<PAGE>   1
                                                                  Exhibit 10.88



                              COLLAGEN CORPORATION

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement") is dated as of February 7,
1997 by and between Gary S. Petersmeyer ("Employee") and Collagen Corporation, a
Delaware corporation (the "Company" or "Collagen").

                                    RECITALS

         A. Employee served as the Company's President and Chief Operating
Officer from February 10, 1995 to February 7, 1997 and as President and Chief
Executive Officer effective February 7, 1997. The Company's Board of Directors
believes it is in the best interests of the Company and its stockholders to
retain Employee and provide incentives to Employee to continue in the service of
the Company. Accordingly, the Board of Directors of the Company and Employee
agree to enter into this Agreement.

         B. In addition, it is expected that another company may from time to
time consider the possibility of acquiring the Company or that a change in
control may otherwise occur, with or without the approval of the Company's Board
of Directors. The Board of Directors recognizes that such consideration can be a
distraction to Employee and can cause Employee to consider alternative
employment opportunities. The Board of Directors has determined that it is in
the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.

         C. The Board of Directors further believes that it is imperative to
provide Employee with certain benefits upon a Change of Control and, under
certain circumstances, upon termination of Employee's employment in connection
with a Change of Control, which benefits are intended to provide Employee with
financial security and provide sufficient income and encouragement to Employee
to remain with the Company, notwithstanding the possibility of a Change of
Control.

         Now therefore, in consideration of the mutual promises, covenants and
agreements contained herein, the parties hereto agree as follows:

         1.       Duties.

                  (a) Position. Employee shall be employed as President and
Chief Executive Officer, and as such will have responsibility for the overall
operation of the Company and will report to the Company's Board of Directors
(the "Board").
<PAGE>   2
                  (b) OBLIGATIONS TO THE COMPANY. Employee agrees to the best of
his ability and experience that he will at all times loyally and conscientiously
perform all of the duties and obligations required of and from Employee pursuant
to the express and implicit terms hereof, and to the reasonable satisfaction of
the Company. During the term of Employee's employment relationship with the
Company, Employee further agrees that he will devote all of his business time
and attention to the business of the Company, the Company will be entitled to
all of the benefits and profits arising from or incident to all such work
services and advice, Employee will not render commercial or professional
services of any nature to any person or organization, whether or not for
compensation, without the prior written consent of the Board, and Employee will
not directly or indirectly engage or participate in any business that is
competitive in any manner with the business of the Company. Nothing in this
Agreement will prevent Employee from accepting speaking or presentation
engagements in exchange for honoraria or from serving on boards of charitable
organizations, or from owning no more than 1% of the outstanding equity
securities of a corporation whose stock is listed on a national stock exchange.
Employee will comply with and be bound by the Company's operating policies,
procedures and practices from time to time in effect during the term of
Employee's employment.

         2. AT-WILL EMPLOYMENT. The Company and Employee acknowledge that
Employee's employment is and shall continue to be at-will, as defined under
applicable law, and that Employee's employment with the Company may be
terminated by either party at any time for any or no reason. If Employee's
employment terminates for any reason, Employee shall not be entitled to any
payments, benefits, damages, award or compensation other than as provided in
this Agreement. The rights and duties created by this Section 2 may not be
modified in any way except by a written agreement executed by an officer of the
Company upon direction from the Board.

         3.       COMPENSATION.  For the duties and services to be performed by
Employee hereunder, the Company shall pay Employee, and Employee agrees to
accept, the salary, stock options, bonuses and other benefits described below in
this Section 3.

                  (a) SALARY. Effective February 7, 1997, Employee shall receive
an annual base salary of $300,000.00. Employee's salary will be payable pursuant
to the Company's normal payroll practices. Employee's salary shall be reviewed
on at least an annual basis by the Board or its Human Resources Committee for
possible adjustment.

                  (b) STOCK OPTIONS AND OTHER INCENTIVE PROGRAMS. Employee shall
be eligible to participate in any stock option or other incentive programs
available to officers or employees of the Company. On February 7, 1997, Employee
was granted an additional option to purchase 145,000 shares of Common Stock of
the Company pursuant to the Company's 1994 Stock Option Plan, subject to the
standard terms and conditions (including vesting at the rate of 2% per month
over 50 months) of the 1994 Stock Option Plan and the options granted
thereunder.

                  (c) BONUSES. Employee's entitlement to incentive bonuses from
the Company is discretionary and shall be determined by the Board or its Human
Resources Committee in 

                                      -2-
<PAGE>   3
good faith based upon the extent to which Employee's individual performance
objectives and the Company's profitability objectives and other financial and
nonfinancial objectives are achieved during the applicable bonus period.

                  (d) ADDITIONAL BENEFITS. Employee will be eligible to
participate in the Company's employee benefit plans of general application,
including, without limitation, those plans covering medical, disability and life
insurance in accordance with the rules established for individual participation
in any such plan and under applicable law. Employee will be eligible for
vacation and sick leave in accordance with the policies in effect during the
term of this Agreement and will receive such other benefits as the Company
generally provides to its other employees of comparable position and experience.

                  (e) REIMBURSEMENT OF EXPENSES. Employee shall be authorized to
incur on behalf and for the benefit of the Company, and shall be reimbursed by
the Company for, reasonable expenses, provided that such expenses are
substantiated in accordance with Company policies.

         4.       TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS.

                  (a)      TERMINATION  OF  EMPLOYMENT.  This Agreement may be
terminated at any time upon the occurrence of any of the following events:

                           (i)      The Company's determination in good faith
that it is terminating Employee for Cause (as defined in Section 5 below);

                           (ii)     The Company's determination that it is 
terminating Employee without Cause, which determination may be made by the
Company at any time at the Company's sole discretion, for any or no reason;

                           (iii)    The effective date of a written notice sent
to the Company from Employee stating that Employee is electing to terminate his
employment with the Company; or

                           (iv)     Following Employee's death or disability.

                  (b)      SEVERANCE BENEFITS.  Employee shall be entitled to
receive severance benefits upon termination of employment only as set forth in
this Section 4(b):

                           (i)      VOLUNTARY TERMINATION.  If Employee
voluntarily resigns from the Company (other than as an Involuntary Termination
(as defined below)), then Employee shall not be entitled to receive payment of
any severance benefits. Employee will receive payment(s) for all salary, bonuses
and unpaid vacation accrued as of the date of Employee's termination of
employment and Employee's benefits will be continued under the Company's then
existing benefit plans and policies in accordance with such plans and policies
in effect on the date of termination and in accordance with applicable law.

                                      -3-
<PAGE>   4
                           (ii)     INVOLUNTARY TERMINATION APART FROM A CHANGE
OF CONTROL. In the event that Employee's employment is terminated as a result of
an Involuntary Termination other than for Cause, either prior to the occurrence
of a Change of Control or after the 24-month period following the effective date
of a Change of Control, then Employee will be entitled to receive the following
benefits: (A) a lump sum payment within five days after the date of termination
of employment equal to 12 months of Employee's then current base salary, (B) a
lump sum payment as soon as practicable after the date of termination of
employment equal to Employee's scheduled bonus for the Company's fiscal year in
which the termination occurs or, if no such bonus has been scheduled, equal to
the bonus paid to Employee for the Company's fiscal year prior to the Company's
fiscal year in which the termination occurs and (C) each stock option to
purchase the Company's Common Stock granted to Employee over the course of his
employment with the Company and held by Employee on the date of termination of
employment shall become immediately vested on such date as to that number of
shares that would have vested in accordance with the terms of such option
(assuming that Employee had remained in Continuous Status as an Employee, as
defined in the relevant plan and option agreement, for 12 months after the date
of termination of employment) as of the date 12 months after the date of
termination of employment and each such option shall be exercisable in
accordance with the provisions of the option agreement and plan pursuant to
which such option was granted. In addition, Employee will receive payment(s) for
all salary, bonuses and unpaid vacation accrued as of the date of Employee's
termination of employment and Employee's benefits will be continued under the
Company's then existing benefit plans and policies in accordance with such plans
and policies in effect on the date of termination and in accordance with
applicable law.

                           (iii)    TREATMENT OF STOCK OPTIONS UPON A CHANGE OF 
CONTROL. In the event of a Change of Control and unless otherwise limited by the
provisions of Section 7, each stock option to purchase the Company's Common
Stock granted to Employee over the course of his employment with the Company and
held by Employee on the effective date of a Change of Control shall become
immediately vested on such date as to that number of shares that would have
vested in accordance with the terms of such option (assuming that Employee had
remained in Continuous Status as an Employee, as defined in the relevant plan
and option agreement, for 24 months after the date of termination of employment)
as of the date 24 months after the effective date of the Change of Control and
each such option shall be exercisable in accordance with the provisions of the
option agreement and plan pursuant to which such option was granted.

                           (iv)     INVOLUNTARY TERMINATION FOLLOWING A CHANGE
OF CONTROL. In the event that Employee's employment is terminated as a result of
an Involuntary Termination other than for Cause at any time within 24 months
following the effective date of a Change of Control, then Employee will be
entitled to receive severance benefits as follows: (A) a lump sum payment within
five days after the date of termination of employment equal to 24 months of
Employee's then current base salary, (B) a lump sum payment as soon as
practicable after the date of termination of employment equal to two times
Employee's scheduled bonus for the Company's fiscal year in which the
termination occurs or, if no such bonus has been scheduled, equal to two times
the bonus paid to Employee for the Company's fiscal year prior to the Company's
fiscal year in which the termination occurs and (C) in the event that the
acceleration of vesting provided for in Section 4(b)(iii) did not occur due to
the provisions of Section 7 on the 

                                      -4-
<PAGE>   5
effective date of the Change of Control, then, except to the extent that the
provisions of Section 7 would not permit acceleration of vesting pursuant to
this Section 4(b)(iv), each stock option to purchase the Company's Common Stock
granted to Employee over the course of his employment with the Company and held
by Employee on the date of termination of employment shall become immediately
vested on such date as to that number of shares that would have vested in
accordance with the terms of such option (assuming that Employee had remained in
Continuous Status as an Employee, as defined in the relevant plan and option
agreement, for 24 months after the date of termination of employment) as of the
date 24 months after the date of termination of employment and each such option
shall be exercisable in accordance with the provisions of the option agreement
and plan pursuant to which such option was granted. In addition, Employee will
receive payment(s) for all salary, bonuses and unpaid vacation accrued as of the
date of Employee's termination of employment and Employee's benefits will be
continued under the Company's then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of termination and
in accordance with applicable law.

                           (v)      TERMINATION FOR CAUSE.  If Employee's 
employment is terminated for Cause at any time, then Employee shall not be
entitled to receive payment of any severance benefits. Employee will receive
payment(s) for all salary, bonuses and unpaid vacation accrued as of the date of
Employee's termination of employment and Employee's benefits will be continued
under the Company's then existing benefit plans and policies in accordance with
such plans and policies in effect on the date of termination and in accordance
with applicable law.

                           (vi)    TERMINATION BY REASON OF DEATH OR DISABILITY.
In the event of Employee's death during the term of this Agreement, the Company
shall pay to Employee or Employee's estate Employee's scheduled bonus for the
Company's fiscal year in which death occurred or, if no such bonus has been
scheduled, equal to the bonus paid to Employee for the Company's fiscal year
prior to the year in which death occurred. In addition, Employee's estate will
receive payment(s) for all salary, bonuses and unpaid vacation accrued as of the
date of Employee's death and any other benefits payable under the Company's then
existing benefit plans and policies in accordance with such plans and policies
in effect on the date of death and in accordance with applicable law. In the
event that, during the term of this Agreement, Employee is unable to perform his
job due to disability (as determined under the Company's long-term disability
insurance program) for 6 months in any 12-month period, the Company may, at its
option, terminate Employee's employment with the Company and such termination
shall be deemed to be an Involuntary Termination other than for Cause apart from
a Change of Control and Employee shall be entitled to receive the benefits set
forth in Section 4(b)(ii) hereof.

         5.       DEFINITION OF TERMS.  The following terms referred to in this
Agreement shall have the following meanings:

                  (a)      CHANGE OF CONTROL.  "Change of Control" shall mean
the occurrence of any of the following events:

                           (i)      OWNERSHIP.  Any "Person" (as such term is 
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "Beneficial 
                                      -5-
<PAGE>   6

Owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company's then outstanding voting securities without the
approval of the Board;

                           (ii)     MERGER/SALE OF ASSETS. A merger or 
consolidation of the Company whether or not approved by the Board, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets; or

                           (iii)    CHANGE IN BOARD COMPOSITION.  A change in 
the composition of the Board, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean directors
who either (A) are directors of the Company as of February 7, 1997 or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but an Incumbent Director shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).

                  (b) CAUSE. "Cause" shall mean (i) gross negligence or willful
misconduct in the performance of Employee's duties to the Company where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries (ii) repeated
unexplained or unjustified absence from the Company, (iii) a material and
willful violation of any federal or state law; (iv) commission of any act of
fraud with respect to the Company or (v) conviction of a felony or a crime
involving moral turpitude causing material harm to the standing and reputation
of the Company, in each case as determined in good faith by the Board.

                  (c) INVOLUNTARY TERMINATION. "Involuntary Termination" shall
include any termination by the Company other than for Cause and Employee's
voluntary termination, upon 30 days prior written notice to the Company,
following (i) a material reduction or change in job duties, responsibilities and
requirements inconsistent with the Employee's position with the Company and the
Employee's prior duties, responsibilities and requirements or a change in
Employee's reporting relationship such that Employee is no longer reporting to
the Board; (ii) any reduction of Employee's base compensation (other than in
connection with a general decrease in base salaries for most officers of the
successor corporation); or (iii) Employee's refusal to relocate to a facility or
location more than 30 miles from the Company's current location.

        6. LIMITATION ON PAYMENTS. In the event that the severance and other
benefits provided for in this Agreement to the Employee (i) constitute
"parachute payments" within the 
                                 

                                      -6-
<PAGE>   7
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) but for this Section, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee's severance benefits
under Sections 4(b)(iii) and (iv) shall be payable either:

                           (a)      in full, or

                           (b)      as to such lesser amount which would result 
in no portion of such severance benefits being subject to excise tax under
Section 4999 of the Code,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits under Section 4(b)(iii) and (iv), notwithstanding that all or
some portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section 6 shall be made in writing by
independent public accountants agreed to by the Company and the Employee (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section 6, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Section
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 6.

         7. CERTAIN BUSINESS COMBINATIONS. In the event it is determined by the
Board, upon consultation with the Company management and the Company's
independent auditors, that the enforcement of any agreement between Employee and
the Company, including the provisions of Section 4(b) of this Agreement, which
allows for the acceleration of vesting of stock options granted for the
Company's Common Stock upon the effective date of a Change of Control or
thereafter, would preclude accounting for any proposed business combination of
the Company involving a Change of Control as a pooling of interests, and the
Board otherwise desires to approve such a proposed business transaction which
requires as a condition to the closing of such transaction that it be accounted
for as a pooling of interests, then any such provision of this Agreement shall
be null and void. For purposes of this Section 7, the Board's determination
shall require the unanimous approval of the non-employee Board members.

         8. AESTHETIC TECHNOLOGIES CORPORATION. The Company has recently
announced its intention to formally separate its Aesthetic Technologies Group
and form a new corporation, Aesthetic Technologies Corporation ("AT"). The Board
and management of the Company will continue to evaluate strategies for Aesthetic
Technologies Corporation, which may include a public offering, a "spin-off" or a
"split-off", among other alternatives. In the event that a management team is
selected for AT and Employee is a member of such management team, at the time of
any grant of options to members of the AT management team, Employee will be
granted options to purchase that number of shares of AT Common Stock
representing 3% of the 

                                      -7-
<PAGE>   8
outstanding Common Stock of AT, such percentage to be based on a percentage of
the outstanding Common Stock of AT on a fully-diluted basis as of the date of
grant, after giving effect to such grant and to grants made to other members of
the AT management team on such date. Such options will have the same terms and
conditions, including exercise price and vesting, as the options granted to
other members of the AT management team. It is currently contemplated that such
AT options will vest over a four year period, with 1/4th of the shares subject
to the option vesting one year after the vesting commencement date determined by
AT's Board of Directors on the date of grant and 1/48th of the shares subject to
the option vesting each month thereafter. At the time of, and as a condition of,
the grant of any options to purchase AT Common Stock, Employee will agree that
all options he then holds to purchase Collagen Common Stock will cease vesting
at the time the AT options begin vesting. Thereafter, Employee's options to
purchase Collagen Common Stock will be exercisable in accordance with the
provisions of the option agreement and plan pursuant to which such option was
granted. Once Employee's options to purchase Collagen Common Stock have ceased
vesting, there will be no acceleration of the vesting of such options,
notwithstanding the provisions of Section 4(b) hereof. However, in such event,
the AT options granted to Employee will be subject to the provisions of this
Agreement, including the vesting acceleration provisions of Section 4(b) hereof.
If Employee becomes an employee of AT, AT will assume all of the Company's
obligations under this Agreement. The distribution of assets of the Company to
AT, an initial public offering of AT Common Stock, a distribution of shares of
AT Common Stock to the stockholder of the Company or the termination of
Employee's employment with the Company in connection with commencement of his
employment by AT will not by itself or together result in any obligation to of
the Company to make any payments to Employee pursuant to Section 4 of this
Agreement.

         9. CONFIDENTIALITY AGREEMENT. Employee has signed a Confidential
Information and Invention Assignment Agreement (the "Confidentiality Agreement")
substantially in the form attached hereto as Exhibit A. Employee hereby
represents and warrants to the Company that he has complied with all obligations
under the Confidentiality Agreement and agrees to continue to abide by the terms
of the Confidentiality Agreement and further agrees that the provisions of the
Confidentiality Agreement shall survive any termination of this Agreement or of
Employee's employment relationship with the Company.

         10. INDEMNIFICATION AGREEMENT. Employee has entered into an
Indemnification Agreement dated as of February 10, 1995 (the "Indemnification
Agreement") with the Company. The Company agrees that, throughout the term of
this Agreement, the Indemnification Agreement shall remain in full force and
effect, subject to any amendments thereto agreed upon by Employee and the
Company. In the event that Employee becomes an employee of AT or any other
successor or affiliate of the Company, Employee and his subsequent employer
company shall enter into an indemnification agreement having substantially the
same terms as the Indemnification Agreement, and the Indemnification Agreement
shall then be terminated unless Employee continues to serve as an officer or
director of the Company.

         11. CONFLICTS. Employee represents that his performance of all the
terms of this Agreement will not breach any other agreement to which Employee is
a party. Employee has 

                                      -8-
<PAGE>   9
not, and will not during the term of this Agreement, enter into any oral or
written agreement in conflict with any of the provisions of this Agreement.
Employee further represents that he is entering into or has entered into an
employment relationship with the Company of his own free will and that he has
not been solicited as an employee in any way by the Company.

         12. SUCCESSORS. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Employee's rights hereunder
and thereunder shall inure to the benefit of, and be enforceable by, Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         13. NOTICE. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Employee shall be
addressed to Employee at the home address which Employee most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

         14.      MISCELLANEOUS PROVISIONS.

                  (a) NO DUTY TO MITIGATE. Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor shall any such payment be
reduced by any earnings that Employee may receive from any other source.

                  (b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

                  (c) WHOLE AGREEMENT. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
supersedes any agreement of the same title and concerning similar subject matter
dated prior to the date of this Agreement, and by execution of this Agreement
both parties agree that any such predecessor agreement shall be deemed null and
void.

                                      -9-
<PAGE>   10
                  (d) CHOICE OF LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.

                  (e) SEVERABILITY. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.

                  (f) ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement may be settled at the option of either party
by binding arbitration in the County of Santa Clara, California, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.
Punitive damages shall not be awarded.

                  (g) LEGAL FEES AND EXPENSES.  The Company shall pay 
Employee's reasonable legal fees, including costs and expenses incurred in
connection with negotiating this Agreement.

                  (h) NO ASSIGNMENT OF BENEFITS. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 14(h) shall be
void.

                  (i) EMPLOYMENT TAXES.  All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

                  (j) ASSIGNMENT BY COMPANY. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company. In
the case of any such assignment, the term "Company" when used in a section of
this Agreement shall mean the corporation that actually employs the Employee.

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

                  (l) ADVICE OF COUNSEL. EACH PARTY TO THIS AGREEMENT
ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE
OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL,

                                      -10-
<PAGE>   11
AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE
DRAFTING OR PREPARATION HEREOF.

                            [Signature Page Follows]



                                      -11-
<PAGE>   12
         The parties have executed this Agreement the date first written above.

                                      COLLAGEN CORPORATION


                                      By: /s/ William G. Davis
                                          ----------------------------------

                                      Title: Chairman, H. R. Committee
                                             -------------------------------

                                      Address:   2500 Faber Place
                                                 Palo Alto, California  94303




                                      GARY S. PETERSMEYER


                                      Signature:  /s/ Gary S. Petersmeyer

                                      Address: 447 Van Buren
                                               -----------------------------
                                               Los Altos, CA 
                                               -----------------------------





                                      -12-
<PAGE>   13





                                    EXHIBIT I

                        AGREEMENT REGARDING PROPRIETARY
                           INFORMATION AND INVENTIONS
<PAGE>   14

                                   EXHIBIT I


                  AGREEMENT REGARDING PROPRIETARY INFORMATION
                                 AND INVENTIONS

                                    RECITALS
         I am, or am about to become, an employee or consultant of COLLAGEN
CORPORATION, a Delaware corporation ("Collagen") or a subsidiary of COLLAGEN.
For purposes of this Agreement, "COLLAGEN" shall include any subsidiary of the
COLLAGEN.

         COLLAGEN is and will in the future be engaged in a continuous program
of research, development and production relating to its business, present and
future, including fields generally related to its business.  In addition,
COLLAGEN may in the future provide consulting services to its clients' relating
to such clients' research, development and production program.

         I understand that during the course of my employment by COLLAGEN, I
may develop and work on new processes, techniques, and inventions and make new
contributions of value to COLLAGEN.

         The purpose of this Agreement is to set forth my understanding and
agreement relating (i) to information of a confidential, secret or proprietary
nature which I may learn, acquire or develop during the course of or in
connection with my employment and (ii) to the right of COLLAGEN to all
Inventions (as defined herein).

         Consequently, I, Gary Petersmeyer , am making and executing this
AGREEMENT REGARDING PROPRIETARY INFORMATION AND INVENTIONS (the "Agreement").

                                   AGREEMENT

         In exchange for my employment and or the continued employment and for
the compensation paid to me by COLLAGEN, I, Gary Petersmeyer, acknowledge and
agree that:

         1.      Acknowledgment of and Incorporation of Recitals

                 The Recitals set forth above are part of this agreement; they
are true and correct.  Further, my employment creates a relationship of
confidence and trust between COLLAGEN and me regarding all proprietary
information, as defined in this Agreement.

         2.      Definition of Proprietary Information

                 As used in this Agreement, the term "Proprietary Information"
refers to any and all information of a confidential, proprietary, or secret
nature Which is or may be either (i) applicable to, or related in any way to,
the business, present or future, of COLLAGEN, or (ii) applicable to, or related
in any way to, the business of any client of COLLAGEN which may be


<PAGE>   15
made known to me by COLLAGEN or by any client of COLLAGEN or that I learn
during the period of my employment. For purposes of this Agreement, the term
"client" includes any customer, consultant or business associate, including,
without limitation, other individuals, partnerships and companies with which
COLLAGEN has a proposed or actual business arrangement.

                 Proprietary Information shall include, but not be limited to,
that of a technical nature such as methods, know-how, formulae, compositions,
processes, formulations, discoveries, machines, inventions, computer programs
and similar items or research projects that are of a business nature such as
information about cost, purchasing, advertising, litigation, profits, markets,
customers, medical investigations, clinical studies, FDA or other governmental
applications and that pertain to future developments such as research and
development, new products, or future marketing and merchandising plans.

         3.      Proprietary Information to be kept Confidential

                 I agree that Proprietary Information is a special, valuable
and unique asset of the business of COLLAGEN's business. I agree both during my
employment and afterwards to keep in confidence and trust all Proprietary
Information. I agree that I will not directly or indirectly disclose or cause
or permit to be used or disclosed, except as may be necessary in the ordinary
course of performing my duties as an employee of COLLAGEN, any Proprietary
Information or anything relating thereto without the written consent of
COLLAGEN.

         4.      Other Employment and Return of Data Upon Termination

                 I agree that during my employment by COLLAGEN, I will not,
without COLLAGEN's express written consent, directly or indirectly engage in
any employment or activity which may be detrimental to COLLAGEN. This includes
any line of business in which COLLAGEN is now or may hereafter become engaged.
If my employment with COLLAGEN terminates for any reason, I agree to promptly
deliver to COLLAGEN all documents, data, records, customer lists and other
information of any nature pertaining to or acquired in connection with my
employment which relates in any way to Proprietary Information.

        5.      Disclosure to COLLAGEN:  Inventions as Sole Property of COLLAGEN

                 I agree to promptly disclose to COLLAGEN, or any persons or
entity designated by COLLAGEN, all developments, improvements discoveries,
inventions, compositions, formulae, processes, techniques, know-how and data,
whether or not patentable (hereinafter "Inventions") and works of authorship,
whether or not copyrightable, that I make, conceive or first reduce to practice
or learn, whether alone or jointly with others, during the period of my
employment, whether or not in the course of my employment.

                 I further acknowledge and agree that all Inventions and works
of authorship, which are in any way related to or useful in the business of
COLLAGEN or of any client of COLLAGEN, or result from tasks assigned to me or
that I undertake, shall be the sole property of COLLAGEN. COLLAGEN may
designate any other person or entity to be the sole owner of




                                       -2-
<PAGE>   16
all applications and patents on said Inventions, works of authorship and rights
under the Paris Convention in any and all countries.  To that end, I shall
execute all documents which COLLAGEN determines to be necessary or convenient
in applying for and obtaining such patents thereon and enforcing same, together
with any assignments thereof to COLLAGEN or persons or entities designated by
it.

                 My obligation to so assist COLLAGEN or its designee in
obtaining and enforcing patents for such Inventions in any and all countries
shall continue beyond the termination of my employment, but COLLAGEN will
compensate me at a reasonable rate after such termination for the time I
actually spend at COLLAGEN's request on such assistance.

         6.      List of Inventions

                 I WARRANT THAT I DO NOT OWN OR HAVE RIGHTS TO ANY INVENTIONS
OR WORKS OF AUTHORSHIP MADE PRIOR TO MY EMPLOYMENT BY COLLAGEN EXCEPT AS LISTED
BY TITLE AND DATE OF IDENTIFYING DOCUMENT ON ATTACHMENT 1.  The items on
Attachment 1 do not belong to COLLAGEN and are not subject to this Agreement.
If I do not list such inventions or improvements, I represent that I have no
such inventions and improvements at the time l am signing this Agreement.

         7.      Power of Attorney

                 If COLLAGEN is unable for any reason whatsoever to secure my
signature to any lawful and necessary documents required, including those
necessary for the assignment of, application for or prosecution of any United
States or foreign applications for letters patent or copyright, I hereby
irrevocably designate and appoint COLLAGEN and its duly authorized officers and
agents as agent and attorney-in-tact, to act for and in my behalf and stead to
execute and file any such application and to do all other lawfully permitted
acts to further the assignment, prosecution and issuance of letters patent or
copyright thereon with the same legal force and effect as if executed by me. I
hereby waive and quit-claim to COLLAGEN any and all claims of any nature
whatsoever which I may now have or may hereafter have for infringement of any
patent or copyright resulting from any such application.

         8.      California Labor Code

                 This Agreement does not apply to an Invention which qualifies
fully under the provisions of Section 2870 of the California Labor Code (copy
attached as Exhibit A). I agree to disclose ALL Inventions I make in confidence
to COLLAGEN to permit a determination as to whether or not the Inventions
should be the property of COLLAGEN.

         9.      No Breach of other Agreements

                 I promise COLLAGEN that neither my performance of all the
terms of this Agreement nor my employment with COLLAGEN constitutes or will
constitute a breach of any agreement to keep in confidence or in trust that I
entered into before my employment with





                                      -3-
<PAGE>   17
COLLAGEN. I agree not to enter into any agreement, either written or oral, that
would conflict with this Agreement.

         10.     Injunction

                 I agree that it would be difficult to measure damage to
COLLAGEN if I breached any of the promises or warranties I make in this
Agreement. Because injury to COLLAGEN from any such breach would be
incalculable and irremediable, money damage would therefore be an inadequate
remedy for any such breach. Accordingly, I agree that if I shall breach any
part of this Agreement, COLLAGEN, in addition to all other remedies it may
have, shall be entitled to a preliminary and permanent injunction to restrain
any such breach by me without showing or proving any actual damage sustained by
COLLAGEN.

         11.     Indemnification

                 I agree to indemnify COLLAGEN and to hold it harmless against
any loss, cost, liability or expense incurred by COLLAGEN by reason of my
breach or nonfulfillment of any agreement, representation or warranty contained
herein.

         12.     Severability

                 To the extent that any of the agreements set forth herein, or
any word, phrase, clause, or sentence thereof shall be found to be illegal or
unenforceable for any reason, such agreement, word, clause, phrase or sentence
shall he modified or deleted in such a manner as to make the agreement as
modified legal and enforceable under applicable laws, and the balance of the
agreements or parts thereof, shall not be effected thereby, the balance being
construed as severable and independent.

         13.     Arbitration

                 I agree that COLLAGEN has the option to have any and all
disputes or controversies (whether or law or fact of any nature whatsoever)
arising from or respecting this Agreement decided by arbitration by the
American Arbitration Association in accordance with the rules and regulations
of that Association.

         14.     Effective Date

                 This agreement shall be effective as of 2/1/95.

         15.     Successors and Assigns

                 This Agreement shall be binding upon me and my heirs,
executors, assigns, and administrators and shall inure to the benefit of
COLLAGEN, its successors and assigns.





                                      -4-
<PAGE>   18
                 I execute this Agreement as of February 1, 1995.


EMPLOYEE:


Gary Petersmeyer                   
-----------------------------
(Type or Print Name)


 /s/  Gary Petersmeyer                     
-----------------------------
(Signature)





                                      -5-
<PAGE>   19
                                  ATTACHMENT 1

                               LIST OF INVENTIONS



<PAGE>   20



                                   EXHIBIT A

                   SECTION 2870 OF THE CALIFORNIA LABOR CODE

Section 2870 of the California Labor Code is as follows:

         (a)     Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:

                 (1)      Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer.

                 (2)      Result from any work performed by the employee for
the employer.

         (b)     To the extent a provision in an employment agreement purports
to require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.