SALES REPRESENTATIVE AGREEMENT

         THIS AGREEMENT is effective JULY 2, 2000 [EFFECTIVE DATE] and is by and
between Smith & Nephew Orthopaedics, a division of Smith & Nephew, Inc., a
Delaware corporation, 1450 Brooks Road, Memphis, Tennessee 38116, (hereinafter
"S&N"), and Harry Kraus, 1905 S. W. Dosch Park Lane, Portland, OR 97201
(hereinafter "Sales Representative").

         WHEREAS, S&N manufactures, distributes and/or supplies medical devices,
including instruments, implants and supplies, to the medical trade; and

         WHEREAS, Sales Representative is in the business of soliciting sales of
products, including medical devices such as instruments, implants and supplies,
to the medical trade; and

         WHEREAS, S&N desires to appoint Sales Representative as an independent
representative for the solicitation of sales of the orthopaedic product lines
indicated in APPENDIX 1 hereto, and Sales Representative desires to be an
appointed independent representative for the solicitation of sales of Products;

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

1.   APPOINTMENT OF SALES REPRESENTATIVE. S&N hereby appoints and Sales
     Representative hereby accepts the appointment as the independent
     representative of S&N for the solicitation of sales of Products (as herein
     defined) for the territory designated. Sales Representative shall not sell
     or solicit sales of products or otherwise represent companies selling or
     otherwise distributing products competitive to S&N's products without prior
     written approval from S&N. S&N shall have the sole right to make the
     determination of those products which are competitive to S&N's products.
     Subject to the terms of this Agreement, Sales Representative is free to
     engage in any other activities he wishes.

     S&N reserves the right to sell directly to national, regional or
     governmental accounts.

2.   TERRITORY AND PRODUCTS. The term "Products" as used in this Agreement
     refers to the orthopaedic product lines identified in APPENDIX 1 hereto
     (hereinafter "Products"). Whether Sales Representative's appointment is
     exclusive or non-exclusive with respect to any individual product line is
     shown in APPENDIX 1. S&N may add and/or delete items from such Appendix to
     reflect changes to the lines of Products offered for sale generally by S&N.

     The territory within which the Sales Representative shall solicit sales of
     Products shall be the geographical area and/or account listing shown in
     APPENDIX 2 hereto (hereinafter "Territory"); provided, however, that S&N
     reserves the right to revise the Territory as necessary .

3.   SALES REPRESENTATIVE'S DUTIES AND OBLIGATIONS.

     (a)  Sales Representative shall promote Products and solicit orders for
          sales of Products within the Territory.



                                                                          PAGE 1




<PAGE>


     (b)  Sales Representative shall ensure the filing of all appropriate
          business registrations, and compliance with the requirements of tax
          withholding and reporting.

     (c)  In order to comply with applicable law and in order to protect S&N
          from claims and liabilities, Sales Representative's communications and
          representations to customers shall be true, accurate, complete and
          consistent with the labeling of Products. Sales Representative shall
          in no circumstances modify , repackage, adulterate, misbrand, alter or
          add labels to or remove labels from any of Products. Sales
          Representative shall take no action or issue any statement which is or
          could be detrimental to the reputation and goodwill of S&N.

     (d)  All advertising and all participation by Sales Representative in
          public exhibitions, relating to Products and the use of S&N's name and
          trademarks, shall be subject to prior written consent of S&N, which
          consent shall not be unreasonably withheld.

     (e)  Except as otherwise agreed, Sales Representative shall be responsible
          for providing his own equipment, offices, working facilities, and such
          other facilities and services as may be required at his own expense;
          provided, however, that Sales Representative shall maintain an
          inventory of demonstration equipment, deliverable Products and
          instrument kits (hereinafter "Inventory") to promote and solicit
          orders for Products. Sales Representative shall be responsible for the
          risk of loss or damage of such Inventory owned by S&N whether or not
          held at Sales Representative's business location. Upon termination of
          this Agreement, Inventory shall be returned to S&N .

     (f)  Sales Representative shall submit an annual comprehensive Business
          Plan and quarterly update reports addressing each section of the
          Business Plan.

4.   S&N DUTIES AND OBLIGATIONS.

     (a)  S&N shall sell Products on orders solicited by Sales Representative in
          accordance with published price lists and currently in effect. Written
          notice of changes to the price lists shall be given by S&N to each
          Sales Representative at least thirty (30) days in advance of the
          implementation of such changes. S&N may accept or refuse any order for
          Products and will not be bound by any order until it is finally
          accepted by S&N. S&N shall not be liable for any loss or damage caused
          by non-acceptance of orders or delays in making shipments.

     (b)  S&N shall pay to Sales Representative a commission at the
          percentages shown on APPENDIX 3 on orders solicited within and
          delivered to the Territory, beginning [EFFECTIVE DATE]. Commissions
          shall be deemed earned by Sales Representative upon invoicing of
          Product sales by S&N to customers. Commissions earned by Sales
          Representative shall be computed on the net amount of the invoices
          rendered (less credit memos) in accordance with published price lists
          for each order or part of an order, exclusive of all freight and
          transportation costs (including insurance), normal and recurring bona
          fide trade discounts having S&N's prior approval and any applicable
          sales or similar taxes. S&N shall withhold from commissions paid a
          base reserve against bad debts, accounts receivable and Inventory .In
          the case of bad debts, S&N shall charge the Sales Representative back
          for the commissions previously paid. In the event that Sales
          Representative continues to deliver order Product to an account on
          credit hold, S&N will reserve the right to charge back against Sales
          Representative's commission the entire amount of the unpaid invoice.




                                                                          PAGE 2




<PAGE>



          Sales Representative is not guaranteed a minimum commission or a
          minimum compensation. There is no assurance that Sales Representative
          will not incur a loss hereunder.

     (c)  S&N shall deduct from the commissions otherwise due the Sales
          Representative an administrative support fee, as detailed in APPENDIX
          4. The fee will be utilized to cover the expense of providing the
          Sales Representative descriptive literature, promotional materials,
          catalogs, office space, secretarial support, loaner instrument and
          implant access, courier services, and any other general support
          services.

     (d)  S&N shall make a good faith effort to collect monies owed on invoices
          from orders solicited by Sales Representative.

5.   CONFIDENTIALITY, IMPROVEMENTS, PATENTS, AND TRADEMARKS.

     (a)  Sales Representative shall take all reasonable steps and do those
          things reasonably necessary to ensure that confidential information
          relating to the Products and to the technology and business of S&N is
          not disclosed or made use of outside the business of Sales
          Representative and S & N; provided, however, that the foregoing shall
          not apply to information (a) which be can shown to be in writing and
          known to Sales Representative prior to disclosure by S & N; (b) which
          is or becomes public knowledge through no fault of Sales
          Representative; or (c) which is disclosed to Sales Representative by a
          third party with the lawful right to make such disclosure.

     (b)  Sales Representative shall submit to S&N all ideas concerning Products
          which Sales Representative receives from customers during the term of
          this Agreement. Further, all product ideas developed or discovered by
          Sales Representative are and shall remain the sole property of S&N
          because S&N has provided Sales Representative with special knowledge
          and has placed Sales Representative in a position to formulate ideas
          concerning Products. Sales Representative prospectively assigns such
          ideas to S&N and hereafter shall acquire no right or interest in such
          ideas. Within a reasonable time, not to exceed one (1) year, S&N shall
          evaluate the idea and shall reassign rights to the idea to Sales
          Representative, at Sales Representative's request, if S&N elects not
          to develop the idea commercially.

     (c)  Sales Representative acknowledges that any and all of the trade
          secrets, ideas and information, research, methods, improvements,
          patented or copyrighted material relating to present or future
          Products or S&N's business, and the goodwill associated with them, are
          owned by S&N, are provided or revealed to Sales Representative in
          trust and confidence, and are and shall remain the sole and exclusive
          property of S&N. All such information and knowledge about S&N and the
          products, services, standards, specifications, procedures and
          techniques which are not in the public domain or generally known in
          the industry and such other information and material as S&N may
          designate as confidential shall be deemed confidential for the
          purposes of this Agreement. Sales Representative shall not, during and
          after the termination of this Agreement, copy or disclose to any other
          person, or use for any purpose other than as contemplated by this
          Agreement, any of the confidential information or trade secrets.




                                                                          PAGE 3



<PAGE>



     (d)  The above provisions of this SECTION 5 shall survive the termination
          of this Agreement.

     (e)  S&N hereby grants Sales Representative a royalty-free right to use
          S&N's trademarks and identification on and in connection with the
          solicitation of orders for Products during the term of this Agreement.
          Sales Representative shall discontinue the use of all such trademarks
          upon the termination of this Agreement. All goodwill generated
          hereunder in the use of such trademarks shall accrue to the benefit of
          S&N and Sales Representative hereby disclaims any rights in S&N's
          trademarks and identification other than the aforementioned license.

6.   TERM OF AGREEMENT. This Agreement shall commence on [EFFECTIVE DATE] and
     continue in full force and effect until December 31, 2001. This Agreement
     shall automatically renew for an additional term of twelve (12) months
     through December 31, 2002, if S&N fails to notify Sales Representative of
     its intention not to renew this Agreement by December 1, 2001.
     Alternatively, this Agreement may be terminated at any time by the mutual
     written agreement of S&N and Sales Representative, or in accordance with
     the provisions OF SECTION 7 below.

7.   TERMINATION.

     (a)  The following actions by or events involving Sales Representative
          shall each constitute a material breach of this Agreement and give S&N
          an immediate right to terminate this Agreement:

          (i)  Conviction of Sales Representative of a felony; or

          (ii) Involuntary bankruptcy which is not terminated within sixty (60)
               days, insolvency or voluntary bankruptcy; or

          (iii) Sales activities in violation of applicable law,
               misrepresentation, misbranding or adulteration of any of S&N's
               products or any action or statement which is or could be
               detrimental to the reputation and good will of S & N; or

          (iv) Engaging in any practices or making any representations to any
               customer which are misleading, incomplete, fraudulent, untrue or
               contrary to the terms of the Sales Representative Agreement; or

          (v)  Selling or invoicing products requesting or requiring customer
               payment to the Sales Representative; or



                                                                          PAGE 4




<PAGE>


          (vi) Engaging in any practices which are contrary to the Sales,
               Marketing and Promotional Practices Policy for Smith & Nephew
               Companies in the United States; or

          (vii) Selling Company products to parties who use, resell or
                distribute such products outside the United States; or

          (viii) Failure to attend required meetings; or

          (ix) Failure to retrieve Product as called for during product
               retrievals; or

          (x)  Engaging in the sale of products, or the solicitation of orders
               for products, competitive to those of the Company, or competitive
               to those of Smith & Nephew, Inc. (including, but not limited to,
               Smith & Nephew Endoscopy, Smith & Nephew Casting, Smith & Nephew
               Wound Management, Smith & Nephew ENT, Smith & Nephew
               Rehabilitation, or any other company subsequently acquired); or

          (xi) Misuse of S&N's confidential information.

     (b)  Either party may terminate this Agreement, with or without cause, by
          giving the other party written notice of its desire to terminate.

8.   FORCE MAJEURE. Obligations of either party to perforn1 under this Agreement
     shall be excused during such period of delay caused by matters such as
     strikes, shortages of power or raw materials, government orders, or Acts of
     God, which are reasonably beyond the control of the party obligated to
     perform.

9.   NOTICES. Any notice required by this Agreement shall be deemed sufficient
     if sent by a) hand delivery , b) certified mail, postage prepaid, c) by
     Federal Express or other similar nationally recognized overnight delivery
     service providing proof of delivery, to the party to be notified at the
     address set forth below, until a different address is supplied in writing.

     (a)  In the case of S&N, such notice shall be sent to:

          Smith & Nephew Orthopaedics
          1450 Brooks Road
          Memphis, Tennessee 38116
          Attn: Sr. Vice President, U.S. Sales

          with a copy to:

          Smith & Nephew, Inc.
          1450 Brooks Road
          Memphis, Tennessee 38116
          Attn: General Counsel



                                                                          PAGE 5



<PAGE>


     (b)  In the case of Sales Representative, such notice shall be sent to the
          address shown on the first page of this Agreement.

10.  ENTIRE AGREEMENT. This document and the incorporated references represent
     the entire agreement between the parties hereto, and supersede all prior
     agreements regardless of their terms or cancellation provisions, and this
     Agreement sha1l be modified only by a written agreement signed by S&N and
     the Sales Representative.

11.  APPLICABLE LAW. This Agreement shall be governed by the laws of the State
     of Tennessee as applicable to contracts made and to be performed in that
     state.

12.  ASSIGNABILITY. This Agreement shall not be assigned either by the parties
     or by operation of law without the prior written consent of the other
     party; however, in the case of S&N, S&N may, without obtaining the consent
     of the Sales Representative, assign its rights and obligations under this
     Agreement to any corporation with which S&N may merge or consolidate or to
     which S&N may transfer substantially all of its assets.

13.  SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement invalid or unenforceable, such provision shall not affect
     the remainder of the Agreement which shall otherwise remain in full force
     and effect.

14.  NON-COMPETE. Sales Representative agrees that, during the term of this
     Agreement, it shall serve the customers of S&N in a representative capacity
     only, and shall not act on behalf of any competition of S&N, and that on
     termination, expiration, or nonrenewal of this Agreement for any cause or
     reason whatsoever, or without cause, Sales Representative shall not, for a
     period of twelve (12) months thereafter:

     (a)  Call upon, solicit, service, interfere with, or divert in any way
          customers served by S&N in the Territory; or

     (b)  Engage in or be employed in any business (in the Territory)
          substantially similar to the business of S&N .

15.  FRAUD AND ABUSE. Sales Representative shall (a) comply with all applicable
     fraud and abuse laws and with the policies of Smith & Nephew, Inc.,
     including but not limited to APPENDIX 5 hereto, as it may be amended from
     time to time; (b) indemnify S&N for any damages S&N suffers due to Sales
     Representative's violation of the policies of S & N; and (c) cooperate in
     S&N's investigations relating to sales representative activities, including
     investigations relating to fraud and abuse issues.

16.  RELATIONSHIP. This Agreement shall not be construed to create between the
     parties hereto the relationship of principal and agent, joint venturers,
     partners, employer and employee, franchisor and franchisee, manufacturer
     and distributor, or any other similar relationship, the existence of which
     is hereby expressly denied by each party .This Agreement does not establish
     a franchise of any type. The parties hereto agree that the Agreement shall
     not be subject to and expressly waive application of any franchise laws
     that may exist in any jurisdiction. Neither party shall have any authority
     to bind the other, and neither party shall be liable to any third party in
     any way for any engagement, obligation, contract, representation or
     transaction. Sales Representative is an independent contractor engaged in
     its own and entirely separate business.


                                                                          PAGE 6



<PAGE>




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

SMITH & NEPHEW ORTHOPAEDICS                     HARRY KRAUS
a division of                                   Social Security No.
SMITH & NEPHEW, INC.


BY: /s/ SCOTT D.                                BY: /s/ HARRY KRAUS
    --------------------                            ---------------
    Sr. Vice President, U.S. Sales

Date:  6/27/00                                  Date:  June 18, 2000
       -------------------                             -------------

BY:
    --------------------------
    Director of Regional Sales

Date:  6/20/00
       -------------------




APPENDICES:
        1. Products
        2. Territory
        3. Commission Schedule
        4. Administrative Support Fee Schedule
        5. Fraud and Abuse



                                                                          PAGE 7





<PAGE>



                                   APPENDIX 1

                                    PRODUCTS



                        X       Trauma
                       ---
                        X       Hips
                       ---
                        X       Knees
                       ---
                        X       Cement/Shoulder
                       ---

<PAGE>


                                   APPENDIX 2

                                   TERRITORY


The Territory is defined by the account listing on the following page(s).









<PAGE>


                                   APPENDIX 3

                              COMMISSION SCHEDULE



                PRODUCT                           COMMISSION RATE
                -------                           ---------------

                Trauma                                  13%

                Hips                                    13%

                Knees                                   13%

                Cement/Shoulder                         13%



In addition to the period commissions paid at the aforementioned rates, the
Sales Representative is entitled to a 3% bonus on incremental sales growth,
paid quarterly, one period in arrears.

The Sales Representative is entitled to receive 50% of loaner fees generated in
the Territory.

Each period, no later than the 20th day after period close, each Sales
Representative will be paid a commission based upon a percentage of the net
selling price of those sales which qualify for commissions.







<PAGE>


                                   APPENDIX 4



For the duration of this agreement, the Sales Representative will be assessed
each sales period, an Administrative Support Fee equal to 1% of the Territory's
total net sales.








<PAGE>


                                   APPENDIX 5

               SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY
               FOR SMITH & NEPHEW COMPANIES IN THE UNITED STATES

                                                                REVISED 11/15/96

INTRODUCTION
A sales, marketing and promotional practices policy has been adopted for all
Smith & Nephew companies in the United States (collectively referred to as the
"Company"). THIS POLICY , WHICH IS EFFECTIVE IMMEDIATELY, APPLIES TO all
EMPLOYEES AND AGENTS OR THE COMPANY, INCLUDING DISTRIBUTORS AND THEIR SALES
REPRESENTATIVES. The purpose of this policy is to assist employees and agents in
their day-to-day dealings with customers and potential customers by summarizing
the existing ethical standards to which the Company and its employees and agents
are subject. Violation of the policy will result in appropriate disciplinary
action, which may include termination of the employment or agent relationship
with the Company.

GIFTS AND BUSINESS COURTESIES
Gifts and business courtesies to health care providers are not permitted unless
the gift or business courtesy

1.   has a value of less than $100; and

2.   either entails a benefit to patients, serves a genuine educational
     function, or is related to the recipient's work.

Employees and agents are expected to use discretion and exercise good judgment
in determining the frequency of providing gifts and business courtesies to
health care providers. Excessive use of gifts and business courtesies is not
permitted.

No gifts or business courtesies may be given with an explicit or implicit
requirement to use products sold by the Company. Cash payments may not be given
under any circumstances.

PRODUCT TRAINING
The Company may sponsor programs designed to train physicians and other health
care professionals in the safe and effective use of the company's products.
Health care professionals may be reimbursed for actual travel expenses incurred
in attending these programs provided that

1.   the travel expenses are modest and limited to transportation, lodging and
     meals

2.   the program is limited to conveying information on the safe and effective
     use of one or more of the Company's products; and

3.   no continuing medical education credits are available for the professionals
     ending the program.



<PAGE>


                                                                REVISED 11/15/96

SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY                      CONTINUED

Attendees at product training programs may not be compensated for their time in
attending the programs. The Company may not pay for recreational activities and
entertainment offered in connection with these programs.

CONTINUING MEDICAL EDUCATION
The Company may underwrite the cost of continuing medical education conferences
or professional meetings provided that

1.   no subsidies or other payments are provided directly to attendees of the
     conference; and

2.   the organization sponsoring the conference has responsibility for, and
     control over , the curriculum, educational methods, materials, faculty and
     invitees of the conference.

Attendees at continuing medical education conferences or professional meetings
may not be reimbursed for travel expenses incurred in attending the conferences
or meetings, nor may they be compensated for their time. The Company may
underwrite the cost of meals and social events at conferences or meetings
provided that the meals and social events are modest and do not compete with or
take precedence over the educational portions of the conference. The costs of
recreational excursions and lavish entertainment may not be paid for in whole or
in part by the Company.

The Company may pay reasonable honoraria and reimbursement for modest
transportation, lodging and meal expense to faculty and consultants who provide
actual and necessary services for a conference. Token consulting or advisory
arrangements, however, are not permitted.

Scholarships or other special funds to permit medical students, residents and
fellows to attend medical conferences with special educational value may be
provided so long as the grants are coordinated through an educational or
scientific department within the Company (e.g., Scientific Affairs or Research
and Development). In addition, the selection of the recipients must be made
solely by the academic or training institution with which the attendees are
associated.

GOVERNMENT OFFICIALS:
Notwithstanding the other provisions of this policy, nothing of value may be
given to a civilian or military official or employee of the U. S. Government
(referred to as "Officials") except that an Official may be reimbursed for
modest and reasonable travel expenses if written approval is obtained from the
Official's agency in advance. Under no circumstances should honoraria be paid to
Officials.

Communications announcing any program or inviting an Official to a program must
note that there may be provisions of law requiring U. S. Government approval of
an Official's participation in the program. Invitees should be advised to
consult with their agency's ethics official or legal counsel prior to attending
any program.




<PAGE>


                                                                REVISED 11/15/96

SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY                      CONTINUED

OBSERVANCE OF APPLICABLE LAWS AND OTHER CODES OF CONDUCT
Employees and agents of the Company are expected to become familiar with the
laws applicable to their aieas of responsibility and the codes of conduct and
ethical guidelines that govern the behavior of the health care providers with
whom they have contact. Employees and agents may not engage in any activities
that would result in violation of the law or in a health care provider violating
a code of conduct or ethical guideline.








<PAGE>




                                                                REVISED 11/15/96

SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY                      CONTINUED

QUESTIONS AND ANSWERS

Q:   I am a sales representative for the Company. I occasionally invite
     customers to dinner and pick up the tab. Is this permitted by the Company's
     policy?

A:   Inviting a customer to dinner and picking up the tab is generally permitted
     provided the customer's tab is less than $100 and business is discussed at
     dinner. There are, however, some circumstances under which invitations of
     this sort would not be appropriate, such as when the customer is a
     government employee or when this activity would violate the customer's code
     of ethics. Sales representatives are expected to familiarize themselves
     with the laws applicable to their areas of responsibility and with the code
     of ethics of their customers.

Q:   Why does the Company's policy place a limit of $100 on the value of gifts
     and business courtesies?

A:   The $100 limit is based on the American Academy of Orthopaedic Surgeons'
     Opinion on Ethics and is consistent with guidelines published by the Health
     Industry Manufacturers Association, the American Medical Association and
     other industry organizations.

Q:   As a sales representative for the Company, I sometimes give physicians free
     equipment or medical texts. Is this permitted by the Company's policy?

A:   Yes, if the equipment or medical text has a value of less than $100 and the
     gift does not violate the recipient's code of ethics. If the value of the
     equipment or text is more than $100, then it would violate Company policy
     and is not permitted.

Q:   Can the Company or a distributor invite its five largest customers to a
     weekend fishing trip paid for by the Company or the distributor?

A:   No. A weekend fishing trip paid for by the Company or the distributor would
     clearly be excessive and would violate the Company's policy of gifts and
     business courtesies.





<PAGE>


                                                                REVISED 11/15/96

SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY                      CONTINUED

QUESTIONS AND ANSWERS

Q:   Why does the policy permit attendees at product training (non CME courses)
     to be reimbursed for modest travel expenses but does not permit attendees
     at continuing medical education conferences to be reimbursed for modest
     travel expenses?

A:   This difference is based on the HIMA Code of Ethics and other industry
     guidelines, which permit reimbursement of travel expenses only for product
     training (non-CME) courses. The rationale for this difference is that
     product training (non-CME) courses are offered primarily for the benefit of
     manufacturers to ensure the safe and effective use of their products. In
     contrast, continuing medical education conferences are viewed as primarily
     benefiting physicians, who receive CME credits for attending these
     conferences.

Q:   Can the Company or a distributor reimburse a physician for travel expenses
     incurred in attending a continuing medical education seminar that included
     a session on the safe and effective use of one of the Company's products?

A:   No. Neither the Company nor a distributor can provide reimbursement for
     travel expenses incurred in attending a conference for which continuing
     medical education credit is awarded, regardless of whether or not the
     seminar includes a session on the safe and effective use of the Company's
     products.

Q:   Can the Company or a distributor provide physicians with certificates that
     can be used to reduce the registration fee of a continuing medical
     education conference?

A:   No. No payments, whether in the form of cash or certificates, may be
     provided directly to health care professionals in connection with attending
     a continuing medical education conference.

Q:   Can the Company or a distributor pick up the tab for a golf outing offered
     in connection with a product training (non CME) program?

A:   No. Although the Company of distributor can reimburse attendees at product
     training programs for modest travel expenses, recreational activities and
     entertainment may not be paid for by the Company or any of its
     representative in connection with this type of program.

Q:   The Company plans to sponsor a reception for the attendees at a continuing
     medical education conference. Is this permitted by the Company's policy?

A:   Yes, provided the reception is modest in nature and does not compete with
     or take precedence over the educational portions of the conference.





<PAGE>

                                                                REVISED 11/15/96

SALES, MARKETING AND PROMOTIONAL PRACTICES POLICY                      CONTINUED

QUESTIONS AND ANSWERS

Q:   The policy allows the Company to underwrite the cost of "modest" meals and
     social events provided in connection with medical conferences. What does
     "modest" mean?

A:   In interpreting words such as "modest," you should consider how a proposed
     activity would appear to a modestly paid government official. If the
     proposed activity could be viewed by a government official as anything more
     than a simple business courtesy, then you should not engage in it.

Q:   Can I reimburse a civilian physician who works for a military hospital for
     travel expenses incurred by the physician in attending a CME course?

A:   You can reimburse physicians employed by the government only if you have
     requested and received written approval in advance from the relevant
     government agency. Only modest and reasonable expenses can be reimbursed.

Q:   A physician recently requested reimbursement for travel expenses incurred
     in attending a product (non-CME) training program sponsored by the Company.
     The physicians expenses included a first class airline ticket and a ticket
     for a Broadway show. Can the company or a distributor reimburse him for
     these expenses?

A:   No. The Company or the distributor should make it clear before any expenses
     are incurred that only modest transportation, lodging and meal expenses
     will be reimbursed in connection with attending a product training
     (non-CME) course. This means that in the case of airline tickets, only
     coach fares will be covered. Costs of attending shows and other
     entertainment cannot be reimbursed by the Company or a distributor in
     connection with a product training course.

Q:   What will happen if an employee or agent of the company violates the
     Company's policy?

A:   The consequences of violating the policy will depend, of course, upon the
     severity of the violation; however, violation of the policy may result in
     termination of the employment or agent relationship with the Company.



<PAGE>