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                                                                 EXHIBIT 2.1




                      SEPARATION AND DISTRIBUTION AGREEMENT

                                 BY AND BETWEEN

                            COLLAGEN CORPORATION AND

                        COHESION TECHNOLOGIES CORPORATION

                         EFFECTIVE AS OF JANUARY 1, 1998


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                                TABLE OF CONTENTS

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<S>         <C>                                                                      <C>
ARTICLE I - DEFINITIONS...............................................................1
        1.1 Action....................................................................1
        1.2 Affiliate.................................................................2
        1.3 Agent.....................................................................2
        1.4 Agreement.................................................................2
        1.5 Ancillary Agreements......................................................2
        1.6 Applicable Deadline.......................................................2
        1.7 Arbitration Act...........................................................2
        1.8 Arbitration Demand Date...................................................2
        1.9 Arbitration Demand Notice.................................................2
        1.10 Assets...................................................................2
        1.11 Benefits Agreement.......................................................4
        1.12 Change of Control........................................................4
        1.13 Code.....................................................................4
        1.14 Collagen Business........................................................4
        1.15 Collagen Common Stock....................................................5
        1.16 Collagen Field...........................................................5
        1.17 Collagen Group...........................................................5
        1.18 Collagen Indemnitees.....................................................5
        1.19 Collagen Supply Agreement................................................5
        1.20 Collagraft Supply Agreement..............................................5
        1.21 Commission...............................................................5
        1.22 Consents.................................................................5
        1.23 Delayed Transfer Assets..................................................5
        1.24 Delayed Transfer Liabilities.............................................5
        1.25 Distribution.............................................................5
        1.26 Distribution Date........................................................6
        1.27 Effective Date...........................................................6
        1.28 Environmental Law........................................................6
        1.29 Environmental Liabilities................................................6
        1.30 Escalation Notice........................................................6
        1.31 Exchange Act.............................................................6
        1.32 Excluded Assets..........................................................6
        1.33 Excluded Liabilities.....................................................6
        1.34 Governmental Approvals...................................................7
        1.35 Governmental Authority...................................................7
        1.36 Group....................................................................7
        1.37 Improvements.............................................................7
        1.38 Indemnifying Party.......................................................7
        1.39 Indemnitee...............................................................7
</TABLE>


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                                TABLE OF CONTENTS
                                   (continued)

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        1.40 Indemnity Payment........................................................7
        1.41 Information..............................................................7
        1.42 Insurance Policies.......................................................7
        1.43 Insurance Proceeds.......................................................7
        1.44 Intellectual Property Rights.............................................8
        1.45 Liabilities..............................................................8
        1.46 License Agreement........................................................8
        1.47 Licensed Technology......................................................8
        1.48 Manufactured Product or Material.........................................8
        1.49 Nasdaq National Market...................................................8
        1.50 Notice of Infringement...................................................8
        1.51 Persistence Technology...................................................8
        1.52 Persistence Agreement....................................................8
        1.53 Person...................................................................9
        1.54 Prime Rate...............................................................9
        1.55 Recombinant Technology...................................................9
        1.56 Recombinant Agreement....................................................9
        1.57 Record Date..............................................................9
        1.58 Research and Development Agreements......................................9
        1.59 Retained Receivables.....................................................9
        1.60 Retained Technology......................................................9
        1.61 Securities Act...........................................................9
        1.62 Security Interest........................................................9
        1.63 Separation..............................................................10
        1.64 Services Agreement......................................................10
        1.65 Subsidiary..............................................................10
        1.66 Tax Allocation Agreement................................................10
        1.67 Taxes...................................................................10
        1.68 Technologies Assets.....................................................10
        1.69 Technologies Business...................................................10
        1.70 Technologies Common Stock...............................................10
        1.71 Technologies Contracts..................................................10
        1.72 Technologies Group......................................................11
        1.73 Technologies Indemnitees................................................11
        1.74 Technologies Liabilities................................................11
        1.75 Third Party Claim.......................................................11
        1.76  Transferred Receivables................................................11
        1.77 Transferred Technology..................................................11
        1.78 Vitrogen International Distribution Agreement...........................11
ARTICLE II - THE SEPARATION..........................................................11
        2.1 Transfer of Assets, Assumption of Liabilities and Issuance of
            Technologies Stock.......................................................11
        2.2 Technologies Assets......................................................12
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
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<S>         <C>                                                                     <C>
        2.3 Technologies Liabilities.................................................14
        2.4 Transfer of Employees....................................................15
        2.5 Documents Relating to Transfer of Real Property Interests and Tangible
            Property Located Thereon.................................................16
        2.6 Documents Relating to Other Transfers of Assets and Assumption of
            Liabilities..............................................................16
        2.7 Other Ancillary Agreements...............................................16
        2.8 Disclaimer of Representations and Warranties.............................16
        2.9 Governmental Approvals and Consents......................................17
        2.10 Novation and Assignment of Assumed Technologies Liabilities.............18
ARTICLE III - THE DISTRIBUTION.......................................................19
        3.1 The Distribution.........................................................19
        3.2 Actions Prior to the Distribution........................................20
        3.3 Conditions to Distribution...............................................20
        3.4 Fractional Shares........................................................21
        3.5 The Technologies Board of Directors......................................21
ARTICLE IV - INDEMNIFICATION.........................................................22
        4.1 Indemnification by Collagen..............................................22
        4.2 Indemnification by Technologies..........................................23
        4.3 Indemnification Obligations Net of Insurance Proceeds and Other Amounts..23
        4.4 Procedures for Indemnification of Third Party Claims.....................24
        4.5 Additional Matters.......................................................25
        4.6 Remedies Cumulative......................................................26
        4.7 Survival of Indemnities..................................................26
ARTICLE V - Intellectual Property Enforcement and Indemnity..........................26
        5.1 Enforcement..............................................................26
        5.2 Third Party Claims.......................................................28
ARTICLE VI - INTERIM OPERATIONS AND CERTAIN OTHER MATTERS............................30
        6.1 Insurance Matters........................................................30
        6.2 Collection of Accounts Receivable........................................32
        6.3 Certain Business Matters.................................................33
        6.4 Late Payments............................................................34
ARTICLE VII - EXCHANGE OF INFORMATION; CONFIDENTIALITY...............................34
        7.1 Agreement for Exchange of Information; Archives..........................34
        7.2 Ownership of Information.................................................35
        7.3 Compensation for Providing Information...................................35
        7.4 Record Retention.........................................................35
        7.5 Limitation of Liability..................................................35
        7.6 Other Agreements Providing for Exchange of Information...................35
</TABLE>


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                                TABLE OF CONTENTS
                                   (continued)

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        7.7   Production of Witnesses; Records; Cooperation..........................36
        7.8   Confidentiality........................................................37
        7.9   Protective Arrangements................................................37
ARTICLE VIII - ARBITRATION; DISPUTE RESOLUTION.......................................38
        8.1   Agreement to Arbitrate.................................................38
        8.2   Escalation.............................................................38
        8.3   Demand for Arbitration.................................................39
        8.4   Arbitrators............................................................39
        8.5   Hearings...............................................................40
        8.6   Discovery and Certain Other Matters....................................41
        8.7   Certain Additional Matters.............................................42
        8.8   Limited Court Actions..................................................42
        8.9   Continuity of Service and Performance..................................43
        8.10  Law Governing Arbitration Procedures...................................43
ARTICLE IX - FURTHER ASSURANCES AND ADDITIONAL COVENANTS.............................43
        9.1   Further Assurances.....................................................43
        9.2   Qualification as Tax-Free Distribution.................................45
ARTICLE X - TERMINATION..............................................................46
        10.1  Termination............................................................46
ARTICLE XI - MISCELLANEOUS...........................................................46
        11.1  Counterparts; Entire Agreement; Corporate Power........................46
        11.2  Right To Offset Payments...............................................46
        11.3  Governing Law..........................................................47
        11.4  Assignability..........................................................47
        11.5  Third Party Beneficiaries..............................................47
        11.6  Notices................................................................47
        11.7  Severability...........................................................48
        11.8  Force Majeure..........................................................48
        11.9  Publicity..............................................................48
        11.10 Expenses...............................................................48
        11.11 Headings...............................................................48
        11.12 Waivers of Default.....................................................49
        11.13 Specific Performance...................................................49
        11.14 Amendments.............................................................49
        11.15 Interpretation.........................................................49

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                                LIST OF SCHEDULES

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<S>                                     <C>
        Schedule 1.71(a)                Technologies Contracts
        Schedule 2.2(a)(i)              Technologies Fixed Assets
        Schedule 2.2(a)(iii)            Technologies Accounts Receivable
        Schedule 2.2(a)(iv)             Technologies Cash and Cash
                                        Equivalents
        Schedule 2.2(a)(v)              Technologies Equity Investments
        Schedule 2.2(a)(viii)           Technologies Deferred Taxes
        Schedule 2.2(a)(x)              Technologies Additional Assets
        Schedule 2.2(b)(ii)             Collagen Assets
        Schedule 2.2(c)                 Chart of Accounts
        Schedule 2.3(a)(i)              Technologies Accounts Payable
        Schedule 2.3(a)(ii)             Technologies Litigation
        Schedule 2.3(a)(vi)             Technologies Additional Liabilities
        Schedule 2.4                    Technologies Employees
        Schedule 2.5                    Transfer Documents

        Exhibit A                       Form of Persistence Development
                                        and License Agreement
</TABLE>


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                                            Application for an order granting
                                           confidential treatment pursuant to
                                        Rule 24b-2 of the Securities Exchange
                                       Act of 1934 has been or will be timely 
                                    made. Confidential portions of this docu- 
                                   ment have been redacted and marked with an 
                                  [*] and have been filed with the Securities
                                 and Exchange Commission separately with such
                                                                 application.



                      SEPARATION AND DISTRIBUTION AGREEMENT

        This SEPARATION AND DISTRIBUTION AGREEMENT, effective as of January 1,
1998 (the "Effective Date"), is made by and between COLLAGEN CORPORATION, a
Delaware corporation ("Collagen"), and COHESION TECHNOLOGIES, INC., a Delaware
corporation formerly known as Collagen Technologies, Inc. ("Technologies").

                                    RECITALS

        1. The Board of Directors of Collagen has determined that it is in the
best interests of Collagen and its stockholders to separate Collagen's existing
businesses into two independent businesses.

        2. In furtherance of the foregoing, it is appropriate and desirable to
transfer the Technologies Assets (as defined below) to Technologies and its
Subsidiaries (as defined below) and to cause Technologies and its Subsidiaries
to assume the Technologies Liabilities (as defined below), all as more fully
described in this Agreement and the Ancillary Agreements (as defined below).

        3. Following completion of such transfer of the Technologies Assets and
assumption of the Technologies Liabilities, the Board of Directors of Collagen
may determine that it is appropriate and desirable, on the terms and conditions
contemplated hereby, to distribute to holders of shares of Collagen Common Stock
the outstanding shares of Technologies Common Stock owned directly or indirectly
by Collagen.

        4. The Distribution (as defined below), if completed, is intended to
qualify as a tax-free spin-off under Section 355 of the Code (as defined below).

        5. It is appropriate and desirable to set forth the principal corporate
transactions required to effect the Separation (as defined below), to permit the
Distribution and to provide for certain other agreements that will govern
certain matters relating to the Separation (as defined below), the Distribution
and the relationship of Collagen and Technologies and their respective
Subsidiaries following the Distribution.

        NOW, THEREFORE, the parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

        For the purpose of this Agreement, the following terms shall have the
following meanings:

        1.1 "Action" means any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority (as defined below) or any
arbitration or mediation tribunal.


<PAGE>   8

        1.2 "Affiliate" of any Person (as defined below) means a Person that
controls, is controlled by or is under common control with such Person. As used
in this Agreement, "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other interests,
by contract or otherwise.

        1.3 "Agent" means the distribution agent to be appointed by Collagen to
distribute to the stockholders of Collagen the shares of Technologies Common
Stock (as defined below) held by Collagen in connection with the Distribution.

        1.4 "Agreement" means this Separation and Distribution Agreement,
including all of the Schedules and Exhibits hereto.

        1.5 "Ancillary Agreements" means the deeds, lease assignments and
assumptions, leases, subleases and sub-subleases, and the supplemental and other
agreements and instruments related thereto, substantially in the forms attached
as Schedule 2.5, the Collagraft Supply Agreement, the Collagen Supply Agreement,
the License Agreement, the Benefits Agreement, the Services Agreement, the Tax
Allocation Agreement, the Recombinant Agreement, the Vitrogen International
Distribution Agreement and, if and when it is entered into by Collagen and
Technologies, the Persistence Agreement (each as defined below).

        1.6 "Applicable Deadline" has the meaning set forth in Section 8.3(b).

        1.7 "Arbitration Act" means the United States Arbitration Act, 9 U.S.C.
1-14, as the same may be amended from time to time.

        1.8 "Arbitration Demand Date" has the meaning set forth in Section
8.3(a).

        1.9 "Arbitration Demand Notice" has the meaning set forth in Section
8.3(a).

        1.10 "Assets" means assets, properties and rights (including goodwill),
wherever located (including in the possession of vendors or other third parties
or elsewhere), whether real, personal or mixed, tangible, intangible or
contingent, in each case whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person, including the following:

               (a) all accounting and other books, records and files whether in
paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other
form;

               (b) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment, motor
vehicles and other transportation equipment, special and general tools, test
devices, prototypes and models and other tangible personal property;

               (c) all inventories of materials, parts, raw materials, supplies,
work-in-process and finished goods and products;



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               (d) all interests in real property of whatever nature, including
easements, whether as owner, mortgagee or holder of a Security Interest (as
defined below) in real property, lessor, sublessor, lessee, sublessee or
otherwise;

               (e) all interests in any capital stock or other equity interests
of any Subsidiary or any other Person, all bonds, notes, debentures or other
securities issued by any Subsidiary or any other Person, all loans, advances or
other extensions of credit or capital contributions to any Subsidiary or any
other Person and all other investments in securities of any Person;

               (f) all license agreements, leases of personal property, open
purchase orders for raw materials, supplies, parts or services, unfilled orders
for the manufacture and sale of products and other contracts, agreements or
commitments;

               (g) all deposits, letters of credit and performance and surety
bonds;

               (h) all written technical information, data, specifications,
research and development information, engineering drawings, operating and
maintenance manuals, and materials and analyses prepared by consultants and
other third parties;

               (i) all domestic and foreign patents, copyrights, trade names,
trademarks, service marks and registrations and applications for any of the
foregoing, trade secrets, inventions, other proprietary information and licenses
from third Persons granting the right to use any of the foregoing;

               (j) all computer applications, programs and other software,
including operating software, network software, firmware, middleware, design
software, design tools, systems documentation and instructions;

               (k) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists, customer and
vendor data, correspondence and lists, product literature, artwork, design,
development and manufacturing files, vendor and customer drawings, formulations
and specifications, quality records and reports and other books, records,
studies, surveys, reports, plans and documents;

               (l) all prepaid expenses, trade accounts and other accounts and
notes receivables;

               (m) all rights under contracts or agreements, all claims or
rights against any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all claims, chooses in action or similar
rights, whether accrued or contingent;

               (n) all rights under insurance policies and all rights in the
nature of insurance, indemnification or contribution;

               (o) all licenses, permits, approvals and authorizations which
have been issued by any Governmental Authority;



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               (p) cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements; and

               (q) interest rate, currency, commodity or other swap, collar, cap
or other hedging or similar agreements or arrangements.

        1.11 "Benefits Agreement" means the Benefits Agreement, effective as of
the Effective Date, by and between Collagen and Technologies.

        1.12 "Change of Control" of any Person means any of the following: (a)
the consummation of a merger, consolidation, or similar business combination
involving such Person, or a sale or other disposition of all or substantially
all of the assets of such Person; (b) the acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(as defined below)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (i) the then
outstanding shares of Common Stock of such Person, (ii) the combined voting
power of the then outstanding voting securities of such Person entitled to vote
generally in the election of directors or (c) individuals who, as of the
Distribution Date, constitute the Board of Directors of such Person (the
"Incumbent Board") cease for any reason to constitute at least a majority of
such Board of Directors; provided, however, that any individual becoming a
director subsequent to the Distribution Date (other than any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person other than such Board of Directors) whose election or nomination for
election by the stockholders of such Person was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board.

        1.13 "Code" means the Internal Revenue Code of 1986, as amended.

        1.14 "Collagen Business" means: the development, manufacture, use, sale
and other commercialization or exploitation of (a) human aesthetics products,
technologies and treatments including, without limitation, soft tissue
augmentation products and treatments, and non-surgical aesthetic treatments, (b)
breast implant products and processes, (c) urinary incontinence products and
treatments and (d) ostomy products. The Collagen Business does not include any
other business, including without limitation the development, manufacture, use,
sale and other commercialization or exploitation of products for fecal
incontinence, dental, ophthalmologic or orthopedic applications or drug or cell
delivery.

        1.15 "Collagen Common Stock" means the Common Stock, $0.01 par value per
share, of Collagen.

        1.16 "Collagen Field" means on a worldwide basis, the fields of: (a)
human aesthetics products, technologies and treatments including, without
limitation, soft tissue augmentation products and treatments and non-surgical
aesthetic treatments; (b) breast implant products and processes; (c) urinary
incontinence products and treatments and (d) ostomy products. The 



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<PAGE>   11

Collagen Field shall not include any other field, including without limitation
products for fecal incontinence, dental, ophthalmologic or orthopedic
applications or drug or cell delivery.

        1.17 "Collagen Group" means Collagen and each Person (other than any
member of the Technologies Group) that is, will be or becomes, after the
Distribution Date, an Affiliate of Collagen.

        1.18 "Collagen Indemnitees" has the meaning set forth in Section 4.2.

        1.19 "Collagen Supply Agreement" means the Collagen Supply Agreement,
effective as of the Effective Date, by and between Collagen and Technologies.

        1.20 "Collagraft Supply Agreement" means the Collagraft Supply
Agreement, effective as of the Effective Date, by and between Collagen and
Technologies.

        1.21 "Commission" means the Securities and Exchange Commission.

        1.22 "Consents" means any consents, waivers or approvals from, or
notification requirements to, any third parties.

        1.23 "Delayed Transfer Assets" means any Technologies Assets that are
expressly provided in this Agreement or any Ancillary Agreement to be
transferred to Technologies after the Effective Date.

        1.24 "Delayed Transfer Liabilities" means any Technologies Liabilities
that are expressly provided in this Agreement or any Ancillary Agreement to be
assumed by Technologies after the Effective Date.

        1.25 "Distribution" means the distribution by Collagen on a pro rata
basis to holders of Collagen Common Stock of all of the outstanding shares of
Technologies Common Stock owned by Collagen on the Distribution Date as set
forth in Article III.

        1.26 "Distribution Date" means the date determined pursuant to Section
3.1 on which the Distribution occurs.

        1.27 "Effective Date" shall have the meaning set forth in the Preamble
of this Agreement.

        1.28 "Environmental Law" means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, 



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treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.

        1.29 "Environmental Liabilities" means all Liabilities (as defined
below) relating to, arising out of or resulting from any Environmental Law or
contract or agreement relating to environmental, health or safety matters
(including all removal, remediation or cleanup costs, investigatory costs,
governmental response costs, natural resources damages, property damages,
personal injury damages, costs of compliance with any settlement, judgment or
other determination of Liability and indemnity, contribution or similar
obligations) and all costs and expenses (including allocated costs of in-house
counsel and other personnel), interest, fines, penalties or other monetary
sanctions in connection therewith.

        1.30 "Escalation Notice" has the meaning set forth in Section 8.2.

        1.31 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.

        1.32 "Excluded Assets" has the meaning set forth in Section 2.2(b).

        1.33 "Excluded Liabilities" has the meaning set forth in Section 2.3(b).

        1.34 "Governmental Approvals" means any notices, reports or other
filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.

        1.35 "Governmental Authority" means any federal, state, local, foreign
or international court, government, department, commission, board, bureau,
agency, official or other regulatory, administrative or governmental authority.

        1.36 "Group" means either the Collagen Group or the Technologies Group,
as the context requires.

        1.37 "Improvements" has the meaning set forth in the License Agreement.

        1.38 "Indemnifying Party" has the meaning set forth in Section 4.3(a).

        1.39 "Indemnitee" has the meaning set forth in Section 4.3(a).

        1.40 "Indemnity Payment" has the meaning set forth in Section 4.3(a).

        1.41 "Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs 



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or other software, marketing plans, customer names, communications by or to
attorneys (including attorney-client privileged communications), memos and other
materials prepared by attorneys or under their direction (including attorney
work product), and other technical, financial, employee or business information
or data.

        1.42 "Insurance Policies" means the insurance policies written by
insurance carriers pursuant to which Collagen and Technologies or one or more of
Technologies' Subsidiaries (or their respective officers or directors) will be
insured parties after the Effective Date.

        1.43 "Insurance Proceeds" means those monies:

               (a)    received by an insured from an insurance carrier or

               (b) paid by an insurance carrier on behalf of the insured.

        1.44 "Intellectual Property Rights" has the meaning set forth in the
License Agreement.

        1.45 "Liabilities" means any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exonerations, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, guarantees,
make whole agreements and similar obligations, and other liabilities, including
all contractual obligations, whether absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, and including those arising under any law, rule, regulation,
Action, threatened or contemplated Action (including the costs and expenses of
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys' fees and any and all costs and expenses (including allocated
costs of in-house counsel and other personnel), whatsoever reasonably incurred
in investigating, preparing or defending against any such Actions or threatened
or contemplated Actions), order or consent decree of any Governmental Authority
or any award of any arbitrator or mediator of any kind, and those arising under
any contract, commitment or undertaking, including those arising under this
Agreement or any Ancillary Agreement, in each case, whether or not recorded or
reflected or required to be recorded or reflected on the books and records or
financial statements of any Person.

        1.46 "License Agreement" means the Assignment and License Agreement,
effective as of the Effective Date, by and between Collagen and Technologies.

        1.47 "Licensed Technology" has the meaning set forth in the License
Agreement.

        1.48 "Manufactured Product or Material" has the meaning set forth in
Section 4.1(f).

        1.49 "Nasdaq National Market" means the National Market of the National
Association of Securities Dealers, Inc.'s Automated Quotation System.

        1.50 "Notice of Infringement" has the meaning set forth in Section
5.1(a).



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<PAGE>   14

        1.51 "Persistence Technology" means the inventions or discoveries,
whether or not patentable, made, conceived, reduced to practice or otherwise
developed by Technologies, whether before or after the Effective Date, in
furtherance of the development of collagen materials that are more persistent
than collagen-based products marketed by Collagen as of the Effective Date.

        1.52 "Persistence Agreement" means the Persistence Development and
License Agreement in substantially the form attached hereto as Exhibit A, which
may be entered into by and between Collagen and Technologies after the Effective
Date.

        1.53 "Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.

        1.54 "Prime Rate" means the rate published in the Wall Street Journal as
the base rate on corporate loans posted by at least 75% of the nation's 30
largest banks, as in effect from time to time.

        1.55 "Recombinant Technology" means the inventions or discoveries,
whether or not patentable, made, conceived, reduced to practice, or otherwise
developed by Technologies and Collagen, whether before or after the Effective
Date, in furtherance of the development of recombinant collagen that has
demonstrated bioequivalence with collagen in solution and that can be
manufactured in commercial scale quantities.

        1.56 "Recombinant Agreement" means the Recombinant Technology Research
and Development Agreement, effective as of the Effective Date, by and between
Collagen and Technologies.

        1.57 "Record Date" means the close of business on the date to be
determined by the Collagen Board of Directors as the record date for determining
stockholders of Collagen entitled to receive shares of Technologies Common Stock
in the Distribution.

        1.58 "Research and Development Agreements" means the Recombinant
Agreement and the Persistence Agreement.

        1.59 "Retained Receivables" means any and all accounts receivable and
other rights to payment for goods or services sold, leased or otherwise provided
other than those accounts receivable listed or described on Schedule
2.2(a)(iii).

        1.60 "Retained Technology" " has the meaning set forth in the License
Agreement.

        1.61 "Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.



                                      -8-
<PAGE>   15

        1.62 "Security Interest" means any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer or other encumbrance of any nature whatsoever.

        1.63 "Separation" means the transfer of the Technologies Assets to
Technologies and its Subsidiaries and the assumption by Technologies and its
Subsidiaries of the Technologies Liabilities, all as more fully described in
this Agreement and the Ancillary Agreements.

        1.64 "Services Agreement" means the Services Agreement, effective as of
the Effective Date, by and between Collagen and Technologies.

        1.65 "Subsidiary" as to any Person means any corporation or other
organization whether incorporated or unincorporated, of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however that no Person that is not directly or
indirectly wholly owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.

        1.66 "Tax Allocation Agreement" means the Tax Allocation and Indemnity
Agreement, effective as of the Effective Date, by and between Collagen and
Technologies.

        1.67 "Taxes" has the meaning set forth in the Tax Allocation Agreement.

        1.68 "Technologies Assets" has the meaning set forth in Section 2.2(a).

        1.69 "Technologies Business" " means the business of Collagen prior to
the Effective Date, other than the Collagen Business.

        1.70 "Technologies Common Stock" means the Common Stock, $0.001 par
value per share, of Technologies.

        1.71 "Technologies Contracts" means the following contracts and
agreements to which Collagen or any of its Affiliates is a party or by which it
or any of its Affiliates or any of their respective Assets is bound, whether or
not in writing, except for any such contract or agreement that is contemplated
to be retained by Collagen or any member of the Collagen Group (as defined
below) pursuant to any provision of this Agreement or any Ancillary Agreement:

                (a) those contracts and agreements listed or described on
Schedule 1.71(a);

                (b) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or member of the
Technologies Group (as defined below); and



                                      -9-
<PAGE>   16

                (c) any guarantee, indemnity, representation, warranty or other
Liability of any member of the Technologies Group or the Collagen Group in
respect of any other Technologies Contract, any Technologies Liability or the
Technologies Business (including guarantees of financing incurred by customers
or other third parties in connection with purchases of products or services from
the Technologies Business).

        1.72 "Technologies Group" means Technologies and each Person (other than
any member of the Collagen Group) that is, will be or becomes, after the
Distribution Date, an Affiliate of Technologies.

        1.73 "Technologies Indemnitees" has the meaning set forth in Section
4.1.

        1.74 "Technologies Liabilities" has the meaning set forth in Section
2.3(a).

        1.75 "Third Party Claim" has the meaning set forth in Section 4.4(a).

        1.76 "Transferred Receivables" means the accounts receivable listed on
Schedule 2.2(a)(iii).

        1.77 "Transferred Technology" " has the meaning set forth in the License
Agreement.

        1.78 "Vitrogen International Distribution Agreement" means the Vitrogen
International Distribution Agreement, effective as of the Effective Date, by and
between Collagen and Technologies.

                                   ARTICLE II
                                 THE SEPARATION

        2.1 TRANSFER OF ASSETS, ASSUMPTION OF LIABILITIES AND ISSUANCE OF
TECHNOLOGIES STOCK.

               (a) Collagen hereby agrees that, as of the Effective Date, it
will assign, transfer, convey and deliver to Technologies, and Collagen hereby
agrees to cause its applicable Subsidiaries to assign, transfer, convey and
deliver to Technologies, and Technologies agrees to accept, as of the Effective
Date, from each of Collagen and its Subsidiaries, all of Collagen's and its
applicable Subsidiaries' respective right, title and interest in all
Technologies Assets, other than the Delayed Transfer Assets.

               (b) Technologies hereby agrees that, as of the Effective Date, it
will assume and Technologies hereby agrees faithfully to perform and fulfill all
the Technologies Liabilities, other than the Delayed Transfer Liabilities, in
accordance with their respective terms. As of the Effective Date, Technologies
will be responsible for all Technologies Liabilities, regardless of when or
where such Technologies Liabilities arose or arise, or whether the facts on
which they are based occurred prior to or subsequent to the Effective Date,
regardless of where or against whom such Liabilities are asserted or determined
(including any Technologies Liabilities arising out of claims made by Collagen's
or Technologies' respective directors, officers, employees, 




                                      -10-
<PAGE>   17

agents, Subsidiaries or Affiliates against any member of the Collagen Group or
the Technologies Group) or whether asserted or determined prior to the Effective
Date, and regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by any
member of the Collagen Group or the Technologies Group or any of their
respective directors, officers, employees, agents, Subsidiaries or Affiliates.

               (c) Each of the parties hereto agrees that the Delayed Transfer
Assets will be assigned, transferred, conveyed and delivered, and the Delayed
Transfer Liabilities will be assumed, in accordance with the terms of the
agreements that provide for such assignment, transfer, conveyance and delivery,
or such assumption, as soon as practicable after the Effective Date. Following
such assignment, transfer, conveyance and delivery of any Delayed Transfer
Asset, or the assumption of any Delayed Transfer Liability, the applicable
Delayed Transfer Asset or Delayed Transfer Liability shall be treated for all
purposes of this Agreement and the Ancillary Agreements as a Technologies Asset
or a Technologies Liability, as the case may be.

               (d) In the event that at any time or from time to time (whether
prior to or after the Distribution Date), any party hereto (or any member of
such party's respective Group), shall receive or otherwise possess any Asset
that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer, or cause to be
transferred, such Asset to the Person so entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for any such other Person.

               (e) In consideration for the transfer to Technologies of the
Technologies Assets, Technologies has previously issued to Collagen 10 shares of
Technologies Preferred Stock.

        2.2    TECHNOLOGIES ASSETS.

                (a) For purposes of this Agreement, "Technologies Assets" means:

                      (i) those fixed assets listed or described on Schedule
2.2(a)(i);

                      (ii) all finished goods inventory of Collagraft(R) bone
graft matrix, Collagraft(R) bone graft matrix strip, Vitrogen(R), Cell Prime(TM)
and Zygen(TM) as of the Effective Date;

                      (iii) the accounts receivable listed or described on
Schedule 2.2(a)(iii);

                      (iv) the cash and cash equivalents listed or described on
Schedule 2.2(a)(iv);

                      (v) the equity investments and any associated rights
listed or described on Schedule 2.2(a)(v);

                      (vi) the Transferred Technology;

                      (vii) the Technologies Contracts;



                                      -11-
<PAGE>   18

                      (viii) the deferred taxes listed or described on Schedule
2.2(a)(viii);

                      (ix) any Assets owned by any member of the Technologies
Group on the Effective Date;

                      (x) such additional assets listed or described on Schedule
2.2(a)(x);

                      (xi) all Information with respect to the Technologies
Assets as defined in this Section 2.2(a) and any other Information not related
primarily to the Excluded Assets and

                      (xii) except as contemplated by Section 2.2(b), any and
all Assets owned or held immediately prior to the Effective Date by Collagen or
any of its Subsidiaries that are not used primarily in the Collagen Business.
The intention of this clause (xii) is only to rectify any inadvertent omission
of transfer or conveyance of any Assets that, had the parties given specific
consideration to such Asset as of the Effective Date, would have otherwise been
classified as a Technologies Asset. No Asset shall be deemed to be a
Technologies Asset solely as a result of this clause (xii) if such Asset is
within the category or type of Asset expressly covered by the subject matter of
an Ancillary Agreement. In addition, no Asset shall be deemed a Technologies
Asset solely as a result of this clause (xii) unless a claim with respect
thereto is made by Technologies on or prior to the first to occur of June 30,
1999 or the first anniversary of the Distribution Date.

        Notwithstanding the foregoing, the Technologies Assets shall not in any
event include the Excluded Assets referred to in Section 2.2(b) below.

                (b) For the purposes of this Agreement, "Excluded Assets" means:

                      (i) all Assets of Collagen and any other member of the
Collagen Group as of the Effective Date, other than the Technologies Assets;

                      (ii) the Assets listed or described on Schedule
2.2(b)(ii); and

                      (iii) any and all Assets that are expressly contemplated
by this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by Collagen or any other member of the
Collagen Group, including without limitation the Retained Technology.

               (c) The Technologies Assets and the Excluded Assets have been
allocated to Technologies and Collagen, respectively, in accordance with the
chart of accounts set forth on Schedule 2.2(c).

        2.3    TECHNOLOGIES LIABILITIES.

               (a) For the purposes of this Agreement, "Technologies
Liabilities" means (without duplication):

                      (i) the accounts payable listed or described on Schedule
2.3(a)(i);



                                      -12-
<PAGE>   19

                      (ii) the litigation listed or described on Schedule
2.3(a)(ii);

                      (iii) all Liabilities (other than Taxes based on, or
measured by reference to, net income) primarily relating to, arising out of or
resulting from:

                             (A) the operation of the Technologies Business, as
conducted at any time prior to, on or after the Effective Date (including,
without limitation, any Liability relating to, arising out of or resulting from
any act or failure to act by any director, officer, employee, agent or
representative of any member of the Technologies Group or, with respect to the
operation of the Technologies Business on or prior to the Effective Date, any
member of the Collagen Group (whether or not such act or failure to act is or
was within such Person's authority));

                             (B) the operation of any business conducted by any
member of the Technologies Group at any time after the Effective Date
(including, without limitation, any Liability relating to, arising out of or
resulting from any act or failure to act by any director, officer, employee,
agent or representative of any member of the Technologies Group (whether or not
such act or failure to act is or was within such Person's authority)); or

                             (C) any Technologies Assets (including, without
limitation, any Technologies Contracts and any real property and leasehold
interests); in any such case whether arising before, on or after the Effective
Date;

                      (iv) all Environmental Liabilities primarily relating to,
arising out of or resulting from:

                             (A) the facilities located at 2500 Faber Place,
Palo Alto, California and 2450 Faber Place, Palo Alto, California;

                             (B) the operation of the Technologies Business, as
conducted at any time after the Effective Date (including, without limitation,
any Environmental Liability relating to, arising out of or resulting from any
act or failure to act by any director, officer, employee, agent or
representative of any member of the Technologies Group (whether or not such act
or failure to act is or was within such Person's authority)); or

                             (C) the operation of any business conducted by any
member of the Technologies Group at any time after the Effective Date
(including, without limitation, any Environmental Liability relating to, arising
out of or resulting from any act or failure to act by any director, officer,
employee, agent or representative of any member of the Technologies Group
(whether or not such act or failure to act is or was within such Person's
authority));

                      (v) any employee-related Liabilities (A) involving any
employee of Technologies or its Subsidiaries (whether arising before, on or
after the Effective Date and whether such employee is then currently employed by
Technologies or was, at the time such Liability arose, an employee of a member
of the Collagen Group), (B) involving Howard Palefsky or any former employees of
Collagen or its Subsidiaries (who are not employees of 



                                      -13-
<PAGE>   20

Collagen or Technologies on the Effective Date) who were primarily engaged in
research and development activities or (C) involving, as an individual
defendant, any employee of Technologies or its Subsidiaries;

                      (vi) such additional liabilities listed or described on
Schedule 2.3(a)(vi); and

                      (vii) except as contemplated by Section 2.3(b), any and
all Liabilities of Collagen or its Subsidiaries accrued or otherwise outstanding
immediately prior to the Effective Date that are related primarily to the
Technologies Business. The intention of this clause (vii) is only to rectify any
inadvertent omission or transfer or conveyance of any Liabilities that, had the
parties given specific consideration to such Liability as of the Effective Date,
would have otherwise been assigned to Technologies hereunder. No Liability shall
be assigned to Technologies solely as a result of this clause (vii) if such
Liability is within the category or type of Liability expressly covered by the
subject matter of an Ancillary Agreement. In addition, no Liability shall be
assigned to Technologies solely as a result of this clause (vii) unless a claim
with respect thereto is made by Collagen on or prior to the first to occur of
June 30, 1999 or the first anniversary of the Distribution Date.

                (b) For the purposes of this Agreement, "Excluded Liabilities"
means:

                      (i) all Liabilities of Collagen or any member of the
Collagen Group, other than the Technologies Liabilities; and

                      (ii) any and all Liabilities that are expressly
contemplated by this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Liabilities to be retained or assumed by Collagen or any
other member of the Collagen Group, and all agreements and obligations of any
member of the Collagen Group under this Agreement or any of the Ancillary
Agreements.

        2.4 TRANSFER OF EMPLOYEES. Each of the individual employees of Collagen
or its Subsidiaries listed on Schedule 2.4 shall, as of the close of business on
December 31, 1997, be transferred to, and become an employee of, Technologies or
the Technologies Subsidiary identified on Schedule 2.4. From and after the
Effective Date, Technologies, or the Technologies Subsidiary, as the case may
be, shall be responsible for paying all salary, wages, bonus, accrued vacation,
severance and overtime, and applicable employment and payroll taxes, to such
individuals for services performed on or after January 1, 1998. Such employees
shall be entitled to the benefits set forth in the Benefits Agreement.

        2.5 DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY INTERESTS AND
TANGIBLE PROPERTY LOCATED THEREON. In furtherance of the assignment, transfer
and conveyance of Technologies Assets and the assumption of Technologies
Liabilities set forth in Section 2.1(a) and (b), on the Effective Date or as
promptly as practicable thereafter, each of Collagen and Technologies, or their
applicable Subsidiaries, is executing and delivering or will execute and deliver
deeds, lease assignments and assumptions, leases, subleases and sub-subleases
substantially in the forms attached as Schedule 2.5, with such 



                                      -14-
<PAGE>   21

changes as may be necessary to conform to any laws, regulations or usage
applicable in the jurisdiction in which the relevant real property is located.
Set forth in, or referenced by, such Schedule 2.5 is, among other things, a
summary of each property or interest therein to be conveyed, assigned, leased,
subleased or sub-subleased, the applicable entities relevant to each property
and their capacities with respect to each property (e.g., as transferor,
transferee, assignor, assignee, lessor, lessee, sublessor, sublessee,
sub-sublessor or sub-sublessee), and any terms applicable to each property that
are not specified in the forms of deed, lease assignment and assumption, lease,
sublease or sub-sublease (e.g., rent and term).

        2.6 DOCUMENTS RELATING TO OTHER TRANSFERS OF ASSETS AND ASSUMPTION OF
LIABILITIES. In furtherance of the assignment, transfer and conveyance of
Technologies Assets and the assumption of Technologies Liabilities set forth in
Section 2.1(a) and (b), on the Effective Date or as promptly as practicable
thereafter, (i) Collagen shall execute and deliver, and shall cause its
Subsidiaries to execute and deliver, such bills of sale, stock powers,
certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of Collagen's and its
Subsidiaries' right, title and interest in and to the Technologies Assets to
Technologies or the designated Technologies Subsidiary and (ii) Technologies
shall execute and deliver to Collagen and its Subsidiaries such bills of sale,
stock powers, certificates of title, assumptions of contracts and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the Technologies Liabilities by Technologies.

        2.7 OTHER ANCILLARY AGREEMENTS. Simultaneously with execution and
delivery of this Agreement, each of Collagen and Technologies will execute and
deliver all Ancillary Agreements (other than the Persistence Agreement) to which
it is a party.

        2.8    DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.

               (a) Each of Collagen (on behalf of itself and each member of the
Collagen Group) and Technologies (on behalf of itself and each member of the
Technologies Group) understands and agrees that, except as expressly set forth
in this Agreement or in any Ancillary Agreement, no party to this Agreement, any
Ancillary Agreement or any other agreement or document contemplated by this
Agreement, any Ancillary Agreement or otherwise, is representing or warranting
in any way as to the Assets, businesses or Liabilities transferred or assumed as
contemplated hereby or thereby, as to any consents or approvals required in
connection therewith, as to the value or freedom from any Security Interests of,
or any other matter concerning, any Assets of such party, or as to the absence
of any defenses or right of setoff or freedom from counterclaim with respect to
any claim or other Asset, including any accounts receivable, of any party, or as
to the legal sufficiency of any assignment, document or instrument delivered
hereunder to convey title to any Asset or thing of value upon the Effective
Date. Except as may expressly be set forth in this Agreement or in any Ancillary
Agreement, all such Assets are being transferred on an "as is," "where is" basis
(and, in the case of any real property, by means of a quitclaim or similar form
deed or conveyance) and, except as otherwise provided herein, the respective
transferees shall bear the economic and legal risks that any 



                                      -15-
<PAGE>   22

conveyance shall prove to be insufficient to vest in the transferee good and
marketable title, free and clear of any Security Interest.

        2.9    GOVERNMENTAL APPROVALS AND CONSENTS.

               (a) To the extent that the Separation requires any Consents or
Governmental Approvals, the parties will use their reasonable best efforts to
obtain any such Consents and Governmental Approvals.

               (b) If and to the extent that the valid, complete and perfected
transfer or assignment to the Technologies Group of any Technologies Assets
would be a violation of applicable laws or require any Consent or Governmental
Approval in connection with the Separation or the Distribution, then the
transfer or assignment to the Technologies Group of such Technologies Assets
shall be automatically deemed deferred and any such purported transfer or
assignment shall be null and void until such time as all legal impediments are
removed and/or such Consents or Governmental Approvals have been obtained.
Notwithstanding the foregoing, any such Asset shall be deemed a Technologies
Asset for purposes of determining whether any Liability is a Technologies
Liability.

               (c) If the transfer or assignment of any Technologies Asset
intended to be transferred or assigned hereunder is not consummated as of the
Effective Date, whether as a result of the provisions of Section 2.9(b) or for
any other reason, then the Person retaining such Technologies Asset shall
thereafter hold such Technologies Asset for the use and benefit, insofar as
reasonably possible, of the Person entitled thereto (at the expense of the
Person entitled thereto). In addition, the Person retaining such Technologies
Asset shall take such other actions as may be reasonably requested by the Person
to whom such Technologies Asset is to be transferred in order to place such
Person, insofar as reasonably possible, in the same position as if such
Technologies Asset had been transferred as contemplated hereby and so that all
the benefits and burdens relating to such Technologies Asset, including
possession, use, risk of loss, potential for gain, and dominion, control and
command over such Technologies Asset, are to inure from and after the Effective
Date to the Technologies Group.

               (d) If and when the Consents and/or Governmental Approvals, the
absence of which caused the deferral of transfer of any Technologies Asset
pursuant to Section 2.9(b), are obtained, the transfer of the applicable
Technologies Asset shall be effected in accordance with the terms of this
Agreement and/or the applicable Ancillary Agreement.

               (e) The Person retaining a Technologies Asset due to the deferral
of the transfer of such Technologies Asset shall not be obligated, in connection
with the foregoing, to expend any money unless the necessary funds are advanced
by the Person entitled to the Technologies Asset, other than reasonable
out-of-pocket expenses, attorneys' fees and recording or similar fees, all of
which shall be promptly reimbursed by the Person entitled to such Technologies
Asset.



                                      -16-
<PAGE>   23

        2.10   NOVATION AND ASSIGNMENT OF ASSUMED TECHNOLOGIES LIABILITIES.

               (a) Each of Collagen and Technologies, at the request of the
other, shall use their reasonable best efforts to obtain, or to cause to be
obtained, any consent, substitution, approval or amendment required to novate
and assign all obligations under agreements, leases, licenses and other
obligations or Liabilities of any nature whatsoever that constitute Technologies
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than any member of the Technologies Group, so that, in
any such case, Technologies and its Subsidiaries will be solely responsible for
such Liabilities; provided, however, that neither Collagen nor Technologies
shall be obligated to pay any consideration therefor to any third party from
whom such consents, approvals, substitutions and amendments are requested.

               (b) If Collagen or Technologies is unable to obtain, or to cause
to be obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the Collagen Group shall continue to be
bound by such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof, Technologies shall, as agent or
subcontractor for Collagen or such other Person, as the case may be, pay,
perform and discharge fully all the obligations or other Liabilities of Collagen
or such other Person, as the case may be, thereunder from and after the
Effective Date. Collagen shall, without further consideration, pay and remit, or
cause to be paid or remitted, to Technologies promptly all money, rights and
other consideration received by it or any member of its Group in respect of the
performance of such unassigned Liabilities (unless any such consideration is an
Excluded Asset). If and when any such consent, approval, release, substitution
or amendment shall be obtained or such agreement, lease, license or other rights
or obligations shall otherwise become assignable or able to be novated, Collagen
shall thereafter assign, or cause to be assigned, all its rights, obligations
and other Liabilities thereunder or any rights or obligations of any member of
the Collagen Group to Technologies or another member of the Technologies Group
specified by Technologies without payment of further consideration and
Technologies, without the payment of any further consideration, shall, or shall
cause such other member of the Technologies Group to assume such rights and
obligations.

                                   ARTICLE III
                                THE DISTRIBUTION

        3.1    THE DISTRIBUTION.

               (a) In the event that the Collagen Board of Directors decides to
proceed with the Distribution, then subject to the conditions specified in
Section 3.3, on or prior to a date determined by such Board of Directors (the
"Distribution Date"), Collagen will deliver to the Agent for the benefit of
holders of record of Collagen Common Stock on the Record Date, a single stock
certificate, endorsed by Collagen in blank, representing all of the outstanding
shares of Technologies Common Stock then owned by Collagen or any member of the
Collagen Group, and shall cause the transfer agent for the shares of Collagen
Common Stock to instruct the Agent



                                      -17-
<PAGE>   24


to distribute on the Distribution Date the appropriate number of such shares of
Technologies Common Stock to each such holder or designated transferee or
transferees of such holder.

               (b) Subject to the provisions of Section 3.4, each holder of
Collagen Common Stock on the Record Date (or such holder's designated transferee
or transferees) will be entitled to receive in the Distribution a number of
shares of Technologies Common Stock equal to the number of shares of Collagen
Common Stock held by such holder on the Record Date multiplied by a fraction,
the numerator of which is the number of outstanding shares of Technologies
Common Stock owned by Collagen or any other member of the Collagen Group on the
Record Date and the denominator of which is the number of shares of Collagen
Common Stock outstanding on the Record Date.

               (c) Technologies and Collagen, as the case may be, will provide
to the Agent all share certificates and any information required in order to
complete the Distribution on the terms specified in this Section 3.1.

        3.2    ACTIONS PRIOR TO THE DISTRIBUTION.

               (a) Collagen and Technologies shall prepare and mail, prior to
the Distribution Date, to the holders of Collagen Common Stock, such information
concerning Technologies, its business, operations and management, the
Distribution and such other matters as Collagen shall reasonably determine and
as may be required by law. Collagen and Technologies will prepare, and
Technologies will, to the extent required under applicable law, file with the
Commission any such documentation and any requisite no action letters which
Collagen determines are necessary or desirable to effectuate the Distribution,
and Collagen and Technologies shall each use its reasonable best efforts to
obtain all necessary approvals from the Commission with respect thereto as soon
as practicable.

               (b) Collagen and Technologies shall take all such action as may
be necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.

               (c) Collagen and Technologies shall take all reasonable steps
necessary and appropriate to cause the conditions set forth in Section 3.3
(subject to Section 3.3(d)) to be satisfied and to effect the Distribution on
the Distribution Date.

               (d) To the extent required, Technologies shall prepare and file,
and shall use its reasonable best efforts to have approved, an application for
the quotation of the Technologies Common Stock to be distributed in the
Distribution on the Nasdaq National Market, subject to official notice of
distribution.

        3.3 CONDITIONS TO DISTRIBUTION. In the event that the Collagen Board of
Directors decides to proceed with the Distribution, the parties hereto shall use
their reasonable best efforts to satisfy the following conditions to the
consummation of the Distribution. The obligations of the parties to consummate
the Distribution shall be conditioned on the satisfaction, or waiver by Collagen
of the following conditions:



                                      -18-
<PAGE>   25

               (a) A private letter ruling from the Internal Revenue Service
shall have been obtained, and shall continue in effect, to the effect that,
among other things, the Distribution will qualify as a tax-free distribution for
federal income tax purposes under Section 355 of the Code and the transfer to
Technologies of the Technologies Assets and the assumption by Technologies of
the Technologies Liabilities in connection with the Separation will not result
in the recognition of any gain or loss to any member of the Collagen Group, any
member of the Technologies Group or their respective stockholders for federal
income tax purposes, and such ruling shall be in form and substance satisfactory
to Collagen in its sole discretion.

               (b) Any material Consents and Governmental Approvals necessary to
consummate the Distribution shall have been obtained and be in full force and
effect.

               (c) No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Distribution shall be pending or in effect and no other
event outside the control of Collagen shall have occurred or failed to occur
that prevents the consummation of the Distribution.

               (d) No other events or developments shall have occurred that, in
the judgment of the Board of Directors of Collagen, would result in the
Distribution having a material adverse effect on Collagen, on any member of the
Collagen Group or on the stockholders of Collagen.

               (e) A no-action letter from the Commission shall have been
obtained to the effect that, after giving effect to the Separation and the
Distribution, Technologies is not an "investment company" under the Investment
Company Act of 1940, as amended.

               (f) To the extent required, a no-action letter from the
Commission shall have been obtained to the effect that the Distribution is
exempt from registration under the Securities Act.

               (g) The stockholders of Collagen shall have approved the
Distribution.

        The foregoing conditions are for the sole benefit of Collagen and shall
not give rise to or create any duty on the part of Collagen or the Collagen
Board of Directors to waive or not waive any such condition.

        3.4 FRACTIONAL SHARES. As soon as practicable after the Distribution
Date, Collagen shall direct the Agent to determine the number of whole shares
and fractional shares of Technologies Common Stock allocable to each holder of
record or beneficial owner of Collagen Common Stock as of the Record Date, to
aggregate all such fractional shares and sell the whole shares obtained thereby
at the direction of Collagen either to Collagen, in open market transactions or
otherwise, in each case at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial owner
to which a fractional share shall be allocable such holder's or owner's ratable
share of the proceeds of such sale, after making appropriate deductions of the
amount required to be withheld for federal income tax purposes and after
deducting an amount equal to all brokerage charges, commissions and transfer
taxes attributed to such sale. Collagen and the Agent shall use their reasonable
best 



                                      -19-
<PAGE>   26

efforts to aggregate the shares of Collagen Common Stock that may be held by any
beneficial owner thereof through more than one account in determining the
fractional share allocable to such beneficial owner.

        3.5 THE TECHNOLOGIES BOARD OF DIRECTORS. Collagen and Technologies shall
each take all actions which may be required to elect or otherwise appoint as
directors of Technologies, on or prior to the Distribution Date, John Daniels,
Reid Dennis, Frank DeLustro, David Foster, Craig Johnson and any other persons
to be designated by a nominating committee of Technologies' Board of Directors
(which nominating committee shall be comprised of individuals who are at such
time neither officers nor directors of Collagen) as additional or substitute
members of the Board of Directors of Technologies on the Distribution Date.

                                   ARTICLE IV
                                 INDEMNIFICATION

        4.1 INDEMNIFICATION BY COLLAGEN. Subject to the provisions of Section
4.3, Collagen shall indemnify, defend and hold harmless Technologies, each
member of the Technologies Group and each of their respective directors,
officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "Technologies Indemnitees"), from and
against any and all Liabilities of the Technologies Indemnitees relating to,
arising out of or resulting from any of the following items (without
duplication):

               (a) the failure of Collagen or any other member of the Collagen
Group or any other Person (other than Technologies or any member of the
Technologies Group) to pay, perform or otherwise promptly discharge any
Liabilities of the Collagen Group, other than the Technologies Liabilities or
any contract other than the Technologies Contracts, in accordance with their
respective terms, whether prior to or after the Effective Date, other than any
failure or alleged failure resulting from any action or failure to act by
Technologies or any member of the Technologies Group;

               (b) the Collagen Business, any Liability of the Collagen Group
(including any Environmental Liability) other than the Technologies Liabilities
or any contract other than the Technologies Contracts, other than any Liability
resulting from any action or failure to act by Technologies or any member of the
Technologies Group;

               (c) any breach, by Collagen or any member of the Collagen Group,
of this Agreement or any of the Ancillary Agreements, other than any Liability
resulting from any action or failure to act by Technologies or any member of the
Technologies Group;

               (d) any product liability claims, whether existing on the
Effective Date or arising thereafter, related to the Collagen Business; and

               (e) any manufacturing defect in any product or material
manufactured by Collagen for Technologies pursuant to the Collagraft Supply
Agreement or the Collagen Supply Agreement (a "Manufactured Product or
Material"); provided, however, that Collagen shall not 



                                      -20-
<PAGE>   27

be obligated to indemnify Technologies pursuant to this Section 4.1(e) to the
extent that any Liability is the result of: (i) the use of any Manufactured
Product or Material that has been manufactured in accordance with and materially
conforms to the specifications provided by Technologies and accepted by Collagen
for such Manufactured Product or Material, (ii) the combination by Technologies
of any Manufactured Product or Material with another product or material or the
modification by Technologies of any Manufactured Product or Material where such
Liability would not have occurred but for such combination or modification or
(iii) any statement, representation, misstatement or omission made by
Technologies, any member of the Technologies Group or any customer thereof
regarding a Manufactured Product or Material which are inconsistent with
Collagen's warranties expressly granted under the Collagraft Supply Agreement or
the Collagen Supply Agreement, as applicable.

        4.2 INDEMNIFICATION BY TECHNOLOGIES. Subject to the provision of Section
4.3, Technologies shall indemnify, defend and hold harmless Collagen, each
member of the Collagen Group and each of their respective directors, officers
and employees, and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "Collagen Indemnitees"), from and against
any and all Liabilities of the Collagen Indemnitees relating to, arising out of
or resulting from any of the following items (without duplication):

               (a) the failure of Technologies or any other member of the
Technologies Group or any other Person (other than Collagen or any member of the
Collagen Group) to pay, perform or otherwise promptly discharge any Technologies
Liabilities or Technologies Contracts, in accordance with their respective
terms, whether prior to or after the Effective Date, other than any failure or
alleged failure resulting from any action or failure to act by Collagen or any
member of the Collagen Group;

               (b) any Liability arising in connection with any Technologies
Liabilities that were not assigned or novated to Technologies and which
Technologies is obligated to pay, perform and discharge pursuant to Section
2.10(b) of this Agreement or in connection with any assignment that was obtained
without a novation or unconditional release of all parties other than members of
the Technologies Group, other than any Liability resulting from any action or
failure to act by Collagen or any member of the Collagen Group;

               (c) the Technologies Business, any Technologies Liability or any
Technologies Contract, other than any Liability resulting from any action or
failure to act by Collagen or any member of the Collagen Group;

               (d) any breach by Technologies or any member of the Technologies
Group of this Agreement or any of the Ancillary Agreements, other than any
breach or alleged breach resulting from any action or failure to act by Collagen
or any member of the Collagen Group; and

               (e) any product liability claims, whether existing on the
Effective Date or arising thereafter, related to the Technologies Business.



                                      -21-
<PAGE>   28

        4.3 INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER
AMOUNTS.

               (a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to Articles IV and V will be net of
Insurance Proceeds. Accordingly, the amount which any party (an "Indemnifying
Party") is required to pay to any Person entitled to indemnification hereunder
(an "Indemnitee") will be reduced by any Insurance Proceeds theretofor actually
recovered by or on behalf of the Indemnitee in reduction of the related
Liability. If an Indemnitee receives a payment (an "Indemnity Payment") required
by this Agreement from an Indemnifying Party in respect of any Liability and
subsequently receives Insurance Proceeds, then the Indemnitee will pay to the
Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds had been received, realized or recovered before the
Indemnity Payment was made.

               (b) An insurer who would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a "windfall" (i.e., a benefit they
would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof. Nothing
contained in this Agreement or any Ancillary Agreement shall obligate any member
of any Group to seek to collect or recover any Insurance Proceeds.

        4.4    PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS.

               (a) If an Indemnitee shall receive notice or otherwise learn of
the assertion by a Person (including any Governmental Authority) who is not a
member of the Collagen Group or the Technologies Group of any claim or of the
commencement by any such Person of any Action (collectively, a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 4.1, Section 4.2, Section
5.2 or any other provision of this Agreement or any Ancillary Agreement, such
Indemnitee shall give such Indemnifying Party written notice thereof within 20
days after becoming aware of such Third Party Claim. Any such notice shall
describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnitee or other Person to give notice as
provided in this Section 4.4(a) shall not relieve the related Indemnifying Party
of its obligations under Articles IV and V, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.

               (b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 4.4(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee as to whether the Indemnifying Party will
assume responsibility 



                                      -22-
<PAGE>   29

for defending such Third Party Claim, which notice shall specify any
reservations or exceptions. After notice from an Indemnifying Party to an
Indemnitee of its election to assume the defense of a Third Party Claim, such
Indemnitee shall have the right to employ separate counsel and to participate in
(but not control) the defense, compromise or settlement thereof, but the fees
and expenses of such counsel shall be the expense of such Indemnitee except as
set forth in the next sentence. In the event that the Indemnifying Party has
elected to assume the defense of the Third Party Claim but has specified, and
continues to assert, any reservations or exceptions in such notice, then, in any
such case, the reasonable fees and expenses of one separate counsel for all
Indemnitees shall be borne by the Indemnifying Party.

               (c) If an Indemnifying Party elects not to assume responsibility
for defending a Third Party Claim, or fails to notify an Indemnitee of its
election as provided in Section 4.4(b), such Indemnitee may defend such Third
Party Claim at the cost and expense (including allocated costs of in-house
counsel and other personnel) of the Indemnifying Party.

               (d) No Indemnitee may settle or compromise any Third Party Claim
without the consent of the Indemnifying Party.

               (e) No Indemnifying Party shall consent to entry of any judgment
or enter into any settlement of a Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other non-monetary relief to be entered, directly or
indirectly, against any Indemnitee.

               (f) The provisions of Section 4.4 and Section 4.5 shall not apply
to Taxes (which are covered by the Tax Allocation Agreement).

               (g) The Indemnitees shall cooperate with the Indemnifying Party
in a reasonable manner in the defense of any Third Party Claim by the
Indemnifying party, and the cost and expense (including costs of in-house
counsel and other personnel) of such cooperation shall be borne by the
Indemnifying Party unless otherwise specified herein.

        4.5    ADDITIONAL MATTERS.

               (a) Any claim on account of a Liability that does not result from
a Third Party Claim shall be asserted by written notice given by the Indemnitee
to the Indemnifying Party. Such Indemnifying Party shall have a period of 30
days after the receipt of such notice within which to respond thereto. If such
Indemnifying Party does not respond within such 30-day period, such Indemnifying
Party shall be deemed to have refused to accept responsibility to make payment.
If such Indemnifying Party does not respond within such 30-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue such
remedies as may be available to such party as contemplated by this Agreement and
the Ancillary Agreements.

               (b) In the event of payment by or on behalf of any Indemnifying
Party to any Indemnitee in connection with any Third Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which such Indemnitee
may have any right, defense or claim relating to such Third 



                                      -23-
<PAGE>   30

Party Claim against any claimant or plaintiff asserting such Third Party Claim
or against any other person.

               (c) In the event of an Action in which the Indemnifying Party is
not a named defendant, if the Indemnifying Party shall so request, the parties
shall endeavor to substitute the Indemnifying Party for the named defendant. If
such substitution or addition cannot be achieved for any reason or is not
requested, the named defendant shall allow the Indemnifying Party to manage the
Action as set forth in this Section 4.5 and the Indemnifying Party shall fully
indemnify the named defendant against all costs of defending the Action
(including court costs, sanctions imposed by a court, attorneys' fees, experts'
fees and all other external expenses, and the allocated costs of in-house
counsel and other personnel), the costs of any judgment or settlement, and the
cost of any interest or penalties relating to any judgment or settlement.

        4.6 REMEDIES CUMULATIVE. The remedies provided in this Article IV shall
be cumulative and, subject to the provisions of Article VIII and Section 5.2(f),
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.

        4.7 SURVIVAL OF INDEMNITIES. The rights and obligations of each of
Collagen and Technologies and their respective Indemnitees under Articles IV and
V shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities.

                                    ARTICLE V
                 INTELLECTUAL PROPERTY ENFORCEMENT AND INDEMNITY

        5.1 ENFORCEMENT.

               (a) NOTICE. In the event that Technologies, Collagen or any
member of the Technologies Group or Collagen Group becomes aware of, or has
reason to suspect, that a third party is infringing or misappropriating, or may
be in the position to begin infringing or misappropriating, either directly or
indirectly, the Transferred Technology, the Retained Technology, Persistence
Technology, Recombinant Technology or Improvements, it shall promptly deliver
written notice to the other party of such infringement or misappropriation or
prospective infringement or misappropriation by such third party ("Notice of
Infringement").

               (b)    INFRINGEMENT IN THE COLLAGEN FIELD.

                      (i) If the alleged infringement or misappropriation by a
third party is of the Retained Technology or Improvements in the Collagen Field,
then Collagen shall have the right to initiate a legal proceeding against such
third party, together with the right to enforce and collect any judgment
thereon. Collagen shall have sole control and shall bear all costs and expenses
associated with such legal proceeding against such third party. Collagen shall
retain all monetary recoveries or awards resulting from such legal proceeding.
Upon Collagen' request, Technologies shall provide reasonable assistance to
Collagen in any such legal proceeding 



                                      -24-
<PAGE>   31

initiated by Collagen, including without limitation providing documentation and
testimony and joining in such legal proceeding if required, provided that all
expenses incurred by Technologies for such assistance shall be reimbursed by
Collagen. If Collagen declines to initiate or fails to initiate within 90 days
after delivery of the Notice of Infringement a legal proceeding against such
third party where such alleged infringement or misappropriation relates to
Improvements owned by Technologies and licensed to Collagen, then Technologies
shall have the right, but not the obligation, to initiate a legal proceeding
against such third party at its expense and retain any monetary recoveries or
awards resulting therefrom. Upon Technologies' request, Collagen shall provide
reasonable assistance to Technologies in any such legal proceeding initiated by
Technologies, including without limitation providing documentation and testimony
and joining in such legal proceeding if required, provided that all expenses
incurred by Collagen for such assistance shall be reimbursed by Technologies.

                      (ii) If the alleged infringement or misappropriation by a
third party is of Licensed Technology, Persistence Technology (if and to the
extent licensed to Collagen pursuant to the Persistence Agreement) or
Recombinant Technology (if and to the extent licensed to Collagen pursuant to
the Recombinant Agreement) in the Collagen Field, then Collagen shall have the
right to elect to initiate a legal proceeding against such third party, together
with the right to enforce and collect any judgment thereon. Collagen shall have
control of such legal proceeding or settlement thereof; provided, however, that:
(a) Collagen notifies Technologies in writing of such election within 90 days
after the Notice of Infringement has been delivered and (b) Collagen shall not
enter into any settlement of such legal proceeding without the approval of
Technologies, which approval shall not be unreasonably withheld. If Collagen
does not initiate such legal proceeding within 90 days after delivery of the
Notice of Infringement, or notifies Technologies that it declines to initiate
such legal proceeding, then Technologies shall have the right, but not the
obligation, to initiate a legal proceeding against such third party.
Technologies shall have control of such legal proceeding or settlement thereof,
provided that it shall not enter into any settlement of such legal proceeding
without the approval of Collagen, which approval shall not be unreasonably
withheld. Each party shall provide reasonable assistance to the party initiating
the legal proceeding, including without limitation, providing documentation and
testimony and joining in such legal proceeding if required. Without regard to
which party initiates the legal proceeding, all costs and expenses associated
with such legal proceeding, including any costs incurred for assistance, and all
monetary recoveries and awards resulting from such legal proceeding shall be
allocated seventy-five percent (75%) to Collagen and twenty-five percent (25%)
to Technologies.

               (c)    INFRINGEMENT OUTSIDE THE COLLAGEN FIELD.

                      If the alleged infringement or misappropriation by a third
party is of Retained Technology, Transferred Technology, Improvements,
Persistence Technology or Recombinant Technology outside of the Collagen Field,
then Technologies shall have the right to initiate a legal proceeding against
such third party, together with the right to enforce and collect any judgment
thereon. Technologies shall have control and shall bear all costs and expenses
associated with such legal proceeding against such third party. Technologies
shall retain all monetary recoveries or awards resulting from such legal
proceeding. Upon Technologies' 


                                      -25-
<PAGE>   32

request, Collagen shall provide reasonable assistance to Technologies in any
such legal proceeding initiated by Technologies, including without limitation
providing documentation and testimony and joining in such legal proceeding if
required, provided that all expenses incurred by Collagen for such assistance
shall be reimbursed by Technologies. If Technologies declines to initiate or
fails to initiate within 90 days after delivery of the Notice of Infringement a
legal proceeding against such third party where such alleged infringement or
misappropriation relates to Retained Technology or Improvements owned by
Collagen and licensed to Technologies, then Collagen shall have the right to
initiate a legal proceeding against such third party at its expense and retain
any monetary recoveries or awards resulting therefrom. Upon Collagen's request,
Technologies shall provide reasonable assistance to Collagen in any such legal
proceeding initiated by Collagen, including without limitation providing
documentation and testimony and joining in such legal proceeding if required,
provided that all expenses incurred by Technologies for such assistance shall be
reimbursed by Collagen.

               (d)    INFRINGEMENT IN AND OUTSIDE THE COLLAGEN FIELD.

                      If a third party is allegedly infringing or
misappropriating Retained Technology, Transferred Technology, Improvements,
Persistence Technology (if and to the extent licensed to Collagen pursuant to
the Persistence Agreement) or Recombinant Technology (if and to the extent
licensed to Collagen pursuant to the Recombinant Agreement) both in and outside
the Collagen Field, then the parties shall cooperate with each other and
negotiate in good faith an arrangement for enforcing their Intellectual Property
Rights against such third party.

        5.2    THIRD PARTY CLAIMS.

               (a) COLLAGEN INDEMNIFICATION. In the event that a Third Party
Claim is brought or filed against the Technologies Indemnitees for any alleged
infringement or misappropriation of any third party Intellectual Property Rights
based on or arising out of: (i) Collagen's making, using, selling, offering for
sale, marketing or promoting technology, products or processes incorporating
Retained Technology in the Collagen Field after the Effective Date or (ii) the
combination by Collagen of any technology, product or process incorporating
Persistence Technology or Recombinant Technology with another product or
process, or the modification by Collagen of any technology, product or process
incorporating Persistence Technology or Recombinant Technology, where any
Liability would not have occurred but for such combination or modification, then
Collagen will have the obligation to defend, indemnify and hold harmless the
Technologies Indemnitees against such Third Party Claim. Collagen agrees to pay
any Liabilities entered against such Technologies Indemnitees relating to,
arising out of or resulting from such Third Party Claim.

               (b) TECHNOLOGIES INDEMNIFICATION. In the event that a Third Party
Claim is brought or filed against the Collagen Indemnitees for any alleged
infringement or misappropriation of any third party Intellectual Property Rights
based on or arising out of: (i) Collagen's making, using, selling, offering for
sale, marketing or promoting technology, products or processes incorporating
Transferred Technology outside the Collagen Field before the Effective Date,
(ii) Collagen's making, using, selling, offering for sale, marketing or


                                      -26-
<PAGE>   33

promoting products or processes incorporating Persistence Technology or
Recombinant Technology (whether in or outside the Collagen Field) prior to the
Effective Date, (iii) Technologies' making, using, selling, offering for sale,
marketing or promoting products or processes incorporating Transferred
Technology, Persistence Technology and Recombinant Technology outside the
Collagen Field after the Effective Date, or (iv) Collagen's making, using,
selling, offering for sale, marketing or promoting products or processes
incorporating Persistence Technology or Recombinant Technology within the
Collagen Field after the Effective Date, then Technologies will have the
obligation to defend, indemnify and hold harmless the Collagen Indemnitees
against any such Third Party Claims; provided, however, that Technologies shall
not be obligated to indemnify Collagen pursuant to this Section 5.2(b) to the
extent that any Liability is the result of: (i) the combination by Collagen of
any technology, product or process incorporating Persistence Technology or
Recombinant Technology with another product or process, or the modification by
Collagen of any technology, product or process incorporating Persistence
Technology or Recombinant Technology, where such Liability would not have
occurred but for such combination or modification or (ii) any unauthorized use
by Collagen of Persistence Technology or Recombinant Technology, including
without limitation any use of Persistence Technology prior to execution of the
Persistence Agreement. Subject to the limitations herein, Technologies agrees to
pay any Liabilities entered against such Collagen Indemnitees relating to,
arising out of or resulting from such Third Party Claim.

               (c) SHARED DEFENSE. In the event that any Third Party Claim is
brought or filed against Collagen, any member of the Collagen Group,
Technologies or any member of the Technologies Group for any infringement or
misappropriation of any third party Intellectual Property Rights based on or
arising out of: (i) Collagen's making, using, selling, offering for sale,
marketing or promoting technology, products or processes incorporating Retained
Technology or Transferred Technology in the Collagen Field prior to the
Effective Date or (ii) Collagen's making, using, selling, offering for sale,
marketing or promoting technology, products or processes incorporating Licensed
Technology in the Collagen Field after the Effective Date, then Collagen will
have the first right to defend against or settle any Third Party Claim;
provided, however, that Technologies: (i) cooperates fully with Collagen in such
defense; and (b) Technologies funds twenty-five percent (25%) of all expenses
associated with such defense, including without limitation attorneys and expert
fees and court or other administrative agency costs. Technologies will have the
right to participate, in a non-controlling manner and at its sole expense in
such defense by Collagen. If Collagen declines to defend such Third Party Claim,
then Technologies shall have the right to defend or settle such Third Party
Claim; provided that Collagen: (x) cooperates fully with Technologies in such
defense and (y) Collagen funds seventy-five percent (75%) of all expenses
associated with such defense, including without limitation attorneys and expert
fees and court or other administrative agency costs. Collagen will have the
right to participate, in a non-controlling manner and at its sole expense in
such defense by Technologies. Without regard to which party controls defense of
such third party claim, suit or proceeding, each party agrees that it will: (k)
share with the other party any Liabilities or monetary recoveries resulting from
such Third Party Claim, with twenty-five (25%) of such amount payable to or by
Technologies, and the remainder of such amount payable to or by Collagen; and
(l) not settle such Third Party Claim prior to receiving approval from the other
party, which approval shall not be unreasonably withheld.



                                      -27-
<PAGE>   34

               (d) Neither party shall have any obligation to indemnify or
defend any Third Party Claim brought or filed against the other party or any
member of the other party's group based on or arising out of any Improvements.

               (e) The provisions of Sections 4.3, 4.4, 4.5 and 4.7 shall apply
to this Section 5.2 to the extent applicable and not inconsistent with the
provisions of this Section 5.2.

               (f) THE REMEDIES IN THIS SECTION 5.2 SHALL STATE THE ENTIRE
LIABILITY AND THE EXCLUSIVE REMEDY OF THE PARTIES AND ANY MEMBERS OF THEIR
RESPECTIVE GROUPS FOR ANY ALLEGED INFRINGEMENT OR MISAPPROPRIATION OF THE
INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY RELATING TO THE RETAINED
TECHNOLOGY, TRANSFERRED TECHNOLOGY, LICENSED TECHNOLOGY, IMPROVEMENTS,
RECOMBINANT TECHNOLOGY OR PERSISTENCE TECHNOLOGY.

                                   ARTICLE VI
                  INTERIM OPERATIONS AND CERTAIN OTHER MATTERS

        6.1    INSURANCE MATTERS.

               (a) Technologies agrees that it will pay to Collagen the amounts
provided for in the Services Agreement or the Benefits Agreement in respect of
the period from the Effective Date until such time as Technologies and Collagen
determine that it is appropriate for Technologies to obtain its own insurance
coverage (which, in any event, shall be no later than the Distribution Date).
Such amounts shall be subject to adjustment in the event of any change in the
premiums charged to Collagen for the Insurance Policies, which adjustment shall
be equal to: (i) in the case of any premium change that is a result of changes
in the factual criteria for the insured party (e.g., number of employees,
revenue, prior claims history), any increase or decrease in such premiums
attributable to changes at Technologies or the Technologies Group shall result
in a dollar for dollar adjustment to the amounts payable by Technologies to
Collagen pursuant to this Section 6.1(a) or (ii) in the case of any other
premium charge, any increase or decrease in such premiums shall result in a
proportionate adjustment to the amounts payable by Technologies to Collagen
pursuant to this Section 6.1(a). Collagen and Technologies agree to cooperate in
good faith to provide for an orderly transition of insurance coverage from the
Effective Date until such time as Technologies and Collagen determine that it is
appropriate for Technologies to obtain its own insurance coverage (which, in any
event, shall be no later than the Distribution Date), and for the treatment of
any Insurance Policies that will remain in effect following the Effective Date
on a mutually agreeable basis. In no event shall Collagen, any other member of
the Collagen Group or any Collagen Indemnitee have any liability or obligation
whatsoever to any member of the Technologies Group in the event that any
Insurance Policy or other contract or policy of insurance shall be terminated or
otherwise cease to be in effect for any reason (other than failure to pay when
due any premium or other amount due thereunder), shall be unavailable or
inadequate to cover any Liability of any member of the Technologies Group for
any reason whatsoever or shall not be renewed or extended beyond the current
expiration date.



                                      -28-
<PAGE>   35

               (b) (i) Except as otherwise provided in any Ancillary Agreement,
the parties intend by this Agreement that Technologies and each other member of
the Technologies Group be successors-in-interest to all rights that any member
of the Technologies Group may have as of the Effective Date as a subsidiary,
affiliate, division or department of Collagen prior to the Effective Date under
any policy of insurance issued to Collagen by any insurance carrier unaffiliated
with Collagen or under any agreements related to such policies executed and
delivered prior to the Effective Date, including any rights such member of the
Technologies Group may have, as an insured or additional named insured,
subsidiary, affiliate, division or department, to avail itself of any such
policy of insurance or any such agreements related to such policies as in effect
prior to the Effective Date. At the request of Technologies, Collagen shall take
all reasonable steps, including the execution and delivery of any instruments,
to effect the foregoing; provided, however, that Collagen shall not be required
to pay any amounts, waive any rights or incur any Liabilities in connection
therewith.

                      (ii) Except as otherwise contemplated by any Ancillary
Agreement, after the Effective Date, none of Collagen or Technologies or any
member of their respective Groups shall, without the consent of the other,
provide any such insurance carrier with a release, or amend, modify or waive any
rights under any such policy or agreement, if such release, amendment,
modification or waiver would adversely affect any rights or potential rights of
any member of the other Group thereunder; provided however that the foregoing
shall not (A) preclude any member of any Group from presenting any claim or from
exhausting any policy limit, (B) require any member of any Group to pay any
premium or other amount or to incur any Liability or (C) require any member of
any Group to renew, extend or continue any policy in force. Each of Technologies
and Collagen will share such information as is reasonably necessary in order to
permit the other to manage and conduct its insurance matters in an orderly
fashion.

               (c) This Agreement shall not be considered as an attempted
assignment of any Insurance Policy or other policy of insurance or as a contract
of insurance and shall not be construed to waive any right or remedy of any
member of the Collagen Group in respect of any Insurance Policy or any other
contract or policy of insurance.

               (d) Technologies does hereby, for itself and each other member of
the Technologies Group, agree that no member of the Collagen Group or any
Collagen Indemnitee shall have any Liability whatsoever as a result of the
Insurance Policies and practices of Collagen and its Affiliates as in effect at
any time, including as a result of the level or scope of any such insurance, the
creditworthiness of any insurance carrier, the terms and conditions of any
policy, the adequacy or timeliness of any notice to any insurance carrier with
respect to any claim or potential claim or otherwise.

               (e) Nothing in this Agreement shall be deemed to restrict any
member of the Technologies Group from acquiring at its own expense any other
insurance policy in respect of any Liabilities or covering any period.



                                      -29-
<PAGE>   36

        6.2    COLLECTION OF ACCOUNTS RECEIVABLE.

               (a) Technologies acknowledges on behalf of itself and each other
member of the Technologies Group that it is aware that the Retained Receivables
are Excluded Assets and that certain Persons that are account debtors with
respect to the Transferred Receivables (or that in the future may otherwise
become payable to a member of the Technologies Group) are also account debtors
with respect to the Retained Receivables. Collagen agrees that from and after
the Effective Date and prior to June 30, 1999, unless otherwise specifically
directed by Technologies, Collagen, as agent for Technologies, will take all
commercially reasonable steps consistent with the current practices of the
Collagen Business to service and collect the Transferred Receivables.
Technologies will cooperate to establish as promptly as practicable mutually
acceptable operational procedures. If, in order to collect any Transferred
Receivables, Collagen is required to engage a collection agency or to institute
legal proceedings or any other Action it shall be entitled to be reimbursed for
its reasonable out-of-pocket costs and expenses incurred in connection
therewith. After June 30, 1999, the parties will negotiate in good faith with
respect to the final disposition of any then outstanding Transferred
Receivables.

               (b) Each of Collagen and Technologies shall deliver to the other
such schedules and other information with respect to the Retained Receivables
and the Transferred Receivables as each shall reasonably request from time to
time in order to permit such parties to reconcile their respective records and
to monitor the collection of all accounts receivable (whether Transferred
Receivables or Retained Receivables). Each of Technologies and Collagen shall
afford the other reasonable access to its books and records relating to such
accounts receivable. Without limiting the foregoing, Collagen shall at all times
maintain the ability to provide to Technologies promptly upon request a true and
complete schedule of all Transferred Receivables due and owing as of the end of
the prior month.

               (c) By the 3rd business day of each month, Collagen hereby
irrevocably agrees to pay over, or cause to be paid over, in immediately
available funds to Technologies, at no cost or charge to Technologies or any of
its Affiliates (other than any member of the Collagen Group), any and all
amounts which were received during the immediately preceding month by any member
of the Collagen Group in respect of the Transferred Receivables. Any such
amounts not paid over to Technologies by the date specified in the first
sentence of this Section 6.2(c) shall bear interest at the Prime Rate plus 2%
per annum.

               (d) Nothing in this Agreement or any Ancillary Agreement shall be
construed to grant to any member of the Collagen Group any right, title or
interest in any Transferred Receivable and no member of the Collagen Group shall
have any right or power to, and no member of the Collagen Group shall, grant or
suffer to exist any right of set off, lien or any other Security Interest in any
Transferred Receivables or proceeds thereof. Collagen will not, and it will not
permit any member of the Collagen Group to, extend or otherwise change the
amount or other terms of payment of any Transferred Receivable, unless Collagen
shall have paid to Technologies an amount equal to the full amount of such
Transferred Receivable. Collagen hereby irrevocably and unconditionally agrees
that it shall not assert (and it shall not permit any member of the Collagen
Group to assert) any offsets, claims, counterclaims or defenses in 



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<PAGE>   37

respect of the Transferred Receivables or its obligations to pay over any such
Transferred Receivables to Technologies hereunder (whether existing on the
Effective Date or arising thereafter and whether or not relating to the
transactions contemplated by this Agreement, any Ancillary Agreement or
otherwise).

               (e) Technologies shall retain the right to collect or seek to
collect in such manner as it may in its sole discretion determine all or any
portion of the Transferred Receivables.

        6.3    CERTAIN BUSINESS MATTERS.

               (a) Except as set forth in this Agreement or any Ancillary
Agreement, no member of any Group shall have any duty to refrain from (i)
engaging in the same or similar activities or lines of business as any member of
any other Group, (ii) doing business with any potential or actual supplier or
customer of any member of any other Group or (iii) engaging in, or refraining
from, any other activities whatsoever relating to any of the potential or actual
suppliers or customers of any member of any other Group.

               (b) Each of Collagen and Technologies is aware that from time to
time certain business opportunities may arise which more than one Group may be
financially able to undertake, and which are, from their nature, in the line of
more than one Group's business and are of practical advantage to more than one
Group. In connection therewith, the parties agree that if prior to (but not
following) the Distribution Date, any member of either the Collagen Group or the
Technologies Group acquires knowledge of an opportunity that meets the foregoing
standard with respect to more than one Group, neither Collagen nor Technologies
shall have any duty to communicate or offer such opportunity to any of the
others and may pursue or acquire such opportunity for itself, or direct such
opportunity to any other Person, unless (i) such opportunity relates primarily
to the Technologies Business, in which case the party that acquires knowledge of
such opportunity shall use its reasonable best efforts to communicate and offer
such opportunity to Technologies, (ii) such opportunity relates primarily to the
Collagen Business, in which case the party that acquires knowledge of such
opportunity shall use its reasonable efforts to communicate and offer such
opportunity to Collagen or (iii) such opportunity relates both to the Collagen
Business and the Technologies Business but not primarily to either one, in which
case the party that acquires such knowledge of opportunity shall use its
reasonable best efforts to communicate such opportunity to the Collagen Board of
Directors and the Collagen Board of Directors shall determine whether such
opportunity shall first be offered to Technologies or to Collagen.
Notwithstanding the foregoing, no party shall be required to so communicate or
offer any such opportunity if it would result in the breach of any contract or
agreement or violate any applicable law, rule or regulation of any Governmental
Authority and no party shall have any obligation to provide financing (or
provide any other assistance whatsoever) to any other party in connection with
any such opportunity. In the event the foregoing clause (i) or (ii) is
applicable, no party, other than the party to whom the opportunity must be
offered in accordance with such clauses, shall pursue or acquire such
opportunity for itself, or direct such opportunity to any other Person, unless
the party to whom 



                                      -31-
<PAGE>   38

the opportunity is required to be offered does not within a reasonable period of
time begin to pursue, or does not thereafter continue to pursue, such
opportunity diligently and in good faith.

        6.4 LATE PAYMENTS. Except as expressly provided to the contrary in this
Agreement or in any Ancillary Agreement, any amount not paid when due pursuant
to this Agreement or any Ancillary Agreement (and any amounts billed or
otherwise invoiced or demanded and properly payable that are not paid within 30
days of such bill, invoice or other demand) shall accrue interest at a rate per
annum equal to the Prime Rate plus 2%.

                                   ARTICLE VII
                    EXCHANGE OF INFORMATION; CONFIDENTIALITY

        7.1    AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES.

               (a) Each of Collagen and Technologies, on behalf of its
respective Group, agrees to provide, or cause to be provided, to the other
Group, at any time before or after the Effective Date, as soon as reasonably
practicable after written request therefor, any Information in the possession or
under the control of such respective Group which the requesting party reasonably
needs (i) to comply with reporting, disclosure, filing or other requirements
imposed on the requesting party (including under applicable securities or tax
laws) by a Governmental Authority having jurisdiction over the requesting party,
(ii) for use in any other judicial, regulatory, administrative, tax or other
proceeding or in order to satisfy audit, accounting, claims, regulatory,
litigation, tax or other similar requirements or (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement; provided, however,
that in the event that any party determines that any such provision of
Information could be commercially detrimental, violate any law or agreement, or
waive any attorney client privilege, the parties shall take all reasonable
measures to permit the compliance with such obligations in a manner that avoids
any such harm or consequence.

               (b) After the Effective Date, each of Collagen and Technologies
shall have access during regular business hours (as in effect from time to time)
to the documents, data and objects of historic significance that relate to the
business conducted by such party that are in the possession of the other party.
Each party may obtain from the other party copies (but not originals), in paper
or electronic format, of documents, data or other objects of historic
significance for bona fide business purposes and the party obtaining such
documents, data or other objects of historic significance shall comply with any
rules, procedures or other requirements, and shall be subject to any
restrictions (including prohibitions on removal of specified objects), that are
then applicable to the other party.

               (c) After the Effective Date, (i) Collagen shall maintain in
effect at its own cost and expense adequate systems and controls to the extent
necessary to enable the members of the Technologies Group to satisfy their
respective financial reporting, accounting, audit, adverse event reporting and
other obligations and (ii) Collagen shall provide, or cause to be provided, to
Technologies in such form as Technologies shall request, at no charge to
Technologies, all financial and other data and information as Technologies
determines necessary or advisable in order to prepare Technologies financial
statements and reports or filings with any Governmental 




                                      -32-
<PAGE>   39

Authority, including, without limitation, the Commission and the United States
Food and Drug Administration.

        7.2 OWNERSHIP OF INFORMATION. Any Information owned by one Group that is
provided to a requesting party pursuant to Section 7.1 shall be deemed to remain
the property of the providing party. Unless specifically set forth herein,
nothing contained in this Agreement shall be construed as granting or conferring
rights of license or otherwise in any such Information.

        7.3 COMPENSATION FOR PROVIDING INFORMATION. The party requesting such
Information agrees to reimburse the other party for the reasonable out-of-pocket
costs, if any, of creating, gathering and copying such Information, to the
extent that such costs are incurred for the benefit of the requesting party. No
charge shall be required for reasonable personnel time of a party incurred in
providing access to Information in its existing format or documentation,
including, without limitation, in providing access to existing databases. Except
as may be otherwise specifically provided elsewhere in this Agreement or in any
other agreement between the parties, such costs shall be computed in accordance
with the providing party's standard methodology and procedures.

        7.4 RECORD RETENTION. To facilitate the possible exchange of Information
pursuant to this Article VII and other provisions of this Agreement after the
Distribution Date, the parties agree to use their reasonable best efforts to
retain all Information in their respective possession or control on the
Distribution Date in accordance with their policies in effect from time to time.
Each party will notify the other party of any material changes in its record
retention policy made after the Effective Date.

        7.5 LIMITATION OF LIABILITY. No party shall have any liability to any
other party in the event that any Information exchanged or provided pursuant to
this Agreement which is an estimate or forecast, or which is based on an
estimate or forecast, is found to be inaccurate, or incomplete in the absence of
willful misconduct by the party providing such Information. No party shall have
any liability to any other party if any Information is destroyed after
reasonable best efforts by such party to comply with the provisions of Section
7.4.

        7.6 OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights
and obligations granted under this Article VII are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in any Ancillary Agreement.

        7.7    PRODUCTION OF WITNESSES; RECORDS; COOPERATION.

               (a) After the Effective Date, except in the case of an
adversarial Action by one party against another party (which shall be governed
by such discovery rules as may be applicable under Article VIII or otherwise),
each party hereto shall use its reasonable best efforts to make available to
each other party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of the members of its
respective Group as witnesses and any books, records or other documents within
its control or which it otherwise 



                                      -33-
<PAGE>   40

has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any Action in which the requesting party may from
time to time be involved, regardless of whether such Action is a matter with
respect to which indemnification may be sought under this Agreement. The
requesting party shall bear all costs and expenses (including allocated costs of
in-house counsel and other personnel) in connection therewith.

               (b) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the other parties shall make
available to such Indemnifying Party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
such defense, settlement or compromise and shall otherwise cooperate in such
defense, settlement or compromise.

               (c) Without limiting the foregoing, the parties shall cooperate
and consult to the extent reasonably necessary with respect to any Actions.

               (d) Without limiting any provision of this Section 7.7, each of
the parties agrees to cooperate, and to cause each member of its respective
Group to cooperate, with each other in the defense of any infringement or
similar claim with respect any intellectual property and shall not claim to
acknowledge, or permit any member of its respective Group to claim to
acknowledge, the validity or infringing use of any intellectual property of a
third Person in a manner that would hamper or undermine the defense of such
infringement or similar claim.

               (e) The obligation of the parties to provide witnesses pursuant
to this Section 7.7 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as witnesses
inventors and other officers without regard to whether the witness or the
employer of the witness could assert a possible business conflict (subject to
the exception set forth in the first sentence of Section 7.7(a)).

               (f) In connection with any matter contemplated by this Section
7.7, the parties will enter into a mutually acceptable joint defense agreement
so as to maintain to the extent practicable any applicable attorney-client
privilege or work product immunity of any member of any Group.

        7.8    CONFIDENTIALITY.

               (a) Subject to Section 7.9, each of Collagen and Technologies, on
behalf of itself and each member of its respective Group, agrees to hold, and to
cause its respective directors, officers, employees, agents, accountants,
counsel and other advisors and representatives to hold, in strict confidence,
with at least the same degree of care that applies to Collagen's confidential
and proprietary information pursuant to policies in effect as of the 



                                      -34-
<PAGE>   41

Effective Date, all Information concerning each such other Group that is either
in its possession (including Information in its possession prior to the
Effective Date or the Distribution Date) or furnished by any such other Group or
its respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement, any
Ancillary Agreement or otherwise, and shall not use any such Information other
than for such purposes as shall be expressly permitted hereunder or thereunder,
except, in each case, to the extent that such Information has been (i) in the
public domain through no fault of such party or any member of such Group or any
of their respective directors, officers, employees, agents, accountants, counsel
and other advisors and representatives, (ii) later lawfully acquired from other
sources by such party (or any member of such party's Group) which sources are
not themselves bound by a confidentiality obligation) or (iii) independently
generated without reference to any proprietary or confidential Information of
the other party.

               (b) Each party agrees not to release or disclose, or permit to be
released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 7.9. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).

        7.9 PROTECTIVE ARRANGEMENTS. In the event that any party or any member
of its Group either determines on the advice of its counsel that it is required
to disclose any Information pursuant to applicable law or receives any demand
under lawful process or from any Governmental Authority to disclose or provide
Information of any other party (or any member of any other party's Group) that
is subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) or by
lawful process or such Governmental Authority.

                                  ARTICLE VIII
                         ARBITRATION; DISPUTE RESOLUTION

        8.1 AGREEMENT TO ARBITRATE. Except as otherwise specifically provided in
any Ancillary Agreement, the procedures for discussion, negotiation and
arbitration set forth in this Article VIII shall apply to all disputes,
controversies or claims (whether contract, tort or otherwise) that may arise out
of or relate to, or arise under or in connection with, this Agreement or any
Ancillary Agreement, or the transactions contemplated hereby or thereby
(including all actions taken in furtherance of the transactions contemplated
hereby or thereby on or prior to the Effective Date), or the commercial or
economic relationship of the parties relating hereto or 



                                      -35-
<PAGE>   42

thereto, between or among any member of the Collagen Group and the Technologies
Group. Each party agrees on behalf of itself and each member of its respective
Group that the procedures set forth in this Article VIII shall be the sole and
exclusive remedy in connection with any dispute, controversy or claim relating
to any of the foregoing matters and irrevocably waives any right to commence any
Action in or before any Governmental Authority, except as expressly provided in
Sections 8.7(b) and 8.8 and except to the extent provided under the Arbitration
Act in the case of judicial review of arbitration results or awards. Each party
on behalf of itself and each member of its respective Group irrevocably waives
any right to any trial by jury with respect to any claim, controversy or dispute
set forth in the first sentence of this Section 8.1.

        8.2    ESCALATION.

               (a) It is the intent of the parties to use their respective
reasonable best efforts to resolve expeditiously any dispute, controversy or
claim between or among them with respect to the matters covered hereby or by any
Ancillary Agreement that may arise from time to time on a mutually acceptable
negotiated basis. In furtherance of the foregoing, any party involved in a
dispute, controversy or claim may deliver a notice (an "Escalation Notice")
demanding an in-person meeting involving representatives of the parties at a
senior level of management (or if the parties agree, of the appropriate
strategic business unit or division within such entity). A copy of any such
Escalation Notice shall be given to the Chief Financial Officer, or like officer
or official, of each party involved in the dispute, controversy or claim (which
copy shall state that it is an Escalation Notice pursuant to this Agreement).
Any agenda, location or procedures for such discussions or negotiations between
the parties may be established by the parties from time to time; provided,
however, that the parties shall use their reasonable best efforts to meet within
30 days of the Escalation Notice.

               (b) The parties shall, upon request by either party, retain a
mediator to aid the parties in their discussions and negotiations by informally
providing advice to the parties. Any opinion expressed by the mediator shall be
strictly advisory and shall not be binding on the parties, nor shall any opinion
expressed by the mediator be admissible in any arbitration proceedings. The
mediator may be chosen from a list of mediators previously selected by the
parties or by other agreement of the parties. Costs of the mediation shall be
borne equally by the parties involved in the matter, except that each party
shall be responsible for its own expenses. Mediation shall be a prerequisite to
a demand for arbitration under Section 8.3.

        8.3    DEMAND FOR ARBITRATION.

               (a) At any time after the first to occur of (i) the date of the
meeting actually held pursuant to the applicable Escalation Notice or (ii) 45
days after the delivery of an Escalation Notice (as applicable, the "Arbitration
Demand Date"), any party involved in the dispute, controversy or claim
(regardless of whether such party delivered the Escalation Notice) may, unless
the Applicable Deadline has occurred, make a written demand (the "Arbitration
Demand Notice") that the dispute be resolved by binding arbitration, which
Arbitration Demand Notice shall be given to the parties to the dispute,
controversy or claim in the manner set forth in Section 11.5. In the event that
any party shall deliver an Arbitration Demand Notice to another 



                                      -36-
<PAGE>   43

party, such other party may itself deliver an Arbitration Demand Notice to such
first party with respect to any related dispute, controversy or claim with
respect to which the Applicable Deadline has not passed without the requirement
of delivering an Escalation Notice. No party may assert that the failure to
resolve any matter during any discussions or negotiations, the course of conduct
during the discussions or negotiations or the failure to agree on a mutually
acceptable time, agenda, location or procedures for the meeting, in each case,
as contemplated by Section 8.2, is a prerequisite to a demand for arbitration
under Section 8.3.

               (b) Except as may be expressly provided in any Ancillary
Agreement, any Arbitration Demand Notice may be given until one year after the
later of the occurrence of the act or event giving rise to the underlying claim
or the date on which such act or event was, or should have been, in the exercise
of reasonable due diligence, discovered by the party asserting the claim (as
applicable and as it may in a particular case be specifically extended by the
parties in writing, the "Applicable Deadline"). Any discussions, negotiations or
mediations between the parties pursuant to this Agreement or otherwise will not
toll the Applicable Deadline unless expressly agreed in writing by the parties.
Each of the parties agrees on behalf of itself and each member of its Group that
if an Arbitration Demand Notice with respect to a dispute, controversy or claim
is not given prior to the expiration of the Applicable Deadline, as between or
among the parties and the members of their Groups, such dispute, controversy or
claim will be barred. Subject to Sections 8.7(d) and 8.8, upon delivery of an
Arbitration Demand Notice pursuant to Section 8.3(a) prior to the Applicable
Deadline, the dispute, controversy or claim shall be decided by a sole
arbitrator in accordance with the rules set forth in this Article VIII.

        8.4    ARBITRATORS.

               (a) Within 15 days after a valid Arbitration Demand Notice is
given, the parties involved in the dispute, controversy or claim referenced
therein shall attempt to select a sole arbitrator satisfactory to all such
parties.

               (b) In the event that such parties are not able jointly to select
a sole arbitrator within such 15-day period, such parties shall each appoint an
arbitrator within 30 days after delivery of the Arbitration Demand Notice. If
one party appoints an arbitrator within such time period and the other party or
parties fail to appoint an arbitrator within such time period, the arbitrator
appointed by the one party shall be the sole arbitrator of the matter.

               (c) In the event that a sole arbitrator is not selected pursuant
to Section 8.4(a) or Section 8.4(b) and, instead, two or three arbitrators are
selected pursuant to paragraph (b) above, the two or three arbitrators will,
within 30 days after the appointment of the later of them to be appointed,
select an additional arbitrator who shall act as the sole arbitrator of the
dispute. After selection of such sole arbitrator, the initial arbitrators shall
have no further role with respect to the dispute. Any arbitrator selected
pursuant to this Section 8.4(c) shall be disinterested with respect to any of
the parties and the matter and shall be reasonably competent in the applicable
subject matter.

               (d) The sole arbitrator selected pursuant to Section 8.4(a),
Section 8.4(b) or Section 8.4(c) will set a time for the hearing of the matter
which will commence no later than 90 



                                      -37-
<PAGE>   44

days after the date of appointment of the sole arbitrator pursuant to Section
8.4(a), Section 8.4(b) or Section 8.4(c) and which hearing will be no longer
than 30 days (unless in the judgment of the arbitrator the matter is unusually
complex and sophisticated and thereby requires a longer time, in which event
such hearing shall be no longer than 90 days). The final decision of such
arbitrator will be rendered in writing to the parties not later than 60 days
after the last hearing date, unless otherwise agreed by the parties in writing.

               (e) The place of any arbitration hereunder will be San Francisco,
California, unless otherwise agreed by the parties.

        8.5 HEARINGS. Within the time period specified in Section 8.4(d), the
matter shall be presented to the arbitrator at a hearing by means of written
submissions of memoranda and verified witness statements, filed simultaneously,
and responses, if necessary in the judgment of the arbitrator or both the
parties. If the arbitrator deems it to be essential to a fair resolution of the
dispute, live cross-examination or direct examination may be permitted, but is
not generally contemplated to be necessary. The arbitrator shall actively manage
the arbitration with a view to achieving a just, speedy and cost-effective
resolution of the dispute, claim or controversy. The arbitrator may, in his or
her discretion, set time and other limits on the presentation of each party's
case, its memoranda or other submissions, and refuse to receive any proffered
evidence, which the arbitrator, in his or her discretion, finds to be
cumulative, unnecessary, irrelevant or of low probative nature. Except as
otherwise set forth herein, any arbitration hereunder will be conducted in
accordance with the American Arbitration Association then prevailing (except
that the arbitration will not be conducted under the auspices of the American
Arbitration Association and the fee schedule of the American Arbitration
Association will not apply). Except as expressly set forth in Section 8.8(b),
the decision of the arbitrator will be final and binding on the parties, and
judgment thereon may be had and will be enforceable in any court having
jurisdiction over the parties. Arbitration awards will bear interest at an
annual rate of the Prime Rate plus 2% per annum. To the extent that the
provisions of this Agreement and the prevailing rules of the American
Arbitration Association conflict, the provisions of this Agreement shall govern.

        8.6    DISCOVERY AND CERTAIN OTHER MATTERS.

               (a) Any party involved in the applicable dispute may request
limited document production from the other party or parties of specific and
expressly relevant documents, with the reasonable expenses of the producing
party incurred in such production paid by the requesting party. Any such
discovery (which rights to documents shall be substantially less than document
discovery rights prevailing under the Federal Rules of Civil Procedure) shall be
conducted expeditiously and shall not cause the hearing provided for in Section
8.5 to be adjourned except upon consent of all parties involved in the
applicable dispute or upon an extraordinary showing of cause demonstrating that
such adjournment is necessary to permit discovery essential to a party to the
proceeding. Depositions, interrogatories or other forms of discovery (other than
the document production set forth above) shall not occur except by consent of
the parties involved in the applicable dispute. Disputes concerning the scope of
document production and enforcement of the document production requests will be
determined by written 



                                      -38-
<PAGE>   45

agreement of the parties involved in the applicable dispute or, failing such
agreement, will be referred to the arbitrator for resolution. All discovery
requests will be subject to the proprietary rights and rights of privilege of
the parties, and the arbitrator will adopt procedures to protect such rights and
to maintain the confidential treatment of the arbitration proceedings (except as
may be required by law). Subject to the foregoing, the arbitrator shall have the
power to issue subpoenas to compel the production of documents relevant to the
dispute, controversy or claim.

               (b) The arbitrator shall have full power and authority to
determine issues of arbitrability but shall otherwise be limited to interpreting
or construing the applicable provisions of this Agreement or any Ancillary
Agreement, and will have no authority or power to limit, expand, alter, amend,
modify, revoke or suspend any condition or provision of this Agreement or any
Ancillary Agreement; it being understood, however, that the arbitrator will have
full authority to implement the provisions of this Agreement or any Ancillary
Agreement, and to fashion appropriate remedies for breaches of this Agreement
(including interim or permanent injunctive relief); provided that the arbitrator
shall not have (i) any authority in excess of the authority a court having
jurisdiction over the parties and the controversy or dispute would have absent
the arbitration provisions or (ii) any right or power to award punitive or
treble damages. It is the intention of the parties that in rendering a decision
the arbitrator give effect to the applicable provisions of this Agreement and
the Ancillary Agreements and follow applicable law (it being understood and
agreed that this sentence shall not give rise to a right of judicial review of
the arbitrator's award).

               (c) If a party fails or refuses to appear at and participate in
an arbitration hearing after due notice, the arbitrator may hear and determine
the controversy upon evidence produced by the appearing party.

               (d) Arbitration costs will be borne equally by each party
involved in the matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of witnesses
selected by such party.

        8.7    CERTAIN ADDITIONAL MATTERS.

               (a) Any arbitration award shall be a bare award limited to a
holding for or against a party and shall be without findings as to facts, issues
or conclusions of law (including with respect to any matters relating to the
validity or infringement of patents or patent applications) and shall be without
a statement of the reasoning on which the award rests, but must be in adequate
form so that a judgment of a court may be entered thereupon. Judgment upon any
arbitration award hereunder may be entered in any court having jurisdiction
thereof.

               (b) Prior to the time at which an arbitrator is appointed
pursuant to Section 8.4, any party may seek one or more temporary restraining
orders in a court of competent jurisdiction if necessary in order to preserve
and protect the status quo. Neither the request for, or grant or denial of, any
such temporary restraining order shall be deemed a waiver of the obligation to
arbitrate as set forth in this Agreement and the arbitrator may dissolve,
continue or modify any such order. Any such temporary restraining order shall
remain in effect until the first 



                                      -39-
<PAGE>   46

to occur of the expiration of the order in accordance with its terms or the
dissolution thereof by the arbitrator.

               (c) Except as required by law, the parties shall hold, and shall
cause their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of mediation or
arbitration in confidence in accordance with the provisions of Article VII and
except as may be required in order to enforce any award. Each of the parties
shall request that any mediator or arbitrator comply with such confidentiality
requirement.

               (d) In the event that at any time the sole arbitrator shall fail
to serve as an arbitrator for any reason, the parties shall select a new
arbitrator who shall be disinterested as to the parties and the matter in
accordance with the procedures set forth in this Agreement for the selection of
the initial arbitrator. The extent, if any, to which testimony previously given
shall be repeated or as to which the replacement arbitrator elects to rely on
the stenographic record (if there is one) of such testimony shall be determined
by the replacement arbitrator.

        8.8    LIMITED COURT ACTIONS.

               (a) Notwithstanding anything in this Agreement to the contrary,
in the event that any party reasonably determines the amount in controversy in
any dispute, controversy or claim (or any series of related disputes,
controversies or claims) under this Agreement or any Ancillary Agreement is, or
is reasonably likely to be, in excess of $2.5 million and if such party desires
to commence an Action in lieu of complying with the arbitration provisions of
this Article, such party shall so state in its Arbitration Demand Notice. If the
other parties to the arbitration do not agree that the amount in controversy in
such dispute, controversy or claim (or such series of related disputes,
controversies or claims) is, or is reasonably likely to be, in excess of $2.5
million, the arbitrator selected pursuant to Section 8.4 hereof shall decide
whether the amount in controversy in such dispute, controversy or claim (or such
series of related disputes, controversies or claims) is, or is reasonably likely
to be, in excess of $2.5 million. The arbitrator shall set a date that is no
later than ten days after the date of his or her appointment for submissions by
the parties with respect to such issue. There shall not be any discovery in
connection with such issue. The arbitrator shall render his or her decision on
such issue within five days of such date so set by the arbitrator. In the event
that the arbitrator determines that the amount in controversy in such dispute,
controversy or claim (or such series of related disputes, controversies or
claims) is or is reasonably likely to be in excess of $2.5 million, the
provisions of Sections 8.4(d) and (e), 8.5, 8.6, 8.7 and 8.10 hereof shall not
apply and on or before (but, except as expressly set forth in Section 8.8(b),
not after) the tenth business day after the date of such decision, any party to
the arbitration may elect, in lieu of arbitration, to commence an Action with
respect to such dispute, controversy or claim (or such series of related
disputes, controversies or claims) in any court of competent jurisdiction. If
the arbitrator does not so determine, the provisions of this Article VIII
(including with respect to time periods) shall apply as if no determinations
were sought or made pursuant to this Section 8.8(a).

               (b) In the event that an arbitration award in excess of $2.5
million is issued in any arbitration proceeding commenced hereunder, any party
may, within 60 days after the date of 



                                      -40-
<PAGE>   47

such award, submit the dispute, controversy or claim (or series of related
disputes, controversies or claims) giving rise thereto to a court of competent
jurisdiction, regardless of whether such party or any other party sought to
commence an Action in lieu of proceeding with arbitration in accordance with
Section 8.8(a). In such event, the applicable court may elect to rely on the
record developed in the arbitration or, if it determines that it would be
advisable in connection with the matter, allow the parties to seek additional
discovery or to present additional evidence. Each party shall be entitled to
present arguments to the court with respect to whether any such additional
discovery or evidence shall be permitted and with respect to all other matters
relating to the applicable dispute, controversy or claim (or series of related
disputes, controversies or claims).

        8.9 CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed in
writing, the parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article VIII with
respect to all matters not subject to such dispute, controversy or claim.

        8.10 LAW GOVERNING ARBITRATION PROCEDURES. The interpretation of the
provisions of this Article VIII, only insofar as they relate to the agreement to
arbitrate and any procedures pursuant thereto, shall be governed by the
Arbitration Act and other applicable federal law. In all other respects, the
interpretation of this Agreement shall be governed as set forth in Section 11.2.

                                   ARTICLE IX
                   FURTHER ASSURANCES AND ADDITIONAL COVENANTS

        9.1    FURTHER ASSURANCES.

               (a) In addition to the actions specifically provided for
elsewhere in this Agreement, each of the parties hereto shall use its reasonable
best efforts, on and after the Effective Date, to take, or cause to be taken,
all actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements to
consummate and make effective the transactions contemplated by this Agreement
and the Ancillary Agreements.

               (b) Without limiting the foregoing, on and after the Effective
Date, each party shall cooperate with the other party, and without any further
consideration, but at the expense of the requesting party, to execute and
deliver, or use its reasonable best efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance, assignment and
transfer, and to make all filings with, and to obtain all consents, approvals or
authorizations of, any Governmental Authority or any other Person under any
permit, license, agreement, indenture or other instrument (including any
Consents or Governmental Approvals), and to take all such other actions as such
party may reasonably be requested to take by the other party from time to time,
consistent with the terms of this Agreement and the Ancillary Agreements, in
order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and the transfer of the Technologies Assets and the
assignment and assumption of the Technologies 



                                      -41-
<PAGE>   48

Liabilities and the other transactions contemplated hereby and thereby. Without
limiting the foregoing, each party will, at the reasonable request, cost and
expense of the other party, take such other actions as may be reasonably
necessary to vest in such other party good and marketable title to any Assets to
be transferred to such other party, free and clear of any Security Interest, if
and to the extent it is practicable to do so.

               (c) On or prior to the Distribution Date, Collagen and
Technologies in their respective capacities as direct and indirect stockholders
of their respective Subsidiaries, shall each ratify any actions which are
reasonably necessary or desirable to be taken by Collagen, Technologies or any
other Subsidiary of Collagen, as the case may be, to effectuate the transactions
contemplated by this Agreement. On or prior to the Distribution Date, Collagen
and Technologies shall take all actions as may be necessary to approve the
stock-based employee benefit plans of Technologies in order to satisfy the
requirements of Rule 16b-3 under the Exchange Act and Section 162(m) of the
Code.

               (d) The parties hereto agree to take any reasonable actions
necessary in order for the Distribution to qualify as a tax-free distribution
pursuant to Section 355 of the Code.

               (e) Collagen and Technologies, and each of the members of their
respective Groups, waive (and agree not to assert against any of the others) any
claim or demand that any of them may have against any of the others for any
Liabilities or other claims relating to or arising out of: (i) the failure of
Technologies or any member of the Technologies Group, on the one hand, or of
Collagen or any member of the Collagen Group, on the other hand, to provide any
notification or disclosure required under any state Environmental Law in
connection with the Separation or the other transactions contemplated by this
Agreement, including the transfer by any member of any Group to any member of
any other Group of ownership or operational control of any Assets not previously
owned or operated by such transferee or (ii) any inadequate, incorrect or
incomplete notification or disclosure under any such state Environmental Law by
the applicable transferor. To the extent any Liability to any Governmental
Authority or any third Person arises out of any action or inaction described in
clause (i) or (ii) of this Section 9.1(e), the transferee of the applicable
Asset hereby assumes and agrees to pay any such Liability.

               (f) Prior to the Distribution Date, if one or more of the parties
identifies any commercial or other service that is needed to assure a smooth and
orderly transition of the businesses in connection with the consummation of the
transactions contemplated hereby, and that is not otherwise governed by the
provisions of this Agreement or any Ancillary Agreement, the parties will
cooperate in determining whether there is a mutually acceptable arm's-length
basis on which one or more of the other parties will provide such service.

               (g) After the Effective Date, in the event that either party is a
direct or indirect beneficiary of any Asset (including, without limitation, any
rights under any contract) of the other party, the party owning such Asset will
cooperate with the other party, upon such party's request, to secure, perfect or
enforce any rights or benefits such requesting party has with respect to the
Asset. The parties shall bear the costs incurred pursuant to this Section 9.1(h)
in 



                                      -42-
<PAGE>   49

proportion to the benefit each party receives as a result of securing,
perfecting or enforcing such rights or benefits with respect to the asset.

        9.2 QUALIFICATION AS TAX-FREE DISTRIBUTION. After the Effective Date,
neither Collagen nor Technologies shall take, or permit any member of its
respective Group to take, any action that could reasonably be expected to
prevent the Distribution from qualifying as a tax-free distribution within the
meaning of Section 355 of the Code or any other transaction contemplated by this
Agreement or any Ancillary Agreement that is intended by the parties to be
tax-free from failing so to qualify. Without limiting the foregoing, after the
Effective Date and on or prior to the Distribution Date, Technologies shall not,
without the prior consent of Collagen, issue or grant, and shall not permit any
member of the Technologies Group to issue or grant, directly or indirectly, any
shares of Technologies Common Stock or any rights, warrants, options or other
securities to purchase or acquire (whether upon conversion, exchange or
otherwise) any shares of Technologies Common Stock (whether or not then
exercisable, convertible or exchangeable) if such issuance or grant would cause
Collagen to own less than 80.1% of the outstanding shares of Technologies Common
Stock. In the event that any such issuance or grant made with the prior consent
of Collagen would cause Collagen to own less than 80.1% of the outstanding
shares of Technologies Common Stock, Technologies shall give Collagen notice not
less than three business days prior to such issuance or grant and Collagen shall
have the right to purchase from Technologies, and Technologies hereby agrees to
sell to Collagen, a sufficient number of shares of Technologies Common Stock, at
a price equal to the fair market value of such shares (as determined by the
Board of Directors of Technologies, which, in the event that the Technologies
Common Stock is listed on the Nasdaq National Market or other exchange, shall be
equal to the average closing price of the Technologies Common Stock as reported
on the Nasdaq National Market or other exchange for the 30 days prior to the
date of sale), to cause Collagen to own not less than 80.1% of the outstanding
shares of Technologies Common Stock, after giving effect to such issuance or
grant and the sale of such shares to Collagen.

                                    ARTICLE X
                                   TERMINATION

        10.1 TERMINATION. This Agreement may be terminated only upon the mutual
consent of Collagen and Technologies and any such termination shall have the
effects mutually agreed upon by Collagen and Technologies.



                                      -43-
<PAGE>   50

                                   ARTICLE XI
                                  MISCELLANEOUS

        11.1   COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER.

               (a) This Agreement and each Ancillary Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.

               (b) This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof and
thereto, supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter, and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.

               (c) Collagen represents on behalf of itself and each other member
of the Collagen Group and Technologies represents on behalf of itself and each
other member of the Technologies Group as follows:

                      (i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action necessary in
order to execute and deliver this Agreement and each Ancillary Agreement to
which it is a party and, subject to receipt of approval of the stockholders of
Collagen of the Distribution, to consummate the transactions contemplated hereby
and thereby; and

                      (ii) this Agreement and each Ancillary Agreement to which
it is a party has been duly executed and delivered by it and constitutes a valid
and binding agreement of it, enforceable in accordance with the terms thereof.

        11.2 RIGHT TO OFFSET PAYMENTS. Technologies and Collagen shall, at the
end of each calendar quarter after the Effective Date, net any amounts then owed
by Collagen to Technologies under this Agreement or any Ancillary Agreement
against any amounts then owed by Technologies to Collagen under this Agreement
or any Ancillary Agreement and, after such calculation has been approved by
Collagen and Technologies, the party owing funds shall promptly pay such amount
to the other party. Nothing in this Section 11.2 shall supersede the time at
which payments are due from one party to the other under this Agreement or any
Ancillary Agreement.

        11.3 GOVERNING LAW. Except as set forth in Section 8.10, this Agreement
and, unless expressly provided therein, each Ancillary Agreement, shall be
governed by and construed and interpreted in accordance with the laws of the
State of California (other than as to its laws of arbitration which shall be
governed under the Arbitration Act or other applicable federal law pursuant to
Section 8.10), irrespective of the choice of laws principles of the State of
California, 



                                      -44-
<PAGE>   51

as to all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.

        11.4 ASSIGNABILITY. Except as set forth in any Ancillary Agreement, this
Agreement and each Ancillary Agreement shall be binding upon and inure to the
benefit of the parties hereto and thereto, respectively, and their respective
successors and assigns; provided, however, that no party hereto or thereto may
assign its respective rights or delegate its respective obligations under this
Agreement or any Ancillary Agreement without the express prior written consent
of the other parties hereto or thereto. Notwithstanding the foregoing, each
party may assign its rights and obligations under this Agreement and each
Ancillary Agreement without the prior written consent of the other party in
connection with the transfer by the assigning party of substantially all of its
business by merger, sale of assets, sale of stock or other form of
reorganization.

        11.5 THIRD PARTY BENEFICIARIES. Except for the indemnification rights
under this Agreement of any Collagen Indemnitee or Technologies Indemnitee in
their respective capacities as such, (a) the provisions of this Agreement and
each Ancillary Agreement are solely for the benefit of the parties hereto or
thereto and are not intended to confer upon any Person except the parties any
rights or remedies hereunder and (b) there are no third party beneficiaries of
this Agreement or any Ancillary Agreement and neither this Agreement nor any
Ancillary Agreement shall provide any third person with any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement or any Ancillary Agreement. No
party hereto shall have any right, remedy or claim with respect to any provision
of this Agreement or any Ancillary Agreement to the extent such provision
relates solely to the other party hereto or the members of such other party's
Group.

        11.6 NOTICES. All notices or other communications under this Agreement
or any Ancillary Agreement shall be in writing and shall be deemed to be duly
given when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:

               If to Technologies, to:       Cohesion Technologies, Inc.
                                             2500 Faber Place
                                             Palo Alto, CA 94303
                                             Attn: President

               If to Collagen, to:           Collagen Corporation
                                             1850 Embarcadero Road
                                             Palo Alto, CA 94303
                                             Attn: President

        Any party may, by notice to the other party, change the address to which
such notices are to be given.



                                      -45-
<PAGE>   52

        11.7 SEVERABILITY. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.

        11.8 FORCE MAJEURE. No party shall be deemed in default of this
Agreement or any Ancillary Agreement to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Ancillary
Agreement results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes,
floods, unusually severe weather conditions, labor problems or unavailability of
materials, or, in the case of computer systems, any failure in electrical or air
conditioning equipment. In the event of any such excused delay, the time for
performance shall be extended for a period equal to the time lost by reason of
the delay.

        11.9 PUBLICITY. Prior to the Distribution, each of Technologies and
Collagen shall consult with the other prior to issuing any press releases or
otherwise making public statements with respect to the Distribution or any of
the other transactions contemplated by this Agreement and prior to making any
filings with any Governmental Authority with respect thereto.

        11.10 EXPENSES. Except as expressly set forth in this Agreement or in
any Ancillary Agreement, whether or not the Distribution is consummated, all
third party fees, costs and expenses paid or incurred in connection with the
Distribution that are not capitalized by Collagen in accordance with generally
accepted accounting principles will be shared equally by Collagen and
Technologies.

        11.11 HEADINGS. The Article, Section and Paragraph headings contained in
this Agreement and in the Ancillary Agreements are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or any Ancillary Agreement.

        11.12 WAIVERS OF DEFAULT. Waiver by any party of any default by the
other party of any provision of this Agreement or any Ancillary Agreement shall
not be deemed a waiver by the waiving party of any subsequent or other default,
nor shall it prejudice the rights of the other party.

        11.13 SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party who is or is to be thereby
aggrieved shall have the right to specific performance and injunctive or other
equitable relief of its rights under this Agreement or such Ancillary Agreement,
in addition to any and all other rights and remedies at law or in equity, and



                                      -46-
<PAGE>   53

all such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived. Any
requirements for the securing or posting of any bond with such remedy are
waived.

        11.14  AMENDMENTS.

               (a) No provisions of this Agreement or any Ancillary Agreement
shall be deemed waived, amended, supplemented or modified by any party, unless
such waiver, amendment, supplement or modification is in writing and signed by
the authorized representative of the party against whom it is sought to enforce
such waiver, amendment, supplement or modification.

               (b) Without limiting the foregoing, the parties intend that, as
of the Effective Date, the Schedules to this Agreement will be amended or
supplemented and such amended or supplemented Schedules shall be attached hereto
in lieu of the original Schedules. In addition, the parties anticipate that,
after the Effective Date and prior to the Distribution Date, some or all of the
Schedules to this Agreement may be further amended or supplemented and, in such
event, such amended or supplemented Schedules shall be attached hereto in lieu
of the original or previously amended or supplemented Schedules.

        11.15 INTERPRETATION. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement (or the applicable Ancillary Agreement) as a whole
(including all of the Schedules, Exhibits and Appendices hereto and thereto) and
not to any particular provision of this Agreement (or such Ancillary Agreement).
Article, Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement (or the
applicable Ancillary Agreement) unless otherwise specified. The word "including"
and words of similar import when used in this Agreement (or the applicable
Ancillary Agreement) shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified. The word "or" shall
not be exclusive.


                                      -47-
<PAGE>   54

        IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.

                                  COLLAGEN CORPORATION



                                  By:  /s/ GARY S. PETERSMEYER
                                     ---------------------------------------

                                  Name:  Gary S. Petersmeyer
                                       -------------------------------------

                                  Title:  President and CEO
                                        ------------------------------------


                                  COHESION TECHNOLOGIES, INC.



                                  By:  /s/ DAVID FOSTER
                                     ---------------------------------------

                                  Name:  David Foster
                                       -------------------------------------

                                  Title:  CEO
                                        ------------------------------------



                                      -48-
<PAGE>   55

        THE REGISTRANT HEREBY UNDERTAKES TO FURNISH SUPPLEMENTARILY UPON REQUEST
A COPY OF ANY OMITTED SCHEDULES OF THE SECURITIES AND EXCHANGE COMMISSION UPON
REQUEST.

<PAGE>   56
                                                                 


                  PERSISTENCE DEVELOPMENT AND LICENSE AGREEMENT


        This PERSISTENCE DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement"),
effective as of ________ (the "Effective Date"), is made by and between COLLAGEN
CORPORATION, a Delaware corporation ("Technologies"), and COLLAGEN TECHNOLOGIES,
INC., a Delaware corporation ("Technologies").

                                    RECITALS

        WHEREAS, Collagen and Technologies have entered into a relationship
whereby certain assets and liabilities are transferred from Collagen to
Technologies, as further described in the Separation and Distribution Agreement,
dated as of the Effective Date, between Technologies and Collagen (the
"Separation Agreement") and in the Ancillary Agreements;

        WHEREAS, Technologies is in the business of developing products and
processes utilizing innovative collagen-based technology and novel biomaterials;

        WHEREAS, Collagen is in the business of developing, manufacturing and
selling human aesthetic and reconstructive medical technology products;

        WHEREAS, Collagen desires for Technologies to perform for Collagen
research and development relating to persistent collagen, and Technologies
desires to perform such research and development for Collagen; and

        WHEREAS, the parties desire to commercialize the results of such
research and development relating to such technology.

        IN CONSIDERATION OF THE MUTUAL PROMISES, REPRESENTATIONS AND WARRANTIES
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

                                    ARTICLE I

                                   DEFINITIONS

        Except as otherwise defined herein, capitalized terms used herein shall
have the meanings given to them in the Separation Agreement. In addition, for
the purposes of this Agreement, the capitalized terms set forth below shall have
the meanings set forth in this Article 1.

        1.1     "Persistence Technology" shall mean the inventions or
discoveries, whether or not patentable, made, conceived, reduced to practice, or
otherwise developed by Technologies in furtherance of the Project.

        1.2     "Costs" shall mean the direct and indirect costs to Technologies
related to performing its research and development obligations pursuant to the
Project hereunder as set forth in Exhibit A.


                                      -1-
<PAGE>   57
        1.3     "FDA" shall mean the United States Food and Drug Administration
or any successor agency thereof.

        1.4     "Intellectual Property Rights" shall mean trade secrets,
patents, copyrights, trademarks, know-how, moral rights and similar rights of
any type under the laws of any governmental authority, domestic or foreign,
including all applications and registrations relating to any of the foregoing.

        1.5     "Net Sale Price" shall mean: the gross invoiced price for all
Products sold by Collagen, its Affiliates or sublicensees to: (i) C.R. Bard,
Inc. for incontinence; or (ii) third party end-users in the facial business,
including Affiliates of Collagen that are end-users of the Products, less
deductions made in the normal course of business for: (a) commercially
reasonable quantity, trade and cash discounts or rebates, recalls, credits or
allowance and adjustments separately and actually credited to customers for
rejections and returns of Products; (b) charges for freight, postage,
transportation, import or export taxes, excise taxes and other similar taxes,
insurance and other delivery costs not otherwise charged to the customer and
actually paid by Collagen; and (c) any tax or other government charges (other
than income tax) levied on the use, sale, transportation or delivery of Product
and borne by Collagen and its Affiliates.

        1.6     "Performance Specification" shall mean that the Product's
persistence must exceed ZyplastTM persistence by at least two times at all time
points.

        1.7     "Product" shall mean any commercial product for use solely
within the Aesthetics Field and which incorporates all or any portion of the
Persistence Technology.

        1.8     "Project" shall mean the research and development activities to
be performed by Technologies under this Agreement relating to persistent
collagen as set forth in the "Project Plan" which shall be delivered and
executed by the parties at the time of execution of this Agreement.

                                   ARTICLE II

                            RESEARCH AND DEVELOPMENT

        2.1     PERFORMANCE OF THE PROJECT. The parties shall agree upon the
Project Plan which shall be delivered and executed by the parties at the time of
execution of this Agreement. The Project Plan shall set forth: (i) the scope and
objectives of the Project; and (ii) work plan activities, and time schedules
associated with: (a) filing for expanded IDE in the U.S. for CP-1; (b) filing
dossier for product registration in Europe for CE Mark for CP-1; and (c)
starting expanded U.S. clinical study (collectively "Development Milestones").
Subject to the terms and conditions set forth herein, Technologies shall use its
commercially reasonable efforts to perform the Project in accordance with the
Project Plan. Technologies' obligations to perform the Project shall be
extinguished upon Collagen's confirmation that Technologies has delivered to
Collagen a Product which materially conforms to the Performance Specification,
which confirmation shall not be unreasonably withheld. If the parties decide to
abandon development and commercialization of the CP-1 Product and to instead
pursue development and/or 


                                      -2-
<PAGE>   58
commercialization of a new product, then the parties shall negotiate with each
other, in good faith, the terms for developing and commercializing such new
product.

        2.2     REPORTING. Technologies shall furnish Collagen with quarterly
written reports summarizing the progress of the Project to date within thirty
(30) days after the end of each quarter during which work on the Project is
performed ("Quarterly Reports"). Technologies will also provide Collagen with
Technologies' summary and conclusions upon completion of the Project (the "Final
Project Report"). Between Quarterly Reports, Technologies shall keep Collagen
advised of the progress of the Project upon Collagen's reasonable request and
shall make available to Collagen, at Collagen's expense, developmental personnel
to share Technologies' information, data, know-how, product plans and relevant
data reduction techniques relating to the Project. Collagen will maintain the
confidentiality of all data provided pursuant to this Section 2.2 in accordance
with Article 6.

        2.3     DEVELOPMENT FEES. In consideration for Technologies' performance
of the Project, commencing upon the Effective Date through June 30, 1998,
Collagen shall pay to Technologies the Costs associated with the Project, based
on the methodology used by Technologies in the fiscal year 1998 budget. After
June 30, 1998, the development fees shall be [*] Technologies shall bill
Collagen for Costs on a monthly basis, and payment shall be due and payable by
Collagen to Technologies within thirty (30) days of receipt of such bill.
Technologies agrees to provide to Collagen within two (2) weeks after the close
of each calendar quarter: (i) a written estimate of the Costs for the third
month of such calendar quarter; and (ii) the actual amounts of the Costs for the
first and second months of such calendar quarter (if not previously billed). In
the event that Collagen fails to pay the Costs to Technologies as set forth
herein, Technologies may terminate this Agreement pursuant to Section 5.2. Upon
reasonable notice to Technologies, Collagen shall have the right to have an
independent certified public accountant, selected by Collagen and reasonably
acceptable to Technologies, audit Technologies' records, during normal business
hours, to verify Technologies' Costs associated with the Project; provided,
however, that such audit shall not take place more frequently than once a year
and shall not cover such records for more than the preceding two (2) years. The
accountant shall only report to Collagen as to the accuracy of Technologies'
Costs, and in the event of any inaccuracy, the correct amount of such Costs.
Technologies shall promptly refund to Collagen the amount of any overpayment
determined in such audit, and Collagen shall promptly pay to Technologies the
amount of any underpayment determined in such audit. Such audit shall be at
Collagen's expense unless the audit identifies an overpayment based on
Technologies' invoices, of greater than five percent (5%), in which case such
audit shall be at Technologies' expense. Technologies shall preserve and
maintain all such records and accounts required for audit for a period of two
(2) years after the calendar quarter for which the records apply.

        2.4     DEVELOPMENT MILESTONES. Technologies shall use commercially
reasonable efforts to meet the Development Milestones by their "Finish Dates"
specified in the Project Plan. For the purpose of this Section 2.4, meeting a
Development Milestone shall mean both completing the Development Milestone
within: (i) ninety (90) days of its corresponding Finish Date; and (ii) one
hundred and twenty percent (120%) of the budget amount associated 


                                      -3-
<PAGE>   59
with that Development Milestone. In the event Technologies fails to so meet any
Development Milestone, Collagen may terminate this Agreement pursuant to Section
5.2.

        2.5     OWNERSHIP OF PERSISTENCE TECHNOLOGY. The parties agree that
Persistence Technology, including works-in-progress, the Product and any and all
Intellectual Property Rights thereto and therein shall be owned by and be the
sole property of Technologies.

                                   ARTICLE III

                           LICENSE GRANT TO AESTHETICS

        3.1     LICENSE. Technologies hereby grants to Collagen a worldwide,
exclusive license, with the right to sublicense, to Persistence Technology
solely within the Aesthetics Field, including the right to develop, have
developed, make, have made, sell, offer to sell, have sold, import, export, have
imported and exported, distribute, and have distributed Products.

        3.2     ROYALTIES. Collagen shall pay to Technologies a royalty of [*]
of the Net Sale Price of the Product.

        3.3     PAYMENT AND AUDIT. Collagen shall make royalty payments to
Technologies pursuant to Section 3.2 on a quarterly basis within thirty (30)
days after the end of each quarter. Sales made in foreign currency will be
determined in the foreign funds for the country in which the Product are sold,
and then converted into equivalent United States dollars at the rate of exchange
for selling funds as published by the Wall Street Journal (U.S., Western
Edition) for the last business day of each quarter. Upon reasonable notice to
Collagen, Technologies shall have the right to have an independent certified
public accountant, selected by Technologies and reasonably acceptable to
Collagen, audit Collagen's records, during normal business hours, to verify the
royalties payable by Collagen to Technologies; provided, however, that such
audit shall not take place more frequently than once a year and shall not cover
such records for more than the preceding two (2) years. The accountant shall
only report to Technologies as to the accuracy of the payments paid by Collagen
to Technologies, and in the event of any inaccuracy, the correct amount of such
payment. Collagen shall promptly pay to Technologies the amount of any
underpayment determined in such audit. Such audit shall be at Technologies'
expense unless the audit identifies greater than five percent (5%) error, in
which case such audit shall be at Collagen's expense. Collagen shall preserve
and maintain all such records and accounts required for audit for a period of
two (2) years after the calendar quarter for which the record applies.

        3.4     REGULATORY MATERIALS. So long as the license granted in Section
3.1 is in effect, Technologies grants to Collagen a royalty free, non-exclusive,
fully paid-up right and license to all United States and foreign regulatory
registrations, licenses, and applications ("Regulatory Materials") relating to
the Persistence Technology, solely as such relates to the Aesthetics Field.
Technologies expressly reserves the right to reference any and all such
Regulatory Materials, solely to the extent necessary for Technologies to
exercise its rights in the Persistence Technology not granted to Collagen
hereunder.


                                      -4-
<PAGE>   60
                                   ARTICLE IV

                                COMMERCIALIZATION

        4.1     COMMERCIALIZATION PLANS. Collagen shall keep Technologies
generally informed of Collagen's commercialization plans for Products, including
Collagen's planned timing for Product launch dates. All dates and other
information provided by Collagen in such plan shall be used for planning
purposes only, and shall be subject to modification by Collagen. All information
provided pursuant to this Section 4.1 shall be kept confidential pursuant to
Article 6.

        4.2     GOVERNMENTAL APPROVALS. Collagen shall be responsible for
obtaining all necessary governmental approvals, including FDA approvals, for the
development, testing, production, distribution, sale and use of any Product in
the Aesthetics Field. Technologies agrees to provide Collagen, at Collagen's
expense, with any assistance reasonably requested by Collagen, in obtaining such
governmental approvals, including, without limitation, the furnishing of all
relevant technical information and know-how presently or hereafter available to
Technologies, but excluding any documentation or data which Technologies is
bound by obligations to third parties to keep confidential. Collagen shall
promptly notify Technologies of FDA and corresponding foreign regulatory
approvals received by Collagen for any Product.

                                    ARTICLE V

                              TERM AND TERMINATION

        5.1     TERM. The term of this Agreement shall commence on the Effective
Date and continue in full force and effect until the termination by either party
pursuant to Sections 5.2 or 5.3.

        5.2     TERMINATION FOR CAUSE. Either Technologies or Collagen may
terminate this Agreement by written notice stating such party's intent to
terminate in the event the other shall have breached or defaulted in the
performance of any of its material obligations hereunder, and the failure of the
breaching party to cure such default or breach within thirty (30) days after
written notice thereof was provided to the breaching party by the non-breaching
party. Such breach shall include but shall not be limited to: (i) Collagen's
failure to pay Costs pursuant to Section 2.3; and (ii) Technologies' failure to
meet the Development Milestones. If Collagen terminates this Agreement for cause
under this Section 5.2, then Collagen shall be granted the license set forth in
Section 3.1. If Technologies terminates this Agreement for cause under this
Section 5.2 then all Collagen's rights under Section 3.1 to Persistence
Technology and Products shall terminate and revert back to Technologies.

        5.3     ADDITIONAL TERMINATION RIGHTS. Subject to the terms and
conditions, herein, either party may terminate this Agreement upon thirty (30)
day written notice to the other party; provided, however, in the event that
Collagen terminates this Agreement pursuant to this Section 5.3, then all
Collagen's rights under Section 3.1 to Persistence Technology and Products shall
terminate and revert back to Technologies. If Technologies terminates this
Agreement 


                                      -5-
<PAGE>   61
pursuant to this Section 5.3, prior to Technologies' delivery to Collagen of a
Product in conformity with the Performance Specifications, then Collagen shall
be granted the License set forth in Section 3.1.

        5.4     EFFECT OF TERMINATION. Expiration or termination of this
Agreement pursuant to the terms and conditions set forth in this Agreement shall
not relieve the parties of any payment obligations, accruing prior to or upon
such expiration or termination.

        5.5     SURVIVAL OF CERTAIN TERMS. The provisions of Sections 2.3, 2.5,
3.3, 3.4 5.3 and 5.4 and Article 6 shall survive the expiration or termination
of this Agreement for any reason. All other rights and obligations of the
parties shall cease upon expiration or termination of this Agreement.

                                   ARTICLE VI

                                 CONFIDENTIALITY

        The parties agree that Information that is proprietary or confidential
to (i) Technologies prior to the Effective Date; or (ii) to one party and
provided to the other party pursuant to or in furtherance of this Agreement
after the Effective Date shall be subject to and treated in accordance with
Article VIII of the Separation Agreement.

                                   ARTICLE VII

                                  MISCELLANEOUS

        This Agreement shall be subject to and incorporate the terms and
provisions contained in Article XI of the Separation Agreement to the extent
applicable.

        IN WITNESS WHEREOF, the parties have caused this Persistence Development
and License Agreement to be executed by their duly authorized representatives.

COLLAGEN TECHNOLOGIES, INC.            COLLAGEN CORPORATION



By:_________________________________   By:_________________________________
             (Signature)                            (Signature)            
                                                                           
Name:_______________________________   Name:_______________________________
                                                                           
Title:______________________________   Title:______________________________
                                                                           
Date:_______________________________   Date:_______________________________


                                      -6-
<PAGE>   62
Address:                               Address:
           2500 Faber Place                       1850 Embarcadero Road
           Palo Alto, CA 94303                    Palo Alto, CA  94303


                                      -7-
<PAGE>   63
                                    EXHIBIT A

                                      Costs



Direct Costs include:
       [*]      

Indirect Costs allocable percentage of the following costs:
       [*] 


<PAGE>   64
                            PERSISTENCE PROJECT PLAN

        Attached hereto is the Project Plan as defined in the Persistence
Development and License Agreement effective as of _________ by and between
Collagen Technologies, Inc. and Collagen Corporation.



COLLAGEN CORPORATION                   COLLAGEN AESTHETICS, INC.


By:_________________________________   By:_________________________________
             (Signature)                            (Signature)            
                                                                           
Name:_______________________________   Name:_______________________________
                                                                           
Title:______________________________   Title:______________________________
                                                                           
Date:_______________________________   Date:_______________________________


Address:                               Address:
           2500 Faber Place                       1850 Embarcadero Road
           Palo Alto, CA 94303                    Palo Alto, CA  94303


<PAGE>   65
                                   MILESTONES


                 Milestone                               Date


(a)  File for expanded IDE in U.S.
(b)  File dossier with TUV
(c)  Start expanded U.S. clinical study