SALES REPRESENTATIVE AGREEMENT

         Agreement made as of the 1ST day of JULY, 2000 (the "Effective Date"),
by and between SMITH & NEPHEW, INC. ("S&N"), and HARRY KRAUS ("Representative").

1.   TERM OF AGREEMENT. The initial term of this Agreement shall commence on the
     Effective Date and shall end on December 31, 2000, subject, however, to
     prior termination in accordance with Section 10 of this Agreement. After
     the initial term, this Agreement shall be automatically renewed and
     extended for successive additional six-month periods subject, however, to
     prior termination in accordance with Section 10 of this Agreement.

2.   APPOINTMENT AND DEFINITION OF PRODUCTS AND TERRITORY. S&N hereby grants to
     Representative, and Representative accepts from S&N, the right to sell the
     products listed in EXHIBIT A attached hereto (the "Products") in the
     geographic area described in EXHIBIT B attached hereto (the "Territory").
     S&N reserves the right to make sales of Products directly to customers
     inside the Territory subject to Representative's right to receive
     commissions on sales of Products in the Territory pursuant to Section 5.
     Whether Representative's right to sell the Products in the Territory is
     exclusive or non-exclusive is stated in EXHIBIT B.

3.   RESPONSIBILITIES OF THE REPRESENTATIVE.

     (a)  PROMOTION OF PRODUCTS. Representative will use its best efforts and
          devote such time as may be reasonably necessary to promote and
          maximize the sale and use of the Products in the Territory. In
          furtherance of but without limiting the foregoing, Representative
          agrees to:

          (i)  diligently solicit orders for the Products throughout the
               Territory;

          (ii) distribute within the Territory sales catalogs and other
               literature supplied by S & N; and Exogen, Inc. ("Exogen"); and

          (iii) maintain adequate facilities and a competent work force to
               promote and sell the products effectively.

     (b)  REPORTS. Representative shall provide S&N and Exogen with periodic and
          other special sales reports as may reasonably be requested from time
          to time by S&N and Exogen.

     (c)  MARKET INFORMATION. Representative shall forward to Company all
          information relating to the Product, whether favorable or adverse,
          received by it or its employees, agents or subcontractors. Likewise,
          Representative shall forward to S&N all marketing information acquired
          on medical instruments in competition, either directly or indirectly,
          with any of the Products. Representative shall submit 30 days
          following the execution date of this Agreement and 30 days prior to
          the beginning of each six month period that this Agreement is in
          effect, a written business plan containing, among other things,
          marketing information, forecast input and sales plans.

                                                                          PAGE 1



<PAGE>


     (d)  RECORDS. Representative shall keep complete and accurate records
          concerning all employees, agents and subcontractors "including,
          without limitation, information detailing (i) training for Medical
          Device and Complaint Reporting ("MDR") under the United States Food
          and Drug Administration ("FDA") requirements, (ii) sales training
          programs for all employees, agents and subcontractors selling Products
          (iii) sales records for all employees, agents and subcontractors
          selling Products, and (iv) a list of all customers with whom
          employees, agents and subcontractors selling Products have done
          business. S&N shall be allowed access to such records at all
          reasonable times ( during normal business hours, or at other times
          that are mutually agreeable by S&N and Representative) following S&N's
          request. Within 10 days of the date of this Agreement, Representative
          shall provide S&N with a list of employees and agents authorized to
          sell the Products and shall notify S&N in writing within 15 days of
          any change to that list.

     (e)  EXPENSES. Representative will pay all expenses incurred by it in
          connection with its business and will be solely responsible for the
          acts and expenses of its employees and agents.

     (f)  AUTHORITY. Representative will not, without S&N's prior written
          approval, accept, alter, enlarge, or limit orders, make
          representations or guarantees concerning Products, accept the return
          of, or make any allowance for, Products, or bill any customer for any
          order of Products.

     (g)  POLICIES. Representative will abide by all policies and procedures
          established by S&N and Exogen from time to time regarding the
          solicitation and recording of orders, sales promotions, and other
          matters related to the sale of Products.

     (h)  TRADE SHOWS. If requested by S&N, Representative at its own expense
          will assist S&N in presentations at trade shows and in sales
          promotional campaigns.

     (i)  SALES LEADS. Representative agrees to promptly advise S&N of any sales
          leads or potential customers for Products outside of the Territory.

     (j)  TRAINING. Representative will make every reasonable effort to assure
          active participation of all appropriate personnel in its organization
          in the use of training materials and attendance at training programs
          of S&N.

     (k)  COLLECTION. Representative will use its best efforts to assist Exogen,
          upon its request, with any collections for Products sold in the
          Territory .

     (l)  COMPLIANCE WITH LAWS. Representative shall comply in all material
          respects, with all laws, regulations, and requirements of all
          governmental agencies governing the manufacture and distribution of
          the Products, including, without limitation to, the FDA's MDR and FDA
          Medical Device Registration guidelines.


                                                                          PAGE 2



<PAGE>


4.   RESPONSIBILITIES OF S&N. S&N agrees to:

     (a)  Provide to Representative such literature, brochures, information and
          training as is required in the judgment of S & N;

     (b)  Keep Representative informed of the prices at which the Products are
          offered for sales and of changes in products, specifications, prices
          and deliveries;

     (c)  Provide Representative with a copy of the acknowledgement of any order
          for Products submitted by a customer in the Territory which is
          accepted by S&N and a copy of each invoice for Products shipped in the
          Territory; and

     (d)  Comply in all material respects, with all laws, regulations, and
          requirements of all governmental agencies governing the manufacture
          and distribution of the Products, including, but not limited to, the
          FDA guidelines and the FDA's MDR requirements.

5.   COMMISSIONS.

     (a)  S&N agrees to pay and Representative agrees to accept commissions as
          set forth in EXHIBIT C attached hereto as full payment for all sales
          made and services rendered by Representative under this Agreement.

     (b)  Commissions will be paid to Representative, subject to the provisions
          of Sections 6 of this Agreement, on Net Invoice Prices (as defined
          below) of Orders (as defined below) for the sale of Products delivered
          to customers in the Territory while this Agreement is in effect.

     (c)  "Net Invoice Price" means the amount shown on the invoice as due from
          the customer, after giving effect to quantity or other discounts,
          sales allowances and adjustments for bad debt. No commissions shall be
          paid on the replacement of Products previously sold in the Territory.

     (d)  "Order" means any commitment to purchase Products which has been
          accepted and shipped by S&N, and which is obtained by Representative
          or directly by S&N, and which is obtained by Representative or
          directly by S&N during the term of this Agreement from (i) any
          customer located in the Territory, or (ii) any third party payer
          purchasing the Product on behalf of any customer located in the
          Territory, subject to the provisions in EXHIBIT C.

6.   ACCEPTANCE OF ORDERS; EXCLUDED ORDERS.

     (a)  All orders shall be submitted to Exogen and shall be subject to
          acceptance or rejection, in the sole discretion of Exogen, by an
          authorized employee of Exogen at its principal office. Representative
          understands that it is granted only the authority to solicit and
          obtain Orders for Products for transmittal to Exogen. Representative
          is neither expressly nor implicitly authorized to accept Orders on
          behalf of Exogen or to enter into written or oral contracts or
          agreements of any nature on behalf of Exogen.

                                                                          Page 3


<PAGE>



     (b)  S&N may designate by written notice to Representative certain
          customers within the Territory as "National, Regional, or Government
          Accounts." Representative will be paid commissions on sales to these
          accounts, depending upon the Representative's responsibilities set
          forth in EXHIBIT C that apply to those accounts.

     (c)  Representative recognizes that S&N has appointed or may appoint (i)
          other sales representatives for the Products in areas other than the
          Territory; (ii) other sales representatives within the Territory for
          goods manufactured by S&N other than the Products; and (iii) other
          sales representatives within the Territory for the Products if
          Representative's rights hereunder are stated to be non-exclusive in
          EXHIBIT A. This Agreement does not give Representative any right to
          offer for sale or sell goods manufactured or offered for sales by S&N
          other than the Products.

7.   COMPETITIVE PRODUCTS. Representative shall not during the term of this
     Agreement, without prior written consent of S&N, market or sell goods which
     in S&N's opinion compete directly or indirectly with Exogen products.

8.   CHANGES IN AGREEMENT AND EXHIBITS.

     (a)  Because of S&N's sales policies, the commission rates it is willing to
          pay to Representative and the sums on which it is willing to sell its
          products may change after this Agreement has been signed, S&N reserves
          the right, in its sole discretion, to make changes in this Agreement
          or in any of the Exhibits to this Agreement. Changes in this Agreement
          or in any Exhibits will be effective 30 days after written notice of
          the change has been given to Representative; provided, however, that
          S&N may make changes affecting promotions and prices without notice.
          Representative may, if it does not agree to the change, terminate this
          Agreement under Section 10 (e). No changes made by S&N shall be
          applied retroactively if the change would result in a reduction in
          commissions due to Representative.

     (b)  Upon 30 days prior written notice to the Representative, S&N may, in
          its sole discretion, modify the Territory or terminate in full this
          Agreement if S&N determines that the Representative's level of sales
          is unsatisfactory to S&N .

9.   FORECASTS. S&N shall establish and notify Representative in writing 30 days
     prior to the beginning of each six month period that this Agreement is in
     effect of its sales quota for each such six month period and its quarterly
     quotas for each quarter of such six month period (the "Sales Quota" or the
     "Quotas"), which Quotas shall be established by S&N on a good faith basis.
     EXHIBIT D attached hereto sets forth the Representative's Sales Quota
     commencing with the first full month Representative sells Sonic Accelerated
     Fracture Healing System ("SAFHS"), under this Agreement.

10.  TERMINATION. This Agreement may be terminated:

     (a)  By either party without cause, effective at the end of the then
          current term, by giving prior written notice of termination to the
          other party at least 30 days prior to the end of the then current
          term. If no notice is given, this Agreement shall automatically renew
          as stated in Section 1.


                                                                          PAGE 4




<PAGE>




     (b)  At any time, by either party , if the other party breaches any of its
          obligations under this Agreement and fails to remedy such breach
          within 30 days after written notice of such breach is provided to such
          other party .

     (c)  By S&N, effective immediately and without notice, if (i) all or a
          substantial part of the assets of Representative, or more than 50% of
          the capital stock of Representative, is sold or otherwise transferred
          to any person; (ii) Representative is merged or consolidated with any
          other person; (iii) a receiver, trustee, or liquidator of
          Representative is appointed for any of properties or assets of
          Representative; (iv) Representative makes a general assignment for the
          benefit of its creditors; (v) Representative files a petition under
          the federal Bankruptcy Code or other federal or state statute for the
          reorganization of Representative or any arrangement with its creditors
          or readjustment of its debt, or its dissolution or liquidation, or
          such a petition is filed against Representative and is not dismissed
          within 60 days thereafter; or (vi) Representative ceases doing
          business or commences dissolution or liquidation proceedings.

     (d)  By S&N, upon 30 days prior written notice to the Representative if the
          Representative's aggregate sales, net of returns, of Products during
          any quarter of this Agreement does not equal or exceed the
          Representative's Sales Quota for each such period.

     (e)  By Representative, if S&N changes any portion of this Agreement or any
          Exhibit to this Agreement pursuant to Section 8(a) and Representative
          disagrees with the change, by written notice of tern1ination to S&N,
          effective 10 days following the giving of such notice.

          It is specifically understood by Representative and by S&N that if one
          party shall duly exercise its right of termination under this section
          10, the only rights of the other party shall be those specified in
          Sections 11, 12, 14, and 18 hereof, and that neither party shall be
          entitled to any compensation or claim for goodwill or other loss, cost
          or expense which either of them may suffer or claim to have suffered
          by reason of termination of this Agreement.

11.  RIGHTS FOLLOWING TERMINATION.

     (a)  Following termination of this Agreement, S&N shall have no further
          responsibility to Representative except to (i) pay commissions then
          due, and (ii) pay when they become due commissions on Orders accepted
          by S&N prior to termination, which are scheduled for shipment and are
          actually shipped within 30 days following termination; provided,
          however, that S&N's obligation under clause 11 (a)(ii) shall be an
          amount equal to one-half(1/2) of the usual commission otherwise due
          under Exhibit C. Except as expressly stated herein, S&N shall have no
          liability for commissions with respect to Orders received by S&N after
          the Effective Date of termination of this Agreement.

     (b)  In the event of termination, Representative shall promptly return to
          S&N or its designee all sales literature, brochures, technical
          information, price lists, samples, evaluation units and other
          materials supplied by S&N to Representative without charge.



                                                                          Page 5

<PAGE>


     (c)  The rights and obligations of the parties to this Agreement set forth
          in this Section 11 and Sections 12, 14, and 18 hereof shall survive
          any termination or expiration of this Agreement. The termination or
          expiration of this Agreement shall in no case relieve either party
          from its obligations to pay to the other monies accrued hereunder
          prior to such termination or expiration.

     (d)  S&N shall have no liability to Representative for damages of any
          kind, including incidental or consequential damages, on account of
          the termination or expiration of this Agreement. Without limiting the
          generality of the foregoing, S&N shall not be liable to Representative
          on account of the termination or expiration of this Agreement for
          reimbursement or damages for the loss of goodwill, prospective profits
          or anticipated sales, or on account of any expenditures, investment,
          leases or commitments made by Representative or for any reason
          whatsoever based upon or growing out of such termination or
          expiration.

12.  PROPRIETARY RIGHTS AND CONFIDENTIALITY .

     (a)  Except as expressly set forth in Section 14, neither this Agreement
          nor any sale of Products under this Agreement shall be construed as
          granting to the Representative any license or right in or to any
          patent, copyright, trademark or other proprietary right of S&N or
          Exogen.

     (b)  The Representative shall maintain the confidentiality of, and not
          disclose to others, any confidential or proprietary information of S&N
          or Exogen which it may now have or may hereafter obtain, including
          without limitation specifications, technical reports, customer lists
          and product plans relating to S&N's business or products.
          Representative shall cause each of its employees, agents and
          subcontractors to execute such agreements as may be necessary to
          assure compliance with this Section l2(b).

13.  PRODUCT CHANGES.

     (a)  It is understood that new and additional products may be introduced by
          S&N from time to time. Representative shall be authorized to solicit
          orders for sales of such new or additional products only if and when
          S&N authorizes Representative, in writing, to represent S&N in
          connection with each such product.

     (b)  Upon 30 days prior written notice to the Representative, Products may
          be deleted from the list of Products which Representative is
          authorized to sell. No commissions shall be paid on Orders for such
          deleted Products received by S&N after the effectiveness of such
          Product deletion.

14.  TRADEMARKS. Representative shall conduct business under its own name.
     Representative shall not use any trademarks or trade names of S&N in any
     manner, except as authorized in writing by S&N or in connection with the
     use of literature supplied by S&N. Representative shall discontinue such
     usage upon termination of this Agreement.


                                                                          Page 6

<PAGE>


15.  RELATIONSHIP BETWEEN PARTIES. The relationship between S&N and
     Representative is that of independent contractors, and nothing in this
     Agreement shall be construed to constitute Representative as an employee,
     partner or agent of S&N. Without limiting the foregoing, Representative
     shall have no authority to act for or to bind S&N in any way, to alter any
     of the terms or conditions of any standard forms or other agreements of S&N
     with purchasers of Products, to make representations or warranties or to
     execute agreements on behalf of S&N, or to represent that is in any way
     responsible for the acts or omissions of Representative. Representative
     shall indemnify and hold S&N harmless for any liability or damage to S&N
     resulting from a violation of this Section 15.

16.  NOTICES. All notices, requests, demands, and other communications under
     this Agreement shall be in writing and shall be deemed to have been duly
     given when delivered in person or, if mailed, when mailed by United States
     certified or registered mail, postage prepaid, to the parties at the
     addresses set forth below their signatures to this Agreement or at such
     other address as may be given in writing by either party to the other in
     accordance with this Section 16.

17.  ASSIGNABILITY.

     (a)  Representative acknowledges that S&N is entering into this Agreement
          in reliance upon the personal reputation, qualifications and abilities
          of the present owner or owners of Representative's business and
          operations, and accordingly, the Representative may not assign its
          rights or obligations under this Agreement, either voluntarily or by
          operation of law, except with the prior written consent of S&N. A
          change in control of the Representative's business shall be deemed to
          be an assignment for this purpose.

     (b)  S&N may assign this Agreement without Representative's consent.

18.  INDEMNIFICATION. S&N shall indemnify and hold harmless Representative from
     any and all claims, damages or costs which arise out of Representative's
     performance of its duties hereunder, except to the extent such claims,
     damages or costs result, directly or indirectly, from Representative's
     breach of Section 15 hereof or the gross negligence or willful misconduct
     of Representative. Representative shall indemnify and hold harmless S&N
     from and all claims, damages or costs which arise out of Representative's
     performance of its duties hereunder, to the extent such claims, damages or
     costs result, directly or indirectly, from Representative's breach of
     Section 15 hereof or the gross negligence or willful misconduct of
     Representative.

19.  MISCELLANEOUS.

     (a)  This Agreement shall not be binding upon S&N until it has been
          executed by a duly authorized officer of S&N .

     (b)  This Agreement shall be governed by, and construed in accordance with,
          the laws of the State of Tennessee without giving effect to conflict
          of laws principles.

     (c)  This Agreement constitutes the entire understanding between the
          parties relating to the subject matter of this Agreement and
          supersedes all prior writings, negotiations or understandings with
          respect thereto. No modification or addition to this Agreement shall
          have any effect unless it is set forth in writing and signed by both
          parties.


                                                                          Page 7


<PAGE>


     (d)  The waiver by S&N of any breach of any provision of this Agreement
          shall not be construed as a continuing waiver of such breach or as a
          waiver of other breaches of the same or of other provisions of this
          Agreement.

     (e)  This Agreement may be executed in one or more counterparts, each of
          which shall be deemed an original, but all of which together shall
          constitute one and the same instrument.

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


REPRESENTATIVE                                  SMITH & NEPHEW, INC.
HARRY KRAUS

Name Printed: Harry Kraus
             --------------------

By: /s/ HARRY KRAUS                             By: /s/ RUE A. BERG
    ---------------                                 ---------------
    Harry Kraus

Title:                                          Title: V.P. Sales
      -------------                                   -------------

Address:                                        Address:

4905 SW Dosch Park Lane                         1450 Brooks Road
Portland, OR 97201                              Memphia, Tennessee 38116

TaxID or Social Security No: ###-##-####
                             ------------

Date:                                           Date:
      ------------------------                       ------------------------

Exhibits:
        A. Products
        B. Territory
        C. Commission
        D. Sales Quota




                                                                          PAGE 8




<PAGE>


                                    EXHIBIT A



                                   "PRODUCTS "

Exogen 2000(TM) - Ultrasound Bone healing Therapy for Fresh Closed Distal Radius
(Colles') Fractures and Closed or Grade I Open Tibial Diaphysis Fractures in
Skeletally Mature Individuals When These Fractures are Orthopaedically Managed
by Closed Reduction and Cast Immobilization.






<PAGE>


                                    EXHIBIT B

                                   "TERRITORY"



REPRESENTATIVE:                                         -----------------------

(name, social security  no. or Federal I.D.)            -----------------------

EXCLUSIVE                                               NON-EXCLUSIVE     X
         ---------------                                              ---------

TERRITORY: TO BE DEFINED BY THE PORTLAND DISTRICT SALES MANAGER.



<PAGE>


                                    EXHIBIT C

                                  "COMMISSIONS"

COMMISSIONS ARE 13% OF THE NET INVOICE PRICE AS DEFINED IN SECTION 5 PARAGRAPH C
UNTIL AN EXOGEN SPECIALIST IS HIRED TO ASSIST IN YOUR TERRITORY.

COMMISSIONS REVERT TO 5% OF THE NET INVOICE PRICE AS DEFINED IN SECTION 5
PARAGRAPH C AS SOON AS AN EXOGEN SPECIALIST IS HIRED TO ASSIST IN YOUR
TERRITORY.








<PAGE>



                                    EXHIBIT D

                                  "SALES QUOTA"

               The Sales Quota is to be determined by the Manager
          in terms of number of monthly REVENUE SHIPMENTS and ORDERS .

















<PAGE>