such claim, suit or proceeding and each party shall cooperate reasonably in
connection with the pursuit of any such action, at the request and expense of
the party requesting such cooperation. Any recovery by such party received as a
result of any such claim, suit or proceeding shall be used first to reimburse
the parties hereto for all expenses (including court costs, attorneys and
professional fees and other expenses of all kinds) incurred in connection with
such claim, suit or proceeding. If the party initiating suit is ArthroCare, * *
* of the remainder shall be retained by ArthroCare. If the party initiating suit
is Collagen, * * *

         14.2 Prosecution of Patent Applications. Collagen will have the right
to access, obtain copies, review and comment on the prosecution of any patent
applications directly related to the Patent Rights within the Field. ArthroCare
shall cooperate with Collagen's patent counsel and, if requested by Collagen,
provide copies of all papers relating to patent applications directly related to
the Patent Rights within the Field. ArthroCare will provide a status report on
the Patent Rights on a semi-annual basis. ArthroCare will follow the reasonable
advice of Collagen's patent counsel regarding such prosecution, * * * ArthroCare
shall not abandon, disclaim, or otherwise jeopardize any Patent Rights primarily
related to the Field. ArthroCare shall use its best efforts to expedite the
prosecution of, establish and maintain Patent Rights related to the Field in all
commercially significant countries, including, but not limited to the * * *

         14.3 ArthroCare Trademarks. During the Term of this Agreement, Collagen
shall have the right to advertise and promote the Licensed Products under
ArthroCare's trademarks and tradenames initially identified in Exhibit E
("ArthroCare Marks"). ArthroCare reserves the right to modify the ArthroCare
Marks or substitute alternative marks for any or all of the ArthroCare Marks at
any time upon thirty (30) days prior written notice. Collagen shall have the
right to use any marketing materials in its possession to depletion. The rights
granted under this Section 14.3 shall automatically terminate on termination or
expiration of this Agreement. During the Term of

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                                      -21-
<PAGE>   22
this Agreement, Collagen agrees to advertise and promote the Licensed Products
using the Coblation(TM) trademark. In addition, Collagen agrees to place the
terms "manufactured by ArthroCare" on the Licensed Products.

         14.4 Limitations. Except as set forth in this Agreement, nothing
contained in this Agreement shall grant to Collagen any right, title, or
interest in or to the ArthroCare Marks, whether or not specifically recognized
or perfected under applicable laws, and Collagen irrevocably assigns to
ArthroCare all such right, title, and interest, if any, in any ArthroCare Marks
that are used in conjunction with the Licensed Products (other than Collagen
Marks). At no time during or after the Term of this Agreement shall Collagen
challenge or assist others to challenge ArthroCare Marks or the registration
thereof or attempt to register any trademarks, marks, or trade names confusingly
similar to ArthroCare Marks. All representations of ArthroCare Marks that
Collagen intends to use shall first be submitted to ArthroCare for approval
(which shall not be unreasonably withheld) of design, color, and other details,
or shall be exact copies of those used by ArthroCare. In addition, Collagen
shall fully comply with all reasonable guidelines, if any, communicated by
ArthroCare concerning the use of ArthroCare Marks.

         14.5 Collagen Trademarks. During the Term of this Agreement, subject to
the limitations in section 14.3, * * * Nothing in this Agreement shall be deemed
to grant to ArthroCare any right, title, or interest in or to Collagen Marks. At
no time during or after the Term of this Agreement shall ArthroCare challenge or
assist others to challenge Collagen Marks or the registration thereof or attempt
to register any trademarks, marks, or tradenames confusingly similar to Collagen
Marks.

         14.6 Inventions.

                  (a) All ideas, discoveries and inventions, whether patentable
or not, that are related to the Patent Rights which are conceived by either
Collagen or ArthroCare after the Effective Date and are based on collaborative
work between Collagen and ArthroCare shall be owned by ArthroCare and subject to
the exclusive license provided in Section 2.1 of this Agreement.

                  (b) All ideas, discoveries and inventions, whether patentable
or not, which are conceived by ArthroCare after the Effective Date and are not
based on collaborative work between Collagen and ArthroCare shall be exclusively
owned by ArthroCare and subject to the exclusive license provided in Section 2.1
of this Agreement.

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                                      -22-
<PAGE>   23

                  (c) All ideas, discoveries and inventions, whether patentable
or not, that are related to the Patent Rights which are conceived by Collagen
after the Effective Date and are not based on collaborative work between
Collagen and ArthroCare shall be exclusively owned by ArthroCare and subject to
the exclusive license provided in Section 2.1 of this Agreement.

                  (d) All ideas, discoveries and inventions, whether patentable
or not, that are unrelated to the Patent Rights which are conceived by Collagen
after the Effective Date and are not based on collaborative work between
Collagen and ArthroCare shall be exclusively owned by Collagen.


           14.7 Protection of Intellectual Property and Improvements. During the
term of this Agreement, Collagen shall promptly inform ArthroCare of any
invention, improvement, upgrading or modification relating to the Patent Rights.
ArthroCare agrees, at ArthroCare's expense, to protect the Patent Rights by
obtaining and maintaining appropriate patent rights. All patents and copyright
registrations shall be applied for in the names of the actual inventors or
authors and shall be assigned to ArthroCare, subject to Collagen's rights and
license therein; each party shall, at ArthroCare's expense, execute and deliver
such forms of assignment, power of attorney and other documents which are
necessary to give effect to the provisions hereof.

                                   ARTICLE 15
* * *

                                   ARTICLE 16

                                 CONFIDENTIALITY

         16.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five years
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;
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                                      -23-
<PAGE>   24

         (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.

         16.2 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).

         16.3 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 as 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 Collagen and ArthroCare without the prior written
consent of an authorized representative of the other party.

                                  ARTICLE 17

                                 INDEMNIFICATION

         17.1 Indemnification of Collagen.


         (a) ArthroCare shall indemnify, defend, and hold harmless Collagen, and
its affiliates and their respective directors, officers, employees, and agents,
and the successors and assigns of any of the foregoing (the "Collagen
Indemnitees") from and against all claims, losses, costs, and liabilities
(including, without limitation, payment of reasonable attorneys' fees and other
expenses of litigation), and shall pay any damages (including settlement
amounts) finally awarded with respect to claims, suits, or proceedings (any of
the foregoing, a "Claim") brought


                                      -24-
<PAGE>   25
by third parties against a Collagen Indemnitee, caused by (i) a failure by
ArthroCare to manufacture the Licensed Products in accordance with the
specifications for such Licensed Products as initially set forth in Exhibit F,
(ii) breach of any representation made by ArthroCare hereunder, (iii) the
willful misconduct of ArthroCare, * * *

         (b) Collagen agrees that ArthroCare has the right to defend, or at its
option to settle, and ArthroCare agrees, at its own expense, to defend or at its
option to settle, any claim, suit or proceeding brought against Collagen by any
third party for: (1) infringement of any U.S. or foreign patents or copyright or
trade secret by the Licensed Products arising out of or in connection with
Collagen's performance of this Agreement; or (2) misappropriation of any
trademarks arising out of or in connection with Collagen's use of any ArthroCare
Marks in connection with this Agreement, and ArthroCare agrees to indemnify,
defend and hold harmless the Collagen Indemnitees (as defined in above) from and
against any and all claims, losses, damages, costs and liabilities (including
payment of reasonable attorneys' fees and other expenses of litigation) arising
from such infringement and shall pay any damages finally awarded with respect to
such a claim, suit or proceeding. Notwithstanding the provisions of this Section
17.1(b), ArthroCare assumes no liability for (i) any combination of Licensed
Products with other Licensed Products not provided by ArthroCare, which
infringement would not arise from such Licensed Products standing alone, or (ii)
the modification of such Licensed Products by Collagen or any third party where
such infringement would not have occurred but for such modifications.
Notwithstanding the foregoing, if it is adjudicatively determined that any
Licensed Product infringes, or in ArthroCare's sole opinion, may be found to
infringe a third party's patent or copyright or constitute misuse of a trade
secret, or if the sale or use of the Licensed Products is enjoined, then
ArthroCare may, at its option and expense either: (i) replace the Licensed
Products with other noninfringing functionally equivalent Licensed Products; or
(ii) modify the Licensed Products to make the Licensed Products functionally
equivalent and noninfringing; or (iii) if (i) - (ii) are deemed commercially
impracticable by ArthroCare, discontinue sale of such Licensed Products. THE
FOREGOING PROVISIONS OF THIS SECTION 17.1(b) STATE THE ENTIRE LIABILITY OF
ARTHROCARE AND THE EXCLUSIVE REMEDY OF COLLAGEN WITH RESPECT TO ANY ALLEGED
INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY
RIGHTS BY THE LICENSED PRODUCTS OR ANY PART THEREOF

         17.2 Indemnification of ArthroCare. Collagen shall indemnify, defend,
and hold harmless ArthroCare, and its Affiliates and their respective directors,
officers, employees and agents, and the successors, and assigns of any of the
foregoing (the "ArthroCare Indemnitees") from and against all claims, losses,
costs, and liabilities (including, without limitation, payment of reasonable
attorneys' fees and other expenses of litigation), and shall pay any damages
(including settlement amounts) finally awarded with respect to a Claim brought
by third parties against an ArthroCare Indemnitee, arising out of or relating to
(a) acts or omissions of Collagen

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -25-
<PAGE>   26
in the distribution or marketing of Licensed Products or other performance by
Collagen of its rights or obligations under this Agreement; (b) breach of any of
the representations or warranties made by Collagen hereunder, or (c) the willful
misconduct of Collagen except to the extent such Claim is covered under Section
17.1 above or is caused by the negligence or willful misconduct of an ArthroCare
Indemnitee.

         17.3 Indemnification Procedures. A party (the "Indemnitee") that
intends to claim indemnification under this Article 17 shall promptly notify the
other party (the "Indemnitor") in writing of any claim in respect of which the
Indemnitee or any of its directors, officers, employees, agents, licensors,
successors, or assigns intends to claim such indemnification. The parties will
then determine whether complete or partial indemnification is appropriate in
such event. If the parties are unable to mutually agree on whether the
Indemnitee should be completely or partially indemnified by the Indemnitor, the
parties shall appoint an arbitrator to make a binding ruling on this issue. The
arbitrator will be appointed according to Section 21.

If the parties or the arbitrator determine that indemnification is appropriate,
the Indemnitor shall have sole control of the defense and/or settlement thereof,
provided that the indemnified party may participate in any such proceeding with
counsel of its choice at its own expense. The indemnity agreement in this
Article 17 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 17, but the
omission to so deliver written notice to the Indemnitor shall not relieve the
Indemnitor of any liability that it may otherwise have to any Indemnitee than
under this Article 17. The Indemnitee under this Article 17, its employees and
agents, shall cooperate fully with the Indemnitor and its legal representatives
and provide full information in the investigation of any Claim covered by this
indemnification. Notwithstanding anything to the contrary contained in this
Article 17, neither party shall be liable for any costs or expenses incurred
without its prior written authorization.

         17.4 Insurance. ArthroCare shall purchase and maintain in full force
and effect, during the Term hereof, comprehensive general liability insurance,
in an amount not less than * * * in the aggregate and * * * per occurrence, and
product liability insurance, in an amount not less than * * * in the aggregate
and * * * per occurrence. ArthroCare shall, upon request from Collagen from time
to time, provide Collagen with certificates of insurance showing compliance with
the foregoing provisions.

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -26-
<PAGE>   27
                                   ARTICLE 18

                        TERM, CONVERSION AND TERMINATION

         18.1 Term. The initial Term of this Agreement shall commence on the
Effective Date and continue in force until * * * from January 27, 1999 (the
"Initial Term"), unless terminated earlier under the provisions of this Article
18. Thereafter, this Agreement will automatically renew for additional renewal
terms of * * * (each a "Renewal Term"), provided that * * * If the new minimums
cannot be agreed upon by the parties, an arbitrator will be appointed by the
parties to determine the new minimums pursuant to section 21.

         18.2 Termination for Cause. Either ArthroCare or Collagen may terminate
this Agreement by written notice stating each party's intent to terminate in the
event the other shall have breached or defaulted in the performance of any of
its material obligations hereunder, * * * or a breach by Collagen of the
provision in Section 3.5, and such default shall have continued for sixty (60)
days after written notice thereof was provided to the breaching party by the
non-breaching party.

         18.3 Termination for Bankruptcy. Either party may terminate this
Agreement effective upon written notice to the other party in the event the
other party declares bankruptcy or becomes the subject of any voluntary or
involuntary proceeding under the U.S. Bankruptcy Code or any state insolvency
proceeding, and such proceeding is not terminated within one hundred twenty
(120) days of its commencement.

         18.4 Effect of Termination.

         (a) Accrued Obligations. Termination shall not relieve either party of
obligations incurred prior to the effective date of such termination.

         (b) Return of Materials. All trademarks, marks, trade names, patents,
copyrights, designs, drawings, formulas or other data, photographs, samples,
literature, and sales and promotional aids of every kind shall remain the
property of ArthroCare. Within thirty (30) days after the termination or
expiration of this Agreement, Collagen shall destroy all tangible items bearing,
containing, or contained in, any of the foregoing, in its possession or control
and provide written certification of such destruction, or prepare such tangible
items for shipment to ArthroCare, as ArthroCare may direct, at ArthroCare's
expense. Collagen shall not make or retain any copies of any confidential items
or information which may have been entrusted to it. Effective upon the
termination of this Agreement, Collagen shall cease to use all trademarks and
trade names of ArthroCare and ArthroCare shall cease to use all trademarks and
trade names of Collagen with the limited exception of repurchased Licensed
Products pursuant to Section

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -27-
<PAGE>   28
18.4(c). During the Term and after any termination or expiration of this
Agreement, ArthroCare shall have the right to continue to use and disclose for
any purpose Customer lists, Customer data and other Customer information and any
and all clinical trial results and other data relating to the Licensed Products
and provided by Collagen to ArthroCare during the Term.

         (c) Repurchase of Products. In the event of a termination of this
Agreement by either party pursuant to Sections 18.2 and 18.3, ArthroCare shall
have the right, but not the obligation, to repurchase Collagen's salable
inventory of Licensed Products at the original sales price with a restocking fee
of * * * Licensed Products repurchased from Collagen pursuant to this Section
18.4(c) shall be shipped promptly by Collagen, at ArthroCare's expense, to a
location specified by ArthroCare. In such event, Collagen will allow ArthroCare
to sell the repurchased products with the Collagen Marks thereon.

         (d) Limitation on Liability. In the event of termination by either
party in accordance with any of the provisions of this Agreement, neither party
shall be liable to the other, because of such termination, for compensation,
reimbursement or damages on account of the loss of prospective profits or
anticipated sales or on account of expenditures, investments, leases, inventory
or commitments in connection with the business or goodwill of ArthroCare or
Collagen.

         (e) Transition. Upon termination of this Agreement, Collagen shall
diligently cooperate with ArthroCare to effect a smooth and orderly transition
in the sale of the Licensed Products. From the time that a notice of termination
is received by either party until the effective termination date, Collagen shall
refer all Product inquiries to ArthroCare, shall support ArthroCare's existing
Customers (but shall not sell them new Licensed Products), and shall cooperate
fully with any newly appointed distributors.

         (f) Survival. The provisions of Sections 3.5, 9.4, 9.6, 9.7, 11.1,
11.2, 11.3, 12.3, 14.4, 14.5, 18.4 and 22.1 and Articles 10, 16, 17, 19 and 21
shall survive the expiration or termination of this Agreement for any reason.
All other rights and obligations of the parties shall cease upon termination of
this Agreement.

         18.6 Conversion. In the event Collagen: (1) fails to meet the minimum
royalty amount by the last day of any Period pursuant to section 5.3; or (2)
fails to make the minimum purchase requirements by the last day of any Period
pursuant to Section 7.5, then ArthroCare has the right to: (i) continue under
the terms of the existing Agreement; or * * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -28-
<PAGE>   29
                                   ARTICLE 19

                    LIMITED LIABILITY TO COLLAGEN AND OTHERS

WITH THE SOLE EXCEPTION OF ARTICLE 17 AND NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, ARTHROCARE'S LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR SALE
OF THE LICENSED PRODUCTS SHALL BE LIMITED TO THE AMOUNT PAID BY COLLAGEN FOR THE
PRODUCT. IN NO EVENT SHALL ARTHROCARE BE LIABLE TO COLLAGEN OR ANY OTHER ENTITY
FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS, LOST PROFITS, OR ANY OTHER
SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY
OF LIABILITY ARISING OUT OF THIS AGREEMENT WHETHER BASED IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), OR OTHERWISE. THESE LIMITATIONS SHALL APPLY WHETHER OR
NOT ARTHROCARE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
HEREIN OR IN THE WARRANTY FOUND IN THE LICENSED PRODUCTS.

                                   ARTICLE 20

                         REPRESENTATIONS AND WARRANTIES

         20.1 Representations and Warranties. ArthroCare represents and
warrants, to the best of its knowledge, that: (i) it is the sole and exclusive
owner of all right, title and interest in the Patent Rights and the Trademark
Rights; (ii) it has the right to grant the rights and licenses granted herein;
and (iii) it has not previously granted any right, license or interest in and to
the Patent Rights or the Trademark Rights inconsistent with the license granted
to Collagen herein.

         20.2 Disclaimer. Except as expressly provided in this Agreement,
nothing in this Agreement is or shall be construed as: (i) a warranty or
representation by ArthroCare as to the validity or scope of any claim or patent
within the Patent Rights; (ii) a warranty or representation that anything made,
used, sold, or otherwise disposed of under any license granted in this Agreement
is or will be free from infringement of any patent rights or other intellectual
property right of any third party; or (iii) granting by implication, estoppel,
or otherwise any licenses or rights under patents or other rights of ArthroCare
or third parties, regardless of whether such patents or other rights are
dominant or subordinate to any patent within the Patent Rights.


                                      -29-
<PAGE>   30
                                   ARTICLE 21

                                   ARBITRATION

         (a) If a dispute arises between the parties relating to the
interpretation or performances of this Agreement or the grounds for the
termination thereof, representatives of the parties with decision-making
authority shall meet to attempt in good faith to negotiate a resolution of the
dispute prior to pursuing other available remedies. If within sixty (60) days
after such meeting the parties have not succeeded in negotiating a resolution of
the dispute, such dispute shall be submitted to final and binding arbitration
under the then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by one (1) arbitrator in Santa Clara County, California;
provided, however, California Code of Civil Procedure Section 1283.05 shall
apply to any such proceeding. Such arbitrator shall be selected by the mutual
agreement of the parties or, failing such agreement, shall be selected according
to the AAA rules. The parties shall bear the costs of arbitration equally and
shall bear their own expenses, including professional fees. The decision of the
arbitrator shall be final and non-appealable and may be enforced in any court of
competent jurisdiction.

         (b) * * *If within sixty (60) days after such meeting the Parties have
not succeeded in negotiating a resolution of the dispute, such dispute shall be
submitted to final and binding arbitration under the then current Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), by one (1)
arbitrator in Santa Clara County, California; provided, however, California Code
of Civil Procedure Section 1283.05 shall apply to any such proceeding; and
provided that Collagen shall not be bound by any such arbitrator ruling unless
the third party has a similar agreement with ArthroCare in which the third party
would be bound by the arbitrator's ruling. Such arbitrator shall be selected by
the mutual agreement of the parties or, failing such agreement, shall be
selected according to the AAA rules. The Parties shall bear the costs of
arbitration equally and shall bear their own expenses, including professional
fees. The decision of the arbitrator shall be final and non-appealable and may
be enforced in any court of competent jurisdiction.

                                   ARTICLE 22

                            MISCELLANEOUS PROVISIONS

         22.1 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 state of California, without reference to conflicts of laws
principles.

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* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -30-
<PAGE>   31
         22.2 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.

         22.3 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.

         22.4 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.

         22.5 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:

                  Collagen:         Collagen Aesthetics, Inc.
                                    1850 Embarcadero Road
                                    Palo Alto, California  94303
                                    Attn: Gary S. Petersmeyer
                                    Fax: (650) 354-4375

                                    with a copy to:

                                    Charlene A. Friedman, Esq.
                                    Collagen Aesthetics, Inc.
                                    1850 Embarcadero Road
                                    Palo Alto, California  94303
                                    Fax: (650) 354-4751



                                      -31-
<PAGE>   32

                  ArthroCare:       ArthroCare Corporation
                                    595 North Pastoria Avenue
                                    Sunnyvale, California 94086
                                    Attn:  Michael A. Baker
                                    Fax:  (408) 732-2752

                                    with a copy to:

                                    John T. Raffle, Esq.
                                    ArthroCare Corporation
                                    595 North Pastoria Avenue
                                    Sunnyvale, California 94086
                                    Fax:  (408) 530-9143

         22.6 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 Collagen 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.

         22.7 Patent Marking. Collagen agrees to mark (or give directions to
ArthroCare to mark) all Licensed 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.

         22.8 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.

         22.9 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.


                                      -32-
<PAGE>   33
         22.10 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.

         22.11 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.

         22.12 Force Majeure. Neither party shall be liable for any failure to
perform or delay in performance hereunder where such failure or delay is
occasioned by circumstances beyond the party's control, including, without
limitation, fire, explosion, storms, interruption of utility services, strikes
or labor disputes, water, acts of God, war, civil disturbances, acts of civil or
military authorities, inability to secure raw materials or transportation
facilities, fuel or energy shortages, acts or omissions of communications
carriers, or other causes beyond the party's control whether or not similar to
the foregoing.

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

ARTHROCARE CORPORATION                     COLLAGEN AESTHETICS INC.

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


                                      -33-
<PAGE>   34
                                    EXHIBIT A
                                  PATENT RIGHTS

                                      * * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -34-
<PAGE>   35

                                    EXHIBIT A
                                  PATENT RIGHTS

                                      * * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -35-
<PAGE>   36
                                   EXHIBIT A
                                  PATENT RIGHTS

                                      * * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.



                                      -36-
<PAGE>   37
                                    EXHIBIT B

                                 PRODUCT PRICES

<TABLE>
<CAPTION>
Licensed Product                                                Price Per Unit
----------------                                                --------------
<S>                                                             <C>
Controllers                                                          * * *

Disposable Wands*                                                    * * *

Cables/Handpieces                                                    * * *

Adaptors**                                                           * * *
</TABLE>


Disposable Wand Transfer Price:

<TABLE>
<CAPTION>
TYPE OF DISPOSABLE                                             PRICE
------------------                                             -----
<S>                                                            <C>
* * *                                                          * * *
* * *                                                          * * *
* * *                                                          * * *
</TABLE>

* * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.



                                      -37-
<PAGE>   38
                                    EXHIBIT C

                                WARRANTY PERIODS


<TABLE>
<CAPTION>
PRODUCT                                              PERIOD
-------                                              ------
<S>                                                  <C>
Controller                                           * * *

Cable/Handpiece                                      * * *

Disposable Wands                                     * * *

Adaptors                                             * * *
</TABLE>


--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -38-
<PAGE>   39

                                    EXHIBIT D

                         COLLAGEN'S ALTERNATIVE PRODUCTS

                        AS OF THE EFFECTIVE DATE: * * *

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -39-
<PAGE>   40
                                    EXHIBIT E

                              U.S. TRADEMARK RIGHTS



<TABLE>
<CAPTION>
                 Trademark                          Application No.
                 ---------                          ---------------
<S>                                                 <C>
                 * * *                              * * *
</TABLE>

<TABLE>
<CAPTION>
                 Trademark                          Application No.
                 ---------                          ---------------
<S>                                                 <C>
                 * * *                              * * *
</TABLE>

--------

* * *  This portion has been omitted pursuant to a confidential treatment
       request and filed separately with the Commission.


                                      -40-

<PAGE>   41
                                    EXHIBIT F

                                 SPECIFICATIONS



                                      -41-