EXHIBIT 10.29  [ARTHROCARE CORPORATION LOGO]  CONFIDENTIAL & BINDING  AMENDMENT  This Amendment by and
between Inamed Corporation, on its own behalf and on behalf of its Affiliates,
including McGhan Medical Corporation (Inamed) and ArthroCare Corporation, on
its own behalf and on behalf of its Affiliates (ArthroCare) is a modification
to the License and Distribution Agreement (the License Agreement) effective
January 27, 1999 between ArthroCare and Collagen Aesthetics, Inc., on its own
behalf and on behalf of its Affiliates (Collagen).  Inamed has wholly acquired Collagen and the License Agreement is
binding upon Inamed under Article 22.2 of said Agreement.  For the purposes of this Amendment and the
License Agreement, the terms Collagen and Inamed shall be interchangeable.  In consideration of the
promises and the mutual covenants contained herein, the parties agree to amend
the License Agreement as follows:  1.       Definitions:  The following definitions are deleted from
the License Agreement: (1) 1.6; (2) 1.12; and (3) 1.13.  Article 1.15 will be replaced by the
following provision:  1.15         Field
shall means the use of RF technology in plastic and reconstructive surgery,
dermatology, facial plastic surgery, cosmetic and aesthetic surgery (including,
but not limited to, ENT physicians and physicians in the AAFPRS, AACS and the
ASPRS), to the extent permitted by the FDA and other regulatory bodies.  2.       License Consideration:Article 4 is
deleted from the License Agreement in its entirety and all references to
Article 4 in other articles of the License Agreement are deleted.  The parties acknowledge and agree that
Inamed has paid and ArthroCare has accepted the first $500,000 of the ENT
License Fee referred to in Article 4.  In addition, Article 5.1 of the License
Agreement will be replaced by the following provision:  5.1           License Fee. In partial consideration for the
license granted herein, Inamed shall pay ArthroCare a license fee of four and
one-half million dollars ($4,500,000) in accordance with the schedule set forth
in Article 5.1(b).  (a)           The parties hereto acknowledge and agree that Inamed has
paid and  
   ArthroCare has accepted one and one-half
million dollars ($1,500,000) of such license fee, including the $500,000 ENT
License Fee described above.  (b)           License Payment Schedule. 
Within thirty (30) days following the execution by both parties of this
Amendment, Inamed shall make a payment to ArthroCare of five hundred thousand
dollars ($500,000).  This payment shall
replace the second half of the ENT License Fee in Article 4, now deleted from
the agreement. In addition, within thirty (30) days following the achievement
by ArthroCare of the following milestone, Inamed shall pay to ArthroCare the
applicable payment below:  Event
  
  
  
  Payment
  (U.S.$)(1)
  
  FDA approval of a Licensed
  Product for: general dermatological use for skin resurfacing and wrinkle
  reduction.
  
  $
  2
  million(2)
  
  Completion of a Disposable
  Wand designed to compete with an MDA Product, pursuant to a mutually agreed
  upon specification.  This
  specification will include a mutually agreed upon transfer price from
  ArthroCare to Inamed
  
  $
  500,000  3.       Royalties:Article 5.2 of
the License Agreement will be replaced by the following provision:  5.2           Royalties. 
As additional consideration for the rights and licenses granted herein
to Inamed by ArthroCare, Inamed will pay to ArthroCare running royalties on
ArthroCare Disposable Wands sold by Inamed worldwide.  The running royalties for all Disposable Wands sold worldwide
shall be the greater of 10% of the Transfer Price of the Disposable Wands or
10% of the Net Sales of Disposable Wands, payable within sixty days after the
close of a calendar quarter in which the Disposable Wands are sold or otherwise
distributed by Inamed.  4.       Product
Manufacturer and Sale:Exhibit B of the License Agreement will be
replaced by the following:  EXHIBIT B  PRODUCT
PRICES  Licensed
  Product
  
  Price Per
  UnitSkin Resurfacing Controllers
  
  $
  4500Liposuction Controller
  
  TBD, $6000 maximumDisposable Wands
  
  See belowCables/Handpieces
  
  $
  300Adaptors*
  
  $
  500  2 
   Disposable Wand Transfer
Price:  Type of Disposable
  
  PriceXL Rejuvenation Stylets
  
  $
  80SRS Rejuvenation Stylets
  
  $
  70MicroElectrode Dissectors
  
  $
  50Plasma Scalpels
  
  $
  50Liposuction Stylets
  
  TBD, $100 maximumMDA
  
  TBD, $50 maximum  
 *              Adaptors
are devices that connect to controllers that are not subject to this Agreement,
and will allow such controllers to power the above Disposable Wands.  5.       Product
Development:Article 7.2 of the License Agreement will be
replaced by the following provision:  7.2           Product Development.  During the Term of this Agreement, ArthroCare at its expense and
initiative, will continue to pursue clinical studies and product development
efforts in collaboration with Inamed. 
ArthroCare shall supply Inamed with any improvements and upgrades to the
Licensed Products developed by ArthroCare for use in the Field.  ArthroCare agrees that any substantial
change to the Licensed Products during the Term shall be subject 10 Inameds
prior written approval, which shall not be unreasonably withheld.  If Inamed requests additional product development
beyond ArthroCares planned efforts, ArthroCare will provide a budget, for
Inameds approval, for the direct cost of such product development on a time
and materials basis.  The time will
include the fully burdened rate for each employee involved in such work.  ArthroCare agrees to supply Inamed
documentation or information as requested for such changes to the Licensed
Products in meeting regulatory compliances.  ArthroCare will agree to develop, and obtain
regulatory approval for, an MDA Product and an RF liposuction product.  ArthroCare will provide a budget for such
product development and regulatory efforts on a time and materials basis as
outlined above.  6.       Minimum
Royalties and Purchases:Article 5.3 and Article 7.5 of the License
Agreement will be replaced by the following provisions:  5.3           Minimum Royalties.  (a)           If ArthroCare receives FDA approval to market and sell a
liposuction product, then, in addition to the license payments made by Inamed
pursuant to Article 5.1, Inameds minimum annual royalty payments for the
Licensed Products (wherein the first Period (Year 1)  3 
   commences the day after ArthroCares receipt
of such FDA approval) for each Period will total at least following:  Period
  
  Minimum
  Annual RoyaltyYear 1
  
  $
  465,000Year 2
  
  $
  917,700Year 3
  
  $
  1,383,200Year 4
  
  $
  1,835,400Year 5
  
  $
  2,300,900
  (b)           If ArthroCare does not receive FDA approval to market and
sell a liposuction product, then, in addition to the license payments made by
Inamed pursuant to Article 5.1, Inameds minimum annual royalty payments for
the Licensed Products (wherein the first Period (Year 1) commences the later of
January 15, 2000 and completion by ArthroCare of the first milestone (1) in
Article 5.1) for each period will total at least the following:  Period
  
  Minimum
  Annual RoyaltyYear 1
  
  $
  0.35 millionYear 2
  
  $
  0.69 millionYear 3
  
  $
  1.04 millionYear 4
  
  $
  1.38 millionYear 5
  
  $
  1.73 million
  (c)           After year 5, the minimum annual royalty payment for the
applicable Article 5.3(a) or (b) will increase by 5% each year thereafter based
on the annual royalty of Year 5.  (d)           In the event the Agreement is renewed pursuant to Article
18.1, the minimum annual royalty for each renewal year will be mutually agreed
upon in writing by the parties. If the new minimums cannot be agreed upon by
the parties, an arbitrator will be appointed by the parties to determine the
new minimums according to Article 21.  (e)           In the event Inamed fails to meet the minimum royalty
amount of the applicable Article 5.3(a), or (b) by the last day of any period,
Inamed shall pay ArthroCare, within thirty (30) days, the difference between
the minimum royalty and the royalties actually paid during such year. In the
event Inamed fails to pay the minimum royalties in any Period, then ArthroCare
has the right to: (i) continue under the terms of the existing Agreement; or
(ii) convert the exclusive distributorship granted in Article 2.1 into a
non-exclusive license, and the exclusive distributorship granted in Article 3.1
into a non-exclusive distributorship (al) other terms, including royalties, and
pricing to remain the same except for the minimum annual royalty requirements)
without paying a conversion fee or any other fee. ArthroCare will not have the right
to terminate the License Agreement if Inamed fails to meet such minimum royalty
amounts.  7.5           Minimum Purchase Requirements.  (a)           If ArthroCare receives FDA approval to market and sell a
liposuction product, then, in addition to the minimum royalty payments made by
Inamed pursuant to Article 5.3, Inameds minimum annual purchase requirements
for the Licensed Products (wherein the first  4 
   Period (Year 1) commences the day after such
FDA approval) for each Period will total at least the following:  Period
  
  Minimum
  Purchase RequirementYear 1
  
  $
  2,294,250Year 2
  
  $
  5,752,250Year 3
  
  $
  7,647,500Year 4
  
  $
  9,576,000Year 5
  
  $
  11,471,250
  (b)           If ArthroCare does not receive FDA approval to market and
sell a liposuction product, then, in addition to the minimum royalty payments
made by Inamed pursuant to Article 5.3. Inameds minimum annual purchase
requirements for the Licensed Products (wherein the first Period (Year 1)
commences the later of January 15, 2000 and completion by ArthroCare of the
first milestone (1) in Article 5.1) for each Period will total at least the
following:  Period
  
  Minimum
  Purchase RequirementYear 1
  
  $
  1,725,000Year 2
  
  $
  4,325,000Year 3
  
  $
  5,750,000Year 4
  
  $
  7,200,000Year 5
  
  $
  8,625,000
  (c)           After year 5, the minimum annual purchase requirements for
the applicable Article 7.5(a) or (b) will increase by 5% each year thereafter
based on the annual purchase requirement of Year 5.  (d)           In the event the Agreement is renewed pursuant to Article
18.1, the minimum annual purchase requirements for each renewal year will be
mutually agreed upon in writing by the parties. If the new minimums cannot be
agreed upon by the parties, an arbitrator will be appointed by the parties to
determine the new minimums according to Article 21.  (e)           In the event Inamed fails to meet the minimum purchase
requirements for the applicable Article 7.5(a) or (b) by the last day of any
period, ArthroCare has the right to: (i) continue under the terms of the
existing Agreement; or (ii) convert the exclusive license granted in Article
2.1 into a non-exclusive distributorship (all other terms, including royalties,
and pricing to remain the same except for the minimum annual purchase
requirements) without paying a conversion fee or any other fee. ArthroCare will
not have the right to terminate the License Agreement if Inamed fails to meet
such minimum purchase requirements. If ArthoCare has a backorder of at least
sixty (60) days for a Licensed Product during any Period, the minimum purchase
requirements for such Period will be reduced by 110% of the total dollar amount
of each such backorder in terms of the transfer prices to Inamed as set forth
in Exhibit B.  7.       Forecasts:Article 8.3 of
the License Agreement will be replaced by the following provision:  8.3           Second Source. In the event that, within any
contract year, ArthroCare is  5 
   unable to or
fails to meet Inameds requirements for an Adverse Quantity of Licensed
Products as specified in the then-current forecast for two periods of at least
30 days each, within a period of three months, then Inamed shall have the right
to manufacture the Licensed Products itself or purchase the Licensed Products
from a second source and Inamed shall not owe ArthroCare the transfer prices
described in Exhibit B for any such Licensed Products manufactured by Inamed or
a third party; provided, however, that (1) the periods referenced above shall
be subject to extension due to Force Majeure as referenced in Article 22.12;
and provided that (2) before internally manufacturing or placing a purchase
order with any third party for such Licensed Products, Inamed shall notify
ArthroCare, and if ArthoCare is capable of meeting Inameds requirements within
thirty (30) days, Inamed shall resume its exclusive purchase of Licensed
Products from ArthroCare subject to this Agreement; and provided that (3) this
Article shall not apply to any Licensed Products that have not been placed on
Inameds forecast pursuant to Article 8.1 at least six (6) months prior to the
delivery date of said Licensed Products. 
If Inamed internally manufactures the Licensed Products or products or purchases
Licensed Products from a second source, then Inamed shall pay to ArthoCare
running royalties on the Licensed Products sold by Inamed and not manufactured
by ArthoCare pursuant to this Article. The running royalties for Licensed
Products shall be the greater of 5% of the transfer price of the Licensed
Products as specified in Exhibit B or 5% of the Net Sales of the Licensed
Products. In such event, Inamed shall not pay any transfer prices for Licensed
Products not manufactured by ArthoCare.  If Inamed obtains the right to manufacture
the Licensed Products itself or purchase the Licensed Products from a second
source under Article 8.3, and if: (1) ArthoCare is able to fill all such
backorders for the Licensed Products ordered by Inamed that led to Inameds
acquisition of such rights as described above; and (2) ArthoCare builds a
one-month inventory of such Licensed Products based on the average volume of
such Licensed Products ordered during the preceding ninety (90) day period,
then Inamed  will continue to have the
right to manufacture the Licensed Products itself or purchase the Licensed
Products from a second source; provided that Inamed shall pay increased running
royalties for cash Licensed Product not manufactured by ArthoCare. The
increased running royalties shall be the greater of 15% of the transfer price
of the Disposable Wands as specified in Exhibit B or 15% of the Net Sales of
Disposable Wands and the greater of 10% of the transfer price of the
Controllers as specified in Exhibit B or 10% of the Net Sales of Controllers.  Notwithstanding the foregoing, the parties
acknowledge and agree that they shall cooperate with one another to assure
sufficient source of Licensed Products to Inamed and its customers.  8.       Additions: The following
articles shall be added to the License Agreement:  7.7           Liposuction Stocking Order Upon receipt of FDA
approval to market and sell a liposuction product, Inamed shall make an initial
stocking order of at least $500,000 for shipment within ten (10) days after
such approval.  6 
   9.8           Royalty Reports ArthroCare recognizes that Inamed
may, from time to time, sell Disposal Wand(s) alone, or as part of a bundle,
such that the price of the Disposable Wand(s) on the customer invoice does not
accurately reflect the economic value directly attributable to the Disposable
Wand(s).  In this event, Inamed will
maintain accurate internal records of such transactions and provide ArthroCare
with royalty reports based on such records, including the number of units sold,
the revenue received and the economic value attributed to the Disposable
Wand(s).  Such report shall be due on or
before the thirtieth (30th) day following the end of the relevant
Calendar Quarter and shall be subject to the audit provisions of Article
9.6.  For the purposes of computing
earned royalties under Article 5.2, however, the Net Sales of the Disposals
Wands shall never be less than 150% of the transfer price as listed in Exhibit
B (with the exception of the Plasma Scalpel and the MicroElectrode Dissector).  For the Plasma Scalpel and the MicroElectrode
Dissector, for the purposes of computing earned royalties under Article 5.2,
the Net Sales of the Disposable Wands shall never be less than 125% of the
transfer price as listed in Exhibit B.  10.5         Non-warranty Repairs ArthroCare agrees, upon Inameds
request to provide repair services for Licensed Products that fall outside of
the warranty provisions in Article 10.1 or the warranty periods in Exhibit
C.  ArthroCare will provide a budget,
for Inameds approval, for the direct cost of such repair work on a time and
materials basis.  The time will include
the fully burdened rate for each employee involved in such work plus 10% of the
fully burdened cost.  ArthroCare will
sell to Inamed a certain number of Controllers for Inameds loaner pool at a
mutually agreed upon discount price.  9.             Effect
of Amendment:This Amendment will be considered a valid and
binding modification of the above referenced License Agreement in accordance
with Article 22.10 of the License Agreement. 
In the event that provisions of the Amendment conflict with provisions
of the License Agreement, the Amendment will prevail, and henceforth be
considered part and parcel of the License Agreement.  Except as amended herein, all other provisions of the License
Agreement remain in full force and effect. 
No further amendments or additions to the License Agreement or the
Amendment shall be effective unless reduced to writing and executed by the
authorized representatives of the parties.  ARTHROCARE CORPORATION
  
  INAMED CORPORATIONBy:
  /s/ Michael A. Baker
  
  By:
  /s/ Ilan K. ReichPrint Name:
  /s/ Michael A. Baker
  
  Print Name:
  /s/ Ilan ReichTitle:
  President & CEO
  
  Title:
  President  7 
   [ARTHROCARE CORPORATION LOGO]  LICENSE AND DISTRIBUTION AGREEMENT  This License and Distribution Agreement (the Agreement) effective as
of January 27, 1999 (the Effective Date) is entered into by and between
ArthroCare Corporation, on its own behalf and on behalf of its Affiliates
(ArthroCare), a Delaware corporation having an address at 595 North Pastoria
Avenue, Sunnyvale, California 94086, and Collagen Aesthetics, Inc., on its own
behalf and on behalf of its Affiliates (Collagen), a Delaware corporation
having an address at 1850 Embarcadero Road, Palo Alto, California 94303.  BACKGROUND  A.            ArthroCare owns
certain Patent Rights (as defined in article 1.21) relating to radio frequency
(RF) energy;  B.            Collagen is a
worldwide leader in marketing products for dermatology, facial plastic surgery,
cosmetic and aesthetic surgery;  C.            Collagen desires to
obtain a license under the Patent Rights in order to commercialize Licensed
Products in the Field, and ArthroCare desires to grant such a license to Collagen,
all on the terms and conditions set forth herein; and  D.            ArthroCare shall be
Collagens exclusive third party contract manufacturer for certain Licensed
Products and/or components of such Licensed Products, all on the terms and
conditions set forth herein.  NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein, the parties agree as follows:  ARTICLE I  DEFINITIONS  1.1           Adverse Quantity
shall mean a quantity of Licensed Products greater than $75,000 based on the transfer
prices of such Licensed Products described in Exhibit B.  1.2           Affiliate
means any corporation or other entity which is directly or indirectly
controlling, controlled by or under the common control with a party
hereto.  For the purpose of this Agreement,
control shall mean the direct or indirect ownership of at least 50% of the  1 
   outstanding
shares or other voting rights of the subject entity to elect directors, or if
not meeting the preceding definition, any entity owned or controlled by or
owning or controlling at the maximum control or ownership right permitted in
the country where such entity exists.  1.3           Alternative
Product(s) shall mean: (1) any product within the scope of a Valid Claim;
(2) any laser, electrosurgical, power peel, power abrasion or similarly powered
product used in a skin resurfacing procedure; or (3) any laser,
electrosurgical, power peel, power abrasion or similarly powered product used
in a procedure intended to remove wrinkles.  1.4           Change in
Control shall mean (i) the sale, lease, exchange or other transfer,
directly or indirectly, of substantially all of the assets of one of the
parties (in one transaction or in a series of related transaction) to one or
more persons or entities that are not affiliates of that party; (ii) the
approval by the shareholders of one of the parties of any plan or proposal for
its liquidation or dissolution; (iii) a merger or consolidation of one of the
parties if the shareholders of that party immediately prior to the effective
date of such merger or consolidation have beneficial ownership, immediately
following the effective date of such merger or consolidation, of securities of
the surviving corporation representing fifty percent (50%) or less of the
combined voting power of the surviving corporation's then outstanding
securities ordinarily having the right to vote at elections of directors; or
(iv) any other change in control of a nature that would be required to be
reported pursuant to Section 13 to 15(d) of the Securities Exchange Act of
1934, as amended, whether or not the party is then subject to such reporting
requirements.  1.5           Change in
Control Entity shall mean any company or entity that, at the time of such
change in control manufactures, sells or distributes: (1) any RF product within
the scope of a patent or patent application owned by or licensed to ArthroCare;
(2) any laser, electrosurgical, power peel, power abrasion or similarly powered
product used in a skin resurfacing procedure; or (3) any laser,
electrosurgical, power peel, power abrasion or similarly powered product used
in a procedure intended to remove wrinkles.  1.6           Co-exclusive ENT
License Rights shall mean a co-exclusive, non-transferable, worldwide
license under the Patent Rights and the Trademark Rights, with the right to
use, market, sell and distribute Licensed Products in the ENT Field. The term
co-exclusive shall mean that only Collagen and one other party (which may
include ArthroCare) shall have such rights.  1.7           Competent
Authority shall mean an EU Member States public officer with jurisdiction
to appoint a body to test or audit medical devices for conformity to EU
registration laws.  1.8           Confidential
Information shall mean any: (i) information or material in tangible form
disclosed hereunder that is marked as Confidential at the time it is
delivered to the receiving party; or (ii) information disclosed orally
hereunder which is identified as confidential or proprietary when disclosed.  1.9           Controller(s)
shall mean an RF power supply.  2 
   1.10         Disposable
Wand(s) shall mean medical instruments and components of such medical
instruments certain of which may have one or more electrode(s) and electrical
connections(s) for coupling the electrode(s) to a Controller.  1.11         ENT shall
mean ear, nose and throat.  1.12         ENT Field
shall mean the use of RF technology in dermatology, facial plastic surgery,
cosmetic and aesthetic surgery, to the extent permitted by the FDA and other
regulatory bodies, to ENT physicians who are members of the American
Association of Facial Plastic and Reconstructive Surgeons (AAFPRS).  1.13         Exclusive ENT
License Rights shall mean an exclusive, non-transferable, worldwide
license under the Patent Rights and the Trademark Rights, with the right to
use, market, sell and distribute Licensed Products in the ENT Field.  1.14         FDA shall
mean the U.S. Food and Drug Administration.  1.15         Field shall
mean the use of RF energy in dermatology, cosmetic and aesthetic surgery to the
extent permitted by the FDA and other regulatory bodies, to all physicians
except for ENT physicians who are members of the American Association of Facial
Plastic and Reconstructive Surgeons (AFFAIRS).  1.16         Licensed
Product(s) will mean any product within the scope of a Valid Claim as
determined on the date of sale, any product used in practicing a process within
the scope of a Valid Claim as determined on the date of sale, or any product
produced using any method within the scope of a Valid Claim as determined on
the date of sale.  1.17         Marketing
Authorizations shall mean any regulatory approvals or authorizations
required by the FDA, Competent Authority or other regulatory bodies to comply
with the laws and regulations of any country or other jurisdiction for sale,
marketing and distribution of the Licensed Products.  1.18         MDA Product(s)
shall mean a product that is designed for use in a cosmetic or aesthetic
procedure to remove the stratum corneum layer of the epidermis with minimal
collateral damage to the underlying tissue in the epidermis and the dermis.  1.19         Net Salesshall mean the invoice price of Licensed Products sold by Collagen to
unaffiliated third parties (including sales made in connection with clinical
trials), less, to the extent included in such invoice price the total of: (1)
ordinary and customary trade discounts actually allowed; (2) credits, rebates
and returns (including, but not limited to, wholesaler and retailer returns);
(3) freight, postage, insurance and duties paid for and separately identified
on the invoice or other documentation maintained in the ordinary course of
business, and (4) excise taxes, other consumption taxes, customs duties and
compulsory payments to governmental authorities actually paid and separately
identified on the invoice or other documentation maintained in the ordinary
course of business.  Net Sales shall
also include the fair market value  3 
   of all other
consideration received by Collagen in respect of Licensed Products, whether
such consideration is in cash, payment in kind, exchange or another form.  1.20         Notified Body
shall mean that body appointed by a Competent Authority to test or audit
medical devices for conformity with EU registration laws.  1.21         Patent Rights
shall mean all patents and patent applications in the Field owned by or
licensed to ArthroCare, including, but not limited to, the patent applications
and patents listed on Exhibit A hereto; all priority applications, divisionals,
continuations, continuations-in-part, and substitutions thereof; all patent
applications and patents relating to improvements thereof; all foreign patent
applications corresponding to the preceding applications; and all U.S. and
foreign patents issuing on any of the preceding applications, including
extension, reissues, and re-examination. 
In addition, the term Patent Rights includes any and all, inventions,
discoveries, know-how, trade secrets, data, information, technology, processes,
formulas, drawings, designs, computer programs and licenses of ArthroCare which
are necessary or useful for designing, developing, manufacturing, using or
selling Licensed Products within the Field, and all amendments, modifications,
and improvements to any of the foregoing  1.22         Potentially
Infringing Product(s) shall mean: (1) any product within the scope of a
Valid Claim that is not manufactured by ArthroCare; or (2) an RF product used
either in a skin resurfacing procedures or in a procedure or in a procedure
intended to remove wrinkles that is not manufactured by ArthoCare.  1.23         RF  shall mean radiofrequency.  1.24         Trademark Rights
shall mean all registered trademarks, trademark applications, common law trademarks,
domestic or foreign, to the marks listed in Exhibit E, all foreign trademark
applications or registrations corresponding to the preceding applications, and
all marks similar thereto.  1.25         Valid Claim
shall mean any claim of an issued and unexpired patent included within the
Patent Rights which has not been held invalid or unenforceable in a final
decision of a court of competent jurisdiction and which has not been disclaimed
or admitted to be invalid or unenforceable through reissue or otherwise;
provided, however, that if the holding of such court is later reversed by a
court with overriding authority, the claim shall be reinstated as a Valid Claim
with respect to Net Sales made after the date of such final decision.  ARTICLE 2  LICENSE  2.1           Exclusive License
Grant. Subject to the terms and conditions of this Agreement, ArthroCare
and its Affiliates hereby grant to Collagen and its Affiliates an exclusive,
non-transferable, worldwide license under the Patent Rights, to import, have
imported, use, offer for  4 
   sale and sell
Licensed Products in the Field. 
ArthroCare hereby grants to Collagen and its Affiliates an exclusive,
non-transferable, worldwide license under the Trademark Rights to use marks and
tradenames within the Trademark Rights in connection with the sale of Licensed
Products in the Field.  ArthroCare has
existing contracts with distributors in certain countries that must be
terminated before ArthroCare can grant Collagen the exclusive license and
distribution rights described herein, in these countries.  Specifically, ArthroCare has such contracts
with distributors in Taiwan, Switzerland, Spain, Austria, Netherlands, Canada,
Korea, Malaysia, Greece, Turkey and the countries of Northern Africa and the
Middle East.  As of April 30, 1999,
ArthroCare shall grant the exclusive rights and licenses herein to Collagen in
Taiwan, Spain, Korea, Malaysia and Austria. 
As of July 30, 1999, ArthroCare shall grant the exclusive rights and
licenses herein to Collagen in Switzerland. 
ArthroCare will work with Collagen and make its best efforts to grant
the licenses and rights herein to Collagen in the Netherlands, Canada, Greece,
Turkey and the countries of Northern Africa and herein to Collagen in the
Netherlands, Canada, Greece, Turkey and the countries of Northern Africa and
the Middle East as soon as possible after the signing of a definitive
agreement.  2.2           No Implied Rights.
Only the licenses granted pursuant to the express terms of this Agreement shall
be of any legal force or effect.  No
other license rights shall be granted or created by implication, estoppel or
otherwise.  2.3           Exclusive to
ArthroCare.  Under the exclusive
license granted by ArthroCare to Collagen in section 2.1, ArthroCare shall not
have the right to import, have imported, use, offer for sale or sell Licensed
Products in the Field during the Term of this Agreement and any renewals
thereof; provided that ArthroCare shall not have made the election to convert
the license into a non-exclusive license pursuant to sections 5.3(f) or 7.5(f).  2.4           ArthroCares
Existing Distributors. ArthroCare will make its best efforts to grant the
licenses and rights herein to Collagen in the Netherlands, Canada, Greece,
Turkey, Malaysia, Korea, Spain, Taiwan, Austria, Switzerland and the countries
of the Middle East and Northern Africa. 
In consideration for Collagens global sales and marketing efforts under
this Agreement, if ArthroCare is unable to grant the licenses and rights herein
in any of these countries by July 30,1999, ArthroCare will, until ArthroCare is
able to grant such rights in said countries, pay Collagen a marketing fee on
ArthroCares product sales in each country. 
This marketing fee shall be 25% of ArthroCares transfer price to its
distributor in each country for all Licensed Products sold in each country,
provided that the transfer price from ArthroCare to its distributor minus the
marketing fee paid to Collagen shall not be an amount less than 110% of
ArthroCares fully allocated production cost of such Licensed Product.  For the purposes of this section, Collagen
will have the right, at Collagens expense, to conduct an audit of ArthroCares
production costs with an independent auditor, provided that said independent
auditor shall maintain the confidentiality of these production costs.  In addition, if ArthroCare reaches a
separate agreement with Canderm that will allow ArthroCare to grant the
licenses and rights herein to Collagen in Canada, Collagen will share 50% of
any costs to ArthroCare, up to a maximum of $50,000, for such settlement.  5 
   ARTICLE 3  APPOINTMENT AND
AUTHORITY OF COLLAGEN  3.1Exclusive
Distributor.Subject to the terms
and conditions herein, ArthroCare hereby appoints Collagen as ArthroCares
authorized exclusive worldwide sales distributor for the Licensed Products in
the Field, and Collagen hereby accepts such appointment.  Collagens sole authority shall be to purchase
Licensed Products from ArthroCare and to promote, market and resell such
Licensed Products in the Field in accordance with the terms of this Agreement.  3.2           Existing Distributors.  Notwithstanding the rights and licenses granted in Articles 2.1
and 3.1, ArthroCare has existing contracts with distributors in certain
countries that must be terminated before ArthroCare can grant Collagen the
exclusive license and distribution rights described herein, in these
countries.  Specifically, ArthroCare has
such contracts with distributors in Taiwan, Switzerland, Spain, Austria,
Netherlands, Canada, Korea, Malaysia, Greece, Turkey and the countries of
Northern Africa and the Middle East. 
ArthroCare shall grant the licenses and rights described herein to
Collagen in Taiwan, Spain, Korea, Malaysia and Austria within three months of
the Effective Date and in Switzerland, within six months of the Effective
Date.  ArthroCare will work with
Collagen and make its best efforts to grant the licenses and rights herein to
Collagen in the Netherlands, Canada, Greece, Turkey and the countries of
Northern Africa and the Middle East as soon as possible after the signing of a
definitive agreement.  3.3           Reservation of Rights; No Rights Beyond Licensed
Products.  Except as expressly
provided in this Article 3, and by the license granted in Article 2, no right,
title, or interest is granted, whether express or implied, by ArthroCare to
Collagen, and nothing in this Agreement shall be deemed to grant to Collagen
rights in any Licensed Products or technology other than the Licensed Products,
nor shall any provision of this Agreement be deemed to restrict ArthroCares
rights to exploit technology, know-how, patents or any other intellectual
property rights relating to the Licensed Products outside of the Field.  3.4           Sale Conveys No Right to Manufacture or Copy.  The Licensed Products are offered for sale
and are sold by ArthroCare subject in every case to the condition that such
sale does not convey any license, expressly or by implication, to manufacture,
duplicate or otherwise copy or reproduce any of the Licensed Products.  3.5           Alternative Products.  If at any time during the Term of this Agreement, Collagen
itself, or through its distributors, sells Alternative Products that compete
with the Licensed Product, ArthroCare shall have the right to terminate this
Agreement in accordance with Section 18.2. 
ArthroCare recognizes that Collagen already distributes the Alternative
Products set forth on Exhibit D and that such Licensed Products are not
competitive with the Licensed Products, and the distribution of such Licensed
Products will not constitute a breach pursuant to this Section 3.5.  The obligations of Collagen under this
Article 3.5 shall remain in force during the entire Term of this Agreement and
any extensions thereof, and for a period of one (1) year thereafter.  3.6           MDA Products. 
If ArthroCare has not sold an MDA Product to Collagen within eighteen
(18) months of the Effective Date, then; (1) Collagen may itself, or through
its  6 
   distributors, manufacture and sell an MDA
Product that is not within the scope of a Valid Claim, and this action will not
be considered a breach of any section of this Agreement including section 3.5;
and if Collagen takes such action, then (2) ArthroCare may manufacture, sell,
or license to a third party (exclusively or non-exclusively) the rights to
manufacture or sell, an MDA Product that is within the scope of a Valid Claim
and this action will not be considered a breach of any section of this
Agreement including sections 2.1, 3.1 or 4.1.  ARTICLE 4  ENT RIGHTS  4.1           Exclusive ENT License Rights.  In addition to the above rights and
licenses, if ArthroCare is able to, ArthroCare will offer the Exclusive ENT
License Rights to Collagen.  In such
event, Collagen will accept such rights and pay an additional ENT License Fee
of $1million to ArthroCare.  This
requirement for Collagen to accept such rights will expire on March 31, 1999.  If ArthroCare is able to offer the Exclusive
ENT License Rights to Collagen after March 31, 1999 and before March 31, 2001,
then Collagen shall have the option to accept the Exclusive ENT License Rights
for a period of thirty (30) days after the date ArthroCare offers the Exclusive
ENT License Rights to Collagen.  If Collagen
exercises this option, Collagen will pay an additional ENT License Fee of $1
million to ArthroCare.  If Collagen does
not exercise this option thirty (30) days after the date ArthroCare offers the
Exclusive ENT License Rights to Collagen, this option shall expire and Collagen
will no longer have any rights under sections 4.1 and 4.2, including the right
of first offer described in each of these sections.  If ArthroCare is unable to offer the Exclusive ENT License Rights
to Collagen by March 31, 2001, this option will expire.  During the Term of this Agreement, if
ArthroCare is able to offer such Exclusive ENT License Rights to Collagen after
March 31, 2001, ArthroCare shall notify Collagen and shall allow Collagen to
make the first offer to purchase such rights (right of first offer).  If the parties do not mutually agree on the
consideration Collagen shall pay ArthroCare for the Exclusive ENT License
Rights within thirty (30) days of this notification, ArthroCare shall have the
right to offer the Exclusive ENT License Rights to third parties.  If ArthroCare offers the Exclusive ENT
License Rights to Collagen by March 31, 1999, the first $500,000 of the ENT
License Fee will be paid at the later of the signing of a definitive agreement
or the time at which ArthroCare offers such rights.  The second $500,000 of the ENT License Fee will be paid upon
Collagens placement of 60 Controllers into accounts that would involve use of
the Controller by an ENT physician.  If
ArthroCare offers the Exclusive ENT License Rights to Collagen after March 31,
1999 and before March 31, 2001, and Collagen exercises its option for these
rights as described above, then Collagen shall pay the entire $1 million of the
ENT License Fee at the time Collagen exercises its option.  If ArthroCare offers and Collagen accepts the
Exclusive ENT License Rights, Collagen will have, in combination with the
rights granted in section 2, an exclusive, non-transferable, worldwide license
under the Patent Rights and the Trademark Rights, with the right to use,
market, sell and distribute Licensed Products to all physicians in the Field
and the ENT field.  7 
   In addition, if ArthroCare offers and
Collagen accepts the Exclusive ENT License Rights, Collagens minimum annual
royalty payments for Disposable Wands and minimum purchase requirements for the
Licensed Products will be increased pursuant to sections 5.3(b) and 7.5(b)
respectively.  4.2           Co-exclusive ENT License Rights.  In addition to the above rights and
licenses, if ArthroCare is able to, ArthroCare will offer the Co-exclusive ENT
License Rights to Collagen.  In such
event, Collagen will accept such rights and pay an additional ENT License Fee
of $500,000 to ArthroCare.  This
requirement for Collagen to accept such rights will expire on March 31,
1999.  If ArthroCare is able to offer
the Co-exclusive ENT License Rights to Collagen after March 31, 1999 and before
March 31, 2001, then Collagen shall have the option to accept the Co-exclusive
ENT License Rights for a period of thirty (30) days after the date ArthroCare
offers the Co-exclusive ENT License Rights to Collagen.  If Collagen exercises this option, Collagen
will pay an additional ENT License Fee of $500,000 to ArthroCare.  If Collagen does not exercise this option
thirty (30) days after the date ArthroCare offers the Co-exclusive ENT License
Rights to Collagen, this option shall expire and Collagen will no longer have
any rights under section 4.1 and 4.2, including the right of first offer
described in each of these sections.  If
ArthroCare is unable to offer the Co-exclusive ENT License Rights to Collagen
by March 31, 2001, this option will expire. 
During the Term of this Agreement, if ArthroCare is able to offer such
Co-exclusive ENT License Rights to Collagen after March 31, 2001, ArthroCare
shall notify Collagen and shall allow Collagen to make the first offer to
purchase such rights (right of first offer). 
If the parties do not mutually agree on the consideration Collagen shall
pay ArthroCare for the Co-exclusive ENT License Rights within thirty (30) days
of this notification, ArthroCare shall have the right to offer the Co-exclusive
ENT License Rights to third parties.  If ArthroCare offers the Co-exclusive ENT
License Rights to Collagen by March 31, 1999, the first $250,000 of the ENT
License Fee will be paid at the later of the signing of a definitive agreement
or the time at which ArthroCare offers such rights.  The second $250,000 of the ENT License Fee will be paid upon
Collagens placement of 60 Controllers into accounts that would involve use of
the Controller by an ENT physician.  If
ArthroCare offers the Co-exclusive ENT License Rights to Collagen after March
31, 1999 and before March 31, 2001, and Collagen exercises its option for these
rights as described above, then Collagen shall pay the entire $500,000 of the
ENT License Fee at the time Collagen exercises its option.  In addition, if ArthroCare offers and
Collagen accepts the Co-exclusive ENT License Rights, Collagens minimum annual
royalty payments for Disposable Wands and minimum purchase requirements for the
Licensed Products will be increased pursuant to sections 5.3(c) and 7.5(c),
respectively.  8 
   ARTICLE 5  CONSIDERATION  5.1           License Fee. 
In partial consideration for the license granted herein, Collagen shall
pay ArthroCare a license fee of three and one-half million dollars ($3,500,000)
in accordance with the schedule set forth in Section 5.1(b).  (a)           The
parties hereto acknowledge and agree that Collagen has paid an ArthroCare has
accepted two hundred and fifty thousand dollars ($250,000) of such license fee.  (b)           License Payment Schedule. 
Within three (3) days following the Effective Date of this Agreement,
Collagen shall make a payment to ArthroCare of seven hundred and fifty thousand
dollars ($750,000).  In addition, within
thirty (30) days following the achievement by ArthroCare of each of the
following milestones, Collagen shall pay to ArthroCare the applicable payments
below:  Event
  
  Payment
  (U.S. $)(1) FDA approval of a Licensed Product for: general dermatological
  use for skin resurfacing and wrinkle reduction.
  
  $
  2
  million(2) Completion of a Disposable Wand designed to compete with an MDA
  Product, pursuant to a mutually agreed upon specification.  This specification will include a mutually
  agreed upon transfer price from ArthroCare to Collagen.
  
  $
  500,000  5.2           Royalties. 
As additional consideration for the rights and licenses granted by
ArthroCare to Collagen herein, Collagen shall pay to ArthroCare running
royalties on Disposable Wands sold by Collagen worldwide.  The running royalties for all Disposable
Wands sold worldwide shall be the greater of 20% of the Transfer Price of the
Disposable Wands as specified in Exhibit B or 20% of the Net Sales of
Disposable Wands, payable within forty-five (45) days after the close of a
calendar quarter in which the Disposable Wands are sold or otherwise
distributed by Collagen.  (a)           Rebates.  In the event that Collagens sales of
Licensed Products are being adversely affected by a Potentially Infringing
Product, the parties will work together to ensure that Collagen maintains its
current market share.  In such event, if
Collagen is required to reduce the sales price of any Licensed Product below
the Discount Price of the Licensed Product as defined below, ArthroCare will
agree, by reducing the transfer prices to Collagen of the relevant Licensed
Products, to share fifty percent (50%) of any discount below the Discount Price  9 
   Collagen must make in order
to maintain such market share; provided that Collagen provides written
documentation of a commitment by a customer to purchase Licensed Products at
such discounted price.  The Discount
Price shall be 250% of the transfer price of Disposable Wands and 200% of the
transfer price of Controllers as listed in Exhibit B.  ArthroCares share of any such discount will be paid to Collagen
in cash or credit at ArthroCares discretion. Notwithstanding the above, ArthroCare will
only be required to provide a maximum discount of USD twenty-five (25) per
Disposable Wand and USD fifteen hundred (1,500) per Controller, and ArthroCare
will not be required to discount any Licensed Product below 110% of the fully
allocated production cost of the Licensed Product.  For the purposes of this section, Collagen will have the right,
at Collagens expense, to conduct an audit of ArthroCares production costs
with an independent auditor, provided that said independent auditor shall
maintain the confidentiality of these production costs.  5.3           Minimum Royalties.  (a)           If ArthroCare does not offer to Collagen either the
Exclusive ENT License Rights or the Co-exclusive ENT License Rights pursuant to
sections 4.1 and 4.2, respectively, then, in addition to the license payments
made by Collagen pursuant to Section 5.1, Collagens minimum annual royalty
payments for the Licensed Products (wherein the first Period (Year 1) commences
the day after completion by ArthroCare of the first milestone (1) in Article
5.1) for each Period will total at least the following:  Period
  
  Minimum Annual RoyaltyYear 1
  
  $
  0.3
  millionYear 2
  
  $
  0.6
  millionYear 3
  
  $
  0.9
  millionYear 4
  
  $
  1.2
  millionYear 5
  
  $
  1.5
  million
  (b)           If ArthroCare offers to Collagen, and Collagen accepts,
the Exclusive ENT License Rights pursuant to section 4.1, then, in addition to
the license payments made by Collagen pursuant to Section 5.1, Collagens
minimum annual royalty payments for the Licensed Products (wherein the first
Period (Year 1) commences the day after completion by ArthroCare of the first
milestone (1) in Article 5.1) for each period will total at least the
following:  Period
  
  Minimum Annual RoyaltyYear 1
  
  $
  0.35
  millionYear 2
  
  $
  0.69
  millionYear 3
  
  $
  1.04
  millionYear 4
  
  $
  1.38
  millionYear 5
  
  $
  1.73
  million
  (c)           If ArthroCare offers to Collagen, and Collagen accepts,
the Co-exclusive ENT License Rights pursuant to section 4.2, then, in addition
to the license payments made by Collagen pursuant to Section 5.1, Collagen's
minimum annual royalty payments for the Licensed  10 
   Products (wherein the first Period (Year 1)
commences the day after completion by ArthroCare of the first milestone (1) in
Article 5.1) for each Period will total at least the following:  Period
  
  Minimum Annual RoyaltyYear 1
  
  $
  0.32
  millionYear 2
  
  $
  0.63
  millionYear 3
  
  $
  0.95
  millionYear 4
  
  $
  1.26
  millionYear 5
  
  $
  1.58
  million
  (d)           After year 5, the minimum annual royalty payment for the
applicable section 5.3(a), (b) or (c) will increase by 5% each year thereafter.  (e)           In the event the Agreement is renewed pursuant to Section
18.1, the minimum annual royalty for each renewal year will be mutually agreed
upon in writing by the parties.  If the
new minimums cannot be agreed upon by the parties, an arbitrator will be
appointed by the parties to determine the new minimums according to Article 21.  (f)            In the event Collagen fails to meet the minimum royalty
amount of the applicable section 5.3(a), (b) or (c) by the last day of any
Period, Collagen shall pay ArthroCare, within thirty (30) days, the difference
between the minimum royalty and the royalties actually paid during such
year.  In the event Collagen fails to
pay the minimum royalties in any Period, then ArthroCare has the right to: (i)
continue under the terms of the existing Agreement; or (ii) convert the exclusive
licenses granted in Sections 2.1 and 4.1 into non-exclusive licenses, and the
exclusive distributorship granted in Section 3.1 into a non-exclusive
distributorship (all other terms, including royalties, minimums and pricing to
remain the same) without paying a conversion fee or any other fee.  ARTICLE 6  MOST FAVORED NATION PRICING  ArthroCare represents and warrants that it
will provide Most Favored Nation Pricing to Collagen during the course of
this agreement.  For the purposes of
this Agreement  Most Favored Nation
Pricing shall mean that, if the overall prices (including transfer prices,
royalties and/or other profit sharing formulas) for Licensed Products that
ArthroCare has with any distributors of dermatology, facial plastic surgery,
cosmetic or aesthetic surgery products become more favorable to said
distributors than the overall prices of like products to Collagen under this
agreement, ArthroCare will adjust the overall prices of said like products to
Collagen, such that these prices are the same as, or more favorable to Collagen
than to the distributors.  11 
   ARTICLE 7  MANUFACTURE; PRUCHASE OF LICENSED
PRODUCTS  7.1           Product Manufacture.  ArthroCare shall manufacture and sell to
Collagen, and Collagen agrees to exclusively purchase from ArthroCare,
Collagens requirements for Licensed Products in the Field.  ArthroCare will manufacture Licensed
Products in accordance with ISO 9000 Standards, EN 46000 Standards, FDA Quality
Systems Regulations (including Current Good Manufacturing Practices), and
requirements of the Medical Device Directives (MDD) and the then-current
product specifications, as may be modified from time to time by the mutual
written consent of the parties hereto.  7.2           Product Development.  During the Term of this Agreement,
ArthroCare, at its expense and initiative, will continue to pursue clinical
studies and product development efforts in collaboration with Collagen.  ArthroCare shall supply Collagen with any
improvements and upgrades to the Licensed Products developed by ArthroCare for
use in the Field.  ArthroCare agrees
that any substantial change to the Licensed Products during the Term shall be
subject to Collagens prior written approval, which shall not be unreasonably
withheld.  If Collagen requests
additional product development beyond ArthroCares planned efforts, ArthroCare
will provide a budget, for Collagen's approval, for the direct cost of such
product development on a time and materials basis.  The time will include the fully burdened rate for each employee
involved in such work plus 10% of the fully burdened cost to account for
overhead.  ArthroCare agrees to supply
Collagen documentation or information as requested for such changes to the
Licensed Products in meeting regulatory compliances.  7.3           Terms and Conditions.  All product purchases hereunder shall be
subject to the terms and conditions of this Agreement.  Unless otherwise agreed in writing, nothing
contained in any purchase order or other document submitted pursuant to this
Agreement shall in any way modify or add to the terms and conditions in this
Agreement.  7.4           Order and Acceptance.  All orders shall be by means of signed
written purchase orders, sent to ArthroCare at ArthroCares address for notice
hereunder and requesting a delivery date that is consistent with the Forecasts
and not less than thirty (30) days after ArthroCares receipt of such purchase
order.  Orders may initially be placed
by telephone or telecopy, provided that a signed written confirming purchase
order is received by ArthroCare within ten (10) days after such telephonic or
telegraphic order.  ArthroCare shall use
reasonable best efforts to fulfill purchase orders submitted in accordance with
ArthroCares lead times, it being understood that no purchase order shall be
binding upon ArthroCare until accepted by ArthroCare by telecopy or in writing,
and ArthroCare shall have no liability to Collagen with respect to purchase
orders that are not accepted. 
ArthroCare shall acknowledge each Order in writing within 10 business
days of receipt.  By written notice
given within such 10-day period, ArthroCare may reject any Order, but only to
the extent that the Order exceeds the applicable, then-current Forecast,
consistent with Section 8.1. Notice of rejection must be given within 10 days
to Collagen by telex or fax, followed by notification in writing.  Once an Order is accepted by ArthroCare,
Collagen may cancel or reschedule such Order only with approval of ArthroCare.  12 
   7.5           Minimum Purchase Requirements.  (a)           If ArthroCare does not offer to
Collagen either the Exclusive ENT License Rights or the Co-exclusive ENT
License Rights pursuant to sections 4.1 and 4.2, respectively, then, in
addition to the minimum royalty payments made by Collagen pursuant to Section
5.3, Collagens minimum annual purchase requirements for the Licensed Products
(wherein the first Period (Year 1) commences the day after completion by
ArthroCare of the first milestone (1) in Article 5.1) for each Period will total
at least the following:  Period
  
  Minimum Purchase RequirementsYear 1
  
  $
  0.6
  millionYear 2
  
  $
  1.5
  millionYear 3
  
  $
  2.0
  millionYear 4
  
  $
  2.5
  millionYear 5
  
  $
  3.0
  million
  (b)           If ArthroCare offers to Collagen, and
Collagen accepts, the Exclusive ENT License Rights pursuant to section 4.1,
then, in addition to the minimum royalty payments made by Collagen pursuant to
Section 5.3, Collagens minimum annual purchase requirements for the Licensed
Products (wherein the first Period (Year 1) commences the day after completion
by ArthroCare of the first milestone (1) in Article 5.1) for each Period will
total at least the following:  Period
  
  Minimum Purchase RequirementsYear 1
  
  $
  0.69
  millionYear 2
  
  $
  1.73
  millionYear 3
  
  $
  2.30
  millionYear 4
  
  $
  2.88
  millionYear 5
  
  $
  3.45
  million
  (c)           If ArthroCare offers to Collagen, and Collagen accepts,
the Co-exclusive ENT License Rights pursuant to section 4.2, then, in addition
to the minimum royalty payments made by Collagen pursuant to Section 5.3,
Collagens minimum annual purchase requirements for the Licensed Products
(wherein first Period (Year 1) commences the day after completion by ArthroCare
of the first milestone (1) in Article 5.1) for each Period will total at least
the following:  Period
  
  Minimum Purchase RequirementsYear 1
  
  $
  0.63
  millionYear 2
  
  $
  1.58
  millionYear 3
  
  $
  2.10
  millionYear 4
  
  $
  2.63
  millionYear 5
  
  $
  3.15
  million
  13 
   (d)           After year 5, the minimum annual
purchase requirements for the applicable section 7.5(a), (b) or (c) will
increase by 5% each year thereafter.  (e)           In the event the Agreement is renewed
pursuant to Section 18.1. the minimum annual purchase requirements for each
renewal year will be mutually agreed upon in writing by the parties.  If the new minimums cannot be agreed upon by
the parties, an arbitrator will be appointed by the parties to determine the
new minimums according to Article 21.  (f)            In the event Collagen fails to meet
the minimum purchase requirements for the applicable section 7.5(a), (b) or (c)
by the last day of any Period, ArthroCare has the right to: (i) continue under
the terms of the existing Agreement; or (ii) convert the exclusive licenses
granted in Sections 2.1 and 4.1 into non-exclusive licenses, and the exclusive
distributorship granted in Section 3.1 into a non-exclusive distributorship
(all other terms, including royalties, minimums and pricing to remain the same)
without paying a conversion fee or any other fee.  If ArthroCare has a backorder of at least sixty (60) days for a
Licensed Product during any Period, the minimum purchase requirements for each
Period will be reduced by 110% of the total dollar amount of each such
backorder in terms of the transfer prices to Collagen as set forth in Exhibit
B.  7.6           Collagens Initial Stocking Order.  Collagen has made an initial stocking order
of approximately $1 million of Licensed Products on December 31, 1998.  At Collagens request and at ArthroCares
expense, ArthroCare shall relabel the Licensed Products within this stocking
order according to Collagens specifications and terms and conditions of this
Agreement.  ARTICLE 8  FORECASTS; NO BACKORDERS  8.1           Forecasts.  Commencing no later than thirty (30) days
after the achievement by ArthroCare of milestone
one (1) in section 5.1(b), Collagen shall furnish ArthroCare a 6-month Forecast
with estimated purchase dates and quantities of Licensed Products, and shall
deliver an updated forecast on a rolling basis on the first day of each
month.  Such forecasts shall include
monthly delivery schedules.  Based on
the then current Forecast, ArthroCare will maintain in production capability
and adequate materials and labor to meet the forecasted monthly delivery
schedule for Licensed Products. 
ArthroCare shall release Licensed Products in accordance with the
delivery schedule set forth on the then current Forest; provided, however,
that: (a) Collagen may make changes to the delivery schedule and the quantities
requested on the then current Forecast at any time up to 60 days prior to a
scheduled delivery; (b) in the event that Collagen desires to increase the
volume of any Licensed Products on an Order with less than 60 days notice to
ArthroCare, ArthroCare shall use its best efforts to supply such increased
volume of Licensed Products; and (c) ArthroCare shall not be required to accept
any Order for a Licensed Product to the extent that it is based on a forecast
that shows an increase in the volume of Licensed Product ordered that exceeds
25% of the average volume of such Licensed Product ordered during the preceding
90-day period; provided that (c) shall not apply to the three months following
the Effective Date.  Collagen may place
additional, unforecasted Orders for Licensed  14 
   Products subject to ArthroCares acceptance, which acceptance
shall not be unreasonably withheld. 
Such Forecasts shall create a firm commitment on Collagen to purchase
and on ArthroCare to manufacture and supply Licensed Products according to the
forecast for the upcoming two calendar months of such Forecast and shall be
accompanied by an Order for such purchases, but shall not create a binding
obligation on Collagen or ArthroCare for the remainder of such 6-month period.  8.2           No Backorders.  ArthroCare shall plan production schedules
and provide the Licensed Products, without backorders, in accordance with the
Orders, to the extent that such Orders are consistent with the then current
forecast.  At all times during the term
of this Agreement, ArthroCare shall maintain not less than a one-month
inventory of each Licensed Product, calculated based on the previous three
months purchases of such Licensed Products; provided that initial required
stock levels shall be based on Collagens initial forecast.  8.3           Second Source.  In the event that, within any contract Year,
ArthroCare is unable to or fails to meet Collagens requirements for an Adverse
Quantity of Licensed Products as specified in the then-current forecast for two
periods of at least 30 days each, within a period of three months, then
Collagen shall have the right to manufacture the Licensed Products itself or
purchase the Licensed Products from a second source and Collagen shall not owe
ArthroCare the transfer prices described in Exhibit B for any such Licensed
Products manufactured by Collagen or a third party; provided, however, that:
(1) the periods referenced above shall be subject to extension due to Fore
Majeure as referenced in Section 22.12; and provided that (2) before internally
manufacturing or placing a purchase order with any third party for such
Licensed Products, Collagen shall notify ArthroCare, and if ArthroCare is
capable of meeting Collagens requirements within thirty (30) days, Collagen
shall resume is exclusive purchase of Licensed Products from ArthroCare subject
to this Agreement; and provided that (3) this section shall not apply to any
Licensed Products that have not been placed on Collagens forecast pursuant to
Section 8.1 at least six (6) months prior to the delivery date of said Licensed
Products.  If Collagen internally
manufactures the Licensed Products or purchases Licensed Products from a second
source, then Collagen shall pay to ArthroCare running royalties on the Licensed
Products sold by Collagen and not manufactured by ArthroCare pursuant to this
section.  The running royalties for
Licensed Products shall be the greater of 10% of the transfer price of the
Licensed Products as specified in Exhibit B or 10% of the Net Sales of the
Licensed Products.  In such event,
Collagen shall not pay any transfer prices for Licensed Products not
manufactured by ArthroCare.  If Collagen obtains in the right to
manufacture the Licensed Products itself or purchase the Licensed Products from
a second source under section 8.3, and if: (1) ArthroCare is able to fill all
such backorders for the Licensed Products ordered by Collagen that led to
Collagens acquisition of such rights as described above; and (2) ArthroCare
builds a non-month inventory of such Licensed Products based on the average
volume of such Licensed Products ordered during the preceding ninety (90) day
period, then Collagen will continue to have the right to manufacture the
Licensed Products itself or purchase the Licensed Products from a second
source; provided that Collagen shall pay increased running royalties for each
Licensed Product not manufactured by ArthroCare.  The increased running royalties shall be the greater of 30% of the
transfer price of the Disposable Wands as specified in Exhibit B or 30% of the
Net Sales of  15 
   Disposable Wands and the greater of 20% of
the transfer price of the Controllers as specified in Exhibit B or 20% of the
Net Sales of Controllers.  Notwithstanding
the foregoing, the parties acknowledge and agree that they shall cooperate with
one another to assure sufficient source of Licensed Products to Collagen and
its customers.  ARTICLE 9  PAYMENTS  9.1           Prices.  All prices shall be F.C.A. ArthroCares
facility currently located at the address listed for ArthroCare at the
beginning of this Agreement (F.C.A. Point). ArthroCare may, upon thirty (30)
days notice to Collagen, designate another facility as the F.C.A. Point.  The difference between Collagen's purchase
price and Collagens price to its Customers shall be Collagens sole
remuneration for the sale of the Licensed Products shall be forth in Exhibit B
attached hereto.  Collagens sales
prices to its customer shall be subject to Collagens sole discretion.  9.2           Taxes.  Collagens purchase shall not include any
government taxes (including, without limitation, sales, use, excise,
withholding, and value-added taxes) or duties imposed by any governmental
agency that are applicable to the export, import, license or purchase of the
Licensed Product (other than taxes on the income of ArthroCare), and Collagen
shall bear all such taxes and duties. 
When ArthroCare has the legal obligation to collect and/or pay such
taxes, the appropriate amounts shall be added to Collagens invoice and paid by
Collagen, unless Collagen provide ArthroCare with a valid tax exemption
certificate authorized by the appropriate taxing authority.  9.3           Invoicing. ArthroCare shall
submit an invoice to Collagen upon the shipment of each Licensed Product
ordered by Collagen.  Each such shall
state Collagens aggregate and unit purchase price for Licensed Products in a
given shipment, plus any freight, taxes or other costs incident to the purchase
or shipment initially paid by ArthroCare but to be borne by Collagen hereunder.  9.4           Payments and Terms.  Collagen shall make payments to ArthroCare
under this Agreement by wire transfer or check in United States dollars in
immediately available funds to a bank designated by ArthroCare.  Payments shall be made (i) in the case of
Collagen purchases of Licensed Products, net thirty (30) days after the date of
invoice and (ii) in the case of running royalties, net forty-five (45) after
the last day of each quarter.  Collagen
shall use its best efforts to submit a royalty schedule to ArthroCare for
preceding quarter within ten (10) days after the last day of such quarter.  9.5           Shipping.  All Licensed Products delivered pursuant to
the terms of this Agreement shall be suitably packed for shipment in
ArthroCares standard shipping cartons, marked for shipment at Collagens
address set forth above (unless otherwise agreed in writing by both parties),
and delivered to Collagen or its carrier agent at the F.C.A. Point, at which
time risk of loss shall pass to Collagen. 
The Licensed Products will be produced to the final saleable form with
Collagen's trade address, tradenames, and all language compliant labeling,
instructions for  16 
   use and carton labeling affixed by
ArthroCare.  Unless otherwise instructed
in writing by Collagen, ArthroCare shall select the carrier.  Collagen agrees to undertake all import
formalities required to import the Licensed Products into the territory.  All customs, freight, insurance, and other
shipping expenses, as well as any special packing expense, shall be paid by
Collagen.  Collagen shall also bear all
applicable taxes, duties, and similar charges that may be assessed against the Licensed
Products after delivery to the carrier at the F.C.A. Point.  All shipments and freight charges shall be
deemed correct unless ArthroCare receives from Collagen, no later than
forty-five (45) days after shipping date of a given shipment, a written notice
specifying the shipment, the purchase order number, and the exact nature of the
discrepancy between the order and shipment or discrepancy in the freight cost,
as applicable.  9.6           Records: Audit.  Collagen shall keep complete, true and
accurate books of account and records for the purpose of determining the
amounts payable under Article 5 and Exhibit B. 
Such books and records shall be kept at Collagens principal place of
business for at least three (3) years following the end of the calendar quarter
to which they pertain.  Such records will
be open for inspection during such three (3) year period by a representative or
agent of ArthroCare for the purpose of auditing sales and inventory records and
for verifying the amounts payable under Article 5.  Upon prior written notice, Collagen shall provide reasonable
access to such records during the normal business hours at Collagens business
locations, no more than twice each calendar year.  9.7           Returns.  Except as set forth in Section 10.3,
Collagen may return Licensed Products only with ArthroCares prior written
approval.  Licensed Products returned to
ArthroCare other than under Section 10.3 shall be returned F.C.A. the
destination point designated by ArthroCare and shall be subject to a restocking
fee in an amount equal to ten percent (10%) of the price paid by Collagen to
ArthroCare for such Licensed Products computed in accordance with Exhibit B.  ARTICLE 10  WARRANTY  10.1         Standard Limited Warranty.
ArthroCare warrants to Collagen that, subject to the exclusions set forth in
Section 10.2 below, at the time of shipment, the Licensed Products (i) shall be
substantially free from defects in material and workmanship for the applicable
warranty period as set forth in Exhibit C hereto; and (ii) shall have been
manufactured in accordance with Current Good Manufacturing Practices
(CGMP).  Collagens exclusive remedy
and ArthroCares sole liability for breach of the foregoing warranty shall be
remedy set forth in Section 10.3.  All
defective Licensed Products shall be returned to ArthroCare in accordance with
Section 10.3.  Collagen shall not pass
on to its Customers a warranty or limitation of liability which its more
protective of such Customers than the warranty (including the limited remedy
and exclusions) set forth in this Article 10 and the limitation of liability
set forth in Article 19.  17 
   10.2         Warranty Limitation.  The warranties in Section 10.1 are
contingent upon proper use of Licensed Products in the applications for which
they were intended, and ArthroCare makes no warranty (express, implied or
statutory) for Licensed Products or spare parts that have been modified or
altered in any manner by anyone other than ArthroCare, or to defects caused (i)
through no fault of ArthroCare during the shipment to or from Collagen; (ii) by
the use or operation in an application or environment other than that intended
or recommended by ArthroCare; (iii) by service by anyone other than employees
of, or persons approved in writing by, ArthroCare; or (iv) by accident,
negligence, misuse, or unusual physical or electrical stress. ArthroCare shall
not be liable for misbranding with respect to any product labeling or package
insert text provided or used by Collagen, or any translation thereof.  10.3         Return of Defective Product.  In the event that any Licensed Product
purchased by Collagen from ArthroCare fails to conform to the warranty set
forth in Section 10.1, ArthroCares sole and exclusive liability and Collagens
exclusive remedy shall be, at ArthroCare sole election, to repair or replace
the Licensed Products, provided that Collagen promptly notifies ArthroCare in
writing that such Licensed Products failed to conform and furnishes a detailed
explanation of any legal nonconformity and requests a return material
authorization number.  10.4         Exclusion of Other Warranties.  Except for the limited warranty provided in
section 10.1 above, ArthroCare grants no other warranties or conditions,
express or implied, by statute, in any communications with Collagen or the customer,
or otherwise, regarding the Licensed Products, their fitness for any purposes,
their quality or their merchantability.  ARTICLE 11  ADDITIONAL OBLIGATIONS OF COLLAGEN  11.1         Registration, Licenses and Permits.
ArthroCare, at ArthroCares expense, shall obtain all Marketing Authorizations
required for sale and distribution of the Licensed Products.  With the exception of these Marketing
Authorization, Collagen, at Collagens expense, shall obtain all other regulations,
licenses and permits (such as import licenses and the like) required by any
country or other jurisdiction for sale and distribution of the Licensed
Products.  All such Marketing
Authorizations, registrations, licenses and permits, whether obtained by
ArthroCare or Collagen, shall be obtained in ArthroCares name, if allowed by
the law of the relevant jurisdiction. 
Collagen shall provide to ArthroCare complete copies of all
applications, and all registrations, licenses and permits obtained therefrom
relating to the Licensed Products.  Upon
the expiration, cancellation, or termination of this Agreement, all Marketing
Authorizations, registrations, approvals, and government authorizations shall
be transferred and delivered to, and shall inure to the benefits of ArthroCare
or its designee, to the extent that this is permissible under applicable law.  18 
   11.2         Product Complaints.  (a)           Collagen will receive locally, and
promptly investigate and monitor, all Customer complaints and/or correspondence
concerning the use of the Licensed Products worldwide.  Collagen will maintain complaints files
during the course of this Agreement, its extensions and for a period of 5 years
thereafter.  (b)           Collagen advise ArthroCare of all
complaints relating to the Licensed Products as promptly as possible but no
more than two (2) business days following the date Collagen receives such
complaint.  In addition, within fifteen
(15) calendar days following the date Collagen receives such complaint,
Collagen shall also provide ArthroCare with a written pt electronic report of
such complaint.  Upon ArthroCares
request, Collagen shall either: (1) investigate and gather ant reasonable
additional information regarding such complaints that is requested by
ArthroCare; or (2) provide ArthroCare with the relevant Customer names, phone
numbers and/or addresses so that ArthroCare may gather this information.  Any notice to ArthroCare under this section
11.2 shall be sent via facsimile and overnight delivery service to the
attention of ArthroCares Vice President of Quality and Regulatory Affairs at
(408) 736-0224 or such other address or person as ArthroCare may designate by
notice.  Collagen shall also provide to
ArthroCare a written quarterly listing of Customer and/or regulatory complaints
received by Collagen during the previous quarter.  (c)           Any and all MDR (FDA CFR §§ 803,804)
near incident or incident (per EC Vigilance requirements) complaints reporting
shall be mutually reviewed prior to submission of the same to the FDA or Competent
Authority. ArthroCares decision to file adverse incident reports shall be
final and any such reports shall be reported in ArthroCares name.  Any reports of substantial unanticipated
adverse effects for injury or potential injury by the Licensed Products shall
be reported to the other party within seven (7) days.  11.3         Corrections, Withdrawals, and Alert
Notices.  In the event that
ArthroCare is required by any regulatory agency to recall the Licensed Products
or if ArthroCare voluntarily initiates a correction, withdrawal of alert notice
for the Licensed Products, Collagen shall, at ArthroCares expense, cooperate
with and assist ArthroCare in locating and retrieving, if necessary, the
recalled Licensed Products from the Customers. ArthroCare shall give prompt
notice to Collagen of any such correction, withdrawal or alert notice, along
with the details of the concern and instructions for the recall.  Except as required by applicable law,
Collagen shall not initiate any correction, withdrawal or alert notice without
the prior written consent of ArthroCare.  11.4         Materials.  Collagen shall, from time to time, copy
ArthroCare on Collagens Green Sheet of Claims for ArthroCares Licensed
Products.  Collagen represents that such
Green Sheet of Claims will be consistent with any and all promotional,
advertising and educational materials and programs, package data sheets, and
other literature relating to the Licensed Products.  Collagen warrants and represents to ArthroCare that all such
promotional, advertising and educational materials and programs, package data
sheets, and other literature relating to the Licensed Products shall be
consistent with the current Marketing Authorizations or other regulatory
approvals.  During the Term of this
Agreement, ArthroCare will have the right, at  19 
   ArthroCares expense, to
conduct an audit of Collagens promotional material for the sole purpose of
determining whether such promotional material complies with this section.  11.5         Product Packaging and Labeling. ArthroCare shall, at ArthroCares expense,
provide with the Licensed Products, any labels, instructions for use and other
support materials used in connection with the sale of the Licensed Products
within the United States.  ArthroCare
shall, at Collagens expense, provide with the Licensed Products translations
of any labels, instructions for use, and other support materials used in
connection with the sale of the Licensed Products outside of the United
States.  Collagen shall not repackage
Licensed Products supplied to Collagen by ArthroCare hereunder without the
prior written consent of ArthroCare.  In
addition, except for the addition of information required by applicable laws
and regulations, Collagen shall not relabel Licensed Products supplied to
Collagen by ArthroCare hereunder without the prior written consent of
ArthroCare.  11.6         Proprietary Notices.  Collagen shall not remove, alter, cover or
obfuscate any logo, trademark notice or other proprietary rights notices placed
or embedded by ArthroCare on or in any package or any of the items contained
therein.  11.7         Reporting Requirements.  Pursuant to the FDAs medical device
reporting (MDR) Regulations, ArthroCare may be required to report to the FDA
information that reasonably suggests that a Licensed Product may have caused or
contributed to death or serious injury or has malfunctioned and that the device
would be likely to cause or contribute to death or serious injury if the
malfunction were to recur.  The parties
hereto agree to supply to the other any such information twenty-four (24) hours
after becoming aware of it so that each can comply with governmental reporting
requirements.  In the event that
ArthroCare is required by any regulatory agency to correct or withdraw the
Licensed Products or if ArthroCare voluntarily initiates such correction or
withdrawal, Collagen shall cooperate with and assist ArthroCare in locating and
retrieving if necessary, the recalled Products from Collagens customers.  Collagen shall maintain all records of
Licensed Products sales to customer by lot number, and/or serial number in the
event of a Licensed Product recall or other quality related issue.  Collagen shall only be required to make such
sales records available to ArthroCare in the event of a Product correction,
withdrawal, alert notice or other quality related issue.  ARTICLE 12  ADDITIONAL OBLIGATIONS OF
ARTHROCARE  12.1         Promotional Materials. ArthroCare shall make available to Collagen
English language samples of promotional support materials, in quantities deemed
reasonable by ArthroCare, at ArthroCares standard charges to distributors for
such items.  Such materials shall
include, without limitation, marketing and technical information concerning the
Licensed Products, brochures, advertising literature, and other product data.  20 
   12.2         Telephone Marketing and Technical
Support.  ArthroCare shall provide a
reasonable level of telephone marketing and technical support to employees of
Collagen who have been trained by ArthroCare and/or customers of Collagen to
answer Collagens questions related to Licensed Products.  ArthroCare agrees to inspect any Licensed
Product delivered by Collagen and to report within reasonable time whether
repair is possible and the materials, time and cost necessary for such
repair.  Upon Collagens request,
ArthroCare shall use best efforts to repair the Licensed Product.  This repair shall be at Collagens cost
(including shipping expenses) unless such repair falls under ArthroCares
limited warranty in section 11.1.  All
such warranty repairs and all service or maintenance repairs shall be performed
to meet and conform to current or latest revisions of the product
specifications.  12.3         Books and Records.  ArthroCare agrees to keep documented records
of all repairs and servicing provided by ArthroCare by product number, serial
number, and description of each Licensed Product and to identify the type of
repair or service completed on the Licensed Product, inclusive of the name of
the individual servicing, the date of the service/repair, and test and
inspection data as required by 21 C.F.R. § Section 820.200.  During the Term and for one (1) year
thereafter, Collagen shall have the right during normal business hours and upon
five (5) days prior written notice to audit such records for the sole purpose
of determining that ArthroCare is meeting such obligations.  12.4         Registrations,
Licenses and Permits.  (a)           ArthroCare shall maintain all
regulatory approvals in ArthroCares name for the marketing of the Licensed
Products for the Term of this Agreement.  (b)           ArthroCare will maintain the
Technical File required by MDD 93/42 EEC (Medical Device Directives), design
history records, device master records, and history records, and the quality
system records for the Licensed Products for the period of time required by the
directives of its Notified Body and other regulatory agencies requirements.  (c)           ArthroCare will maintain for the
period of this Agreement and its extensions a certified quality system in
compliance with and maintain certifications with its Notified Body for valid
standing to CE conformity of its manufacturing facility and the Licensed
Products.  ArthroCare shall use best
efforts to supply to Collagen the information necessary to fulfill any request
by the EC Competent Authority or Notified Body to Collagen for information
contained in the records within the requested time period.  Changes in Specifications, manufacturing,
including change of sterilization process or provider, labeling, or packaging
agreed to by Collagen and ArthroCare may result in amendments to the Technical
File.  ArthroCare will provide to
Collagen a copy of any FDA or other regulatory agency correspondence within
seven (7) days of receipt that is directly relating to the Licensed Products
which are reasonably necessary to Collagens performance under this Agreement
or which could adversely affect Collagen or its Customers.  (d)           ArthroCare understands that Collagen
or any government regulatory agency or third party observers may send
representatives to ArthroCares facility to observe, inspect and audit the
production facilities related to the Licensed Products.  ArthroCare will  21 
   allow such representatives
reasonable access to all manufacturing facilities and records for the Licensed
Products so as to ensure applicable regulations are in compliance. Collagen
will provide at least ten (10) days advance notice of such observation and
provide the names, meeting agenda and provide proper identification of such
representatives.  ArthroCare will use
reasonable commercial efforts to correct any material non-compliance brought to
its attention as a result of such inspections and audits.  ArthroCare also agrees, during the Term of
this Agreement, to allow Collagen access to all clinical and pre-clinical data
involving the Licensed Products for use in the Field.  Collagen understands that ArthroCare or any government regulatory
agency or third party observers may send representatives to Collagen's facility
to observe, inspect and audit promotional, advertising and educational
materials and programs, and other literature relating to reasonable access to
all such promotional literature for the Licensed Products so as to ensure
applicable regulations are in compliance. 
ArthroCare will provide at least ten (10) days advance notice of such
observation and provide the names, meeting agenda and provide proper
identification of such representatives. 
Collagen will use reasonable commercial efforts to correct any material
non-compliance brought to its attention as a result of such inspections and
audits.  ARTICLE 13  ADDITIONAL
COVENANTS OF ARTHROCARE  13.1         Financial Statements. From time
to time as requested by Collagen (but not more frequently than once per
calendar year), ArthroCare will provide Collagen with copies of audited
financial statements and such other information reasonably requested by
Collagen to demonstrate ArthroCares financial ability to perform under this
Agreement.  From time to time as
requested by ArthroCare (but not more frequently than once per calendar year),
Collagen will provide ArthroCare with copies of audited financial statements
and such other information reasonably requested by ArthroCare to demonstrate
Collagens financial ability to perform under this Agreement.  All information provided to either party
under this Section 13.1 will be treated confidentially, unless such information
is otherwise publicly available.  13.2         Exclusivity. Unless otherwise
agreed by the parties, during the term of this Agreement, ArthroCare shall not
be involved with the design, manufacture and/or sale, to or on behalf of any
other person or entity, of any Licensed Products intended for use in procedures
in the Field.  13.3         ArthroCares Assets. With the
exception of standard financing mechanisms, ArthroCare shall not sell,
transfer, assign, pledge, grant a security interest in, or otherwise encumber
or allow any third party to obtain an interest in, any prints, designs, tools,
fixtures, raw materials, moldings or other equipment used or useful in
manufacturing and/or supplying the Products without giving Collagen at least
sixty (60) days prior written notice.  22 
   ARTICLE 14  INTELLECTUAL PROPERTY  14.1         Enforcement. In the event that any Patent Right necessary
for use and sale of a Licensed Products is infringed or misappropriated by a
third party in any country or is subject to a declaratory judgment action
arising from such infringement or misappropriation in such country, or is the
subject of an interference, re-examination, reissue or opposition proceeding,
the party becoming aware thereof shall promptly notify the other party hereto.  ArthroCare shall have the initial right (but
not the obligation), at its expense, to bring suit to abate any infringement or
misappropriation of the Patent Rights, using counsel of its choice.  In addition, ArthroCare shall have the
obligation, at its expense, to take action to abate any commercially
significant infringement or misappropriation of the Patent Rights.  In the event that ArthroCare fails to
initiate a suit to enforce such Patent Rights against a commercially
significant infringement in the Field by a third party within one hundred and
eighty (180) days, Collagen may initiate such suit to abate such infringement
or misappropriation, and the parties shall equally share the expenses
associated therewith; provided, Collagen may not enter into any settlement
without the prior consent of ArthroCare, may not make any statement which
admits that any of the Patent Rights or other intellectual property licensed to
Collagen pursuant to this Agreement are invalid or unenforceable; and provided
that, if ArthroCare informs Collagen, prior to the end of the one hundred and
eighty (180) day period, that ArthroCare is pursuing settlement negotiations
with the third party, Collagen will not have the right to initiate such suit
until such settlement negotiations have concluded.  If Collagen initiates a suit under this section, ArthroCare shall
cooperate with, and provide reasonable support to, Collagens counsel,
including providing ArthroCare personnel or a reasonable amount of deposition
testimony or expert assistance, and, if requested by Collagen, provide copies
of all documents related to such suit. The party involved in any such claim,
suit or preceding, shall keep the other party hereto reasonably informed of the
progress of any such claim, suit or proceeding and each party shall cooperate
reasonably in connection with the pursuit of any such action, at the request
and expense of the party requesting such cooperation.  Any recovery by such party received as a result of any such
claim, suit or proceeding shall be used first to reimburse the parties hereto
for all expenses (including court costs, attorneys and professional fees and
other expenses of all kinds) incurred in connection with such claim, suit or
proceeding.  If the party initiating
suit is ArthroCare, one hundred percent (100%) of the remainder shall be
retained by ArthroCare.  If the party
initiating suit is Collagen, the parties shall equally share any remainder.  14.2         Prosecution of Patent Applications
Collagen will have the right to access, obtain copies, review and comment on
the prosecution of any patent applications directly related to the Patent
Rights within the Field.  ArthroCare
shall cooperate with Collagens patent counsel and, if requested by Collagen,
provide copies of all papers relating to patent applications directly related
to the Patent Rights within the Field. 
ArthroCare will provide a status report on the Patent Rights on a
semi-annual basis.  ArthroCare will
follow the reasonable advice of Collagens patent counsel regarding such prosecution,
and Collagen will have the right to control patent prosecution if patent
applications primarily related to the Field within the Patent Rights are
jeopardized in any country.  In the
event that Collagen elects to control the patent prosecution of any patent
applications under the Patent Rights, Collagen will pay for all costs related
to such  23 
   patent prosecution. ArthroCare shall not
abandon, disclaim, or otherwise jeopardize any Patent Rights primarily related
to the Field. ArthroCare shall use its best efforts to expedite the prosecution
of, establish and maintain Patent Rights related to the Field in all
commercially significant countries, including, but not limited to the United
States, Germany, France and Japan.  14.3         ArthroCare Trademarks.  During the Term of this Agreement, Collagen
shall have the right to advertise and promote the Licensed Products under
ArthroCares trademarks and tradenames initially identified in Exhibit E
(ArthroCare Marks). ArthroCare reserves the right to modify the ArthroCare
Marks or substitute alternative marks for any or all of the ArthroCare Marks at
any time upon thirty (30) days prior written notice. Collagen shall have the
right to use any marketing materials in its possession to depletion. The rights
granted under this Section 14.3 shall automatically terminate on termination or
expiration of this Agreement. During the Term of this Agreement, Collagen
agrees to advertise and promote the Licensed Products using the Coblation.TM
trademark. In addition, Collagen agrees to place the terms manufactured by
ArthroCare on the Licensed Products.  14.4         Limitations.  Except as set forth in this Agreement,
nothing contained in this Agreement shall grant to Collagen any right, title,
or interest in or to the ArthroCare Marks, whether or not specifically
recognized or perfected under applicable laws, and Collagen irrevocably assigns
to ArthroCare all such right, title, and interest, if any, in any ArthroCare
Marks that are used in conjunction with the Licensed Products (other than
Collagen Marks). At no time during or after the Term of this Agreement shall
Collagen challenge or assist others to challenge ArthroCare Marks or the
registration thereof or attempt to register any trademarks, marks, or trade
names confusingly similar to ArthroCare Marks. All representations of
ArthroCare Marks that Collagen intends to use shall first be submitted to
ArthroCare for approval (which shall not be unreasonably withheld) of design, color,
and other details, or shall be exact copies of those used by ArthroCare. In
addition, Collagen shall fully comply with all reasonable guidelines, if any,
communicated by ArthroCare concerning the use of ArthroCare Marks.  14.5         Collagen Trademarks.  During the Term of this Agreement, subject
to the limitations in section 14.3, ArthroCare shall label products sold to
Collagen hereunder with Collagens trademarks and tradenames as specified by
Collagen (the Collagen Marks). Nothing in this Agreement shall be deemed to
grant to ArthroCare any right, title, or interest in or to Collagen Marks. At
no time during or after, the Term of this Agreement shall ArthroCare challenge
or assist others to challenge Collagen Marks or the registration thereof or
attempt to register any trademarks, marks, or tradenames confusingly similar to
Collagen Marks.  14.6         Inventions.  (a)           All ideas, discoveries and
inventions, whether patentable or not, that are related to the Patent Rights
which are conceived by either Collagen or ArthroCare after the Effective Date
and are based on collaborative work between Collagen and ArthroCare shall be
owned by ArthroCare and subject to the exclusive license provided in Section
2.1 of this Agreement.   24 
   (b)           All ideas, discoveries and
inventions, whether patentable or not, which are conceived by ArthroCare after
the Effective Date and are not based on collaborative work between Collagen and
ArthroCare shall be exclusively owned by ArthroCare and subject to the
exclusive license provided in Section 2.1 of this Agreement.  (c)           All ideas, discoveries and
inventions, whether patentable or not, that are related to the Patent Rights
which are conceived by Collagen after the Effective Date and are not based on
collaborative work between Collagen and ArthroCare shall be exclusively owned
by ArthroCare and subject to the exclusive license provided in Section 2.1 of
this Agreement.  (d)           All ideas, discoveries and
inventions, whether patentable or not, that are unrelated to the Patent Rights
which are conceived by Collagen after the Effective Date and are not based on
collaborative work between Collagen and ArthroCare shall be exclusively owned
by Collagen.  14.7         Protection of Intellectual Property
and Improvements.  During the term
of this Agreement, Collagen shall promptly inform ArthroCare of any invention,
improvement, upgrading or modification relating to the Patent Rights.
ArthroCare agrees, at ArthroCares expense, to protect the Patent Rights by obtaining
and maintaining appropriate patent rights. All patents and copyright
registrations shall be applied for in the names of the actual inventors or
authors and shall be assigned to ArthroCare, subject to Collagens rights and
license therein; each party shall, at ArthroCares expense, execute and deliver
such forms of assignment, power of attorney and other documents which are
necessary to give effect to the provisions hereof.  ARTICLE 15  CHANGE IN CONTROL  Each party hereto agrees not to acquire greater
than fifteen percent (15%) of the other partys stock unless such acquisition
is in response to an unsolicited Change in Control attempt by a third party. To
the extent not prohibited under applicable law, each party shall use its best
efforts to give the other party not less than thirty (30) days prior notice of
any unsolicited offer which could result in Change in Control. All such
information will be treated as confidential by the receiving party.
Notwithstanding any Change in Control, each party shall continue to perform its
obligations under this Agreement. Notwithstanding the above, if Collagen is
subject to such a Change in Control by a Change in Control Entity, ArthroCare
will have the right to terminate this agreement and, in such event, Collagens
successor will be paid a termination fee that is the greater of: (1) the
unamortized portion of the License Fees in Sections 5.1, 4.1 and/or 4.2 that
have already been paid to ArthroCare (based on straight line amortization over
ten years); or (2) Collagens revenues on the sale of ArthroCare Products for
the preceding 12 months.  25 
   ARTICLE 16  CONFIDENTIALITY  16.1         Confidential Information.  Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall
not publish or otherwise disclose and shall not use for any purpose except for
the purposes contemplated by this Agreement any Confidential Information
furnished to it by the disclosing party hereto, except that to the extent that
it can be established by the receiving party by written proof that such
Confidential Information:  (i)            was already known
to the receiving party, other than under an obligation of confidentiality, at
the time of disclosure;  (ii)           was available to
the public or otherwise part of the public domain at the time of its disclosure
to the receiving party;  (iii)          became available to
the public or otherwise part of the public domain after its disclosure and
other than through any act or omission of the receiving party in breach of this
Agreement;  (iv)          was subsequently
lawfully disclosed to the receiving party by a person other than a party
hereto; or  (v)           was independently
developed by a person having no knowledge of or access to any of the other
partys Confidential Information.  16.2         Permitted Use and Disclosures.  Each party hereto may use or disclose
information disclosed to it by the other party to the extent such use or
disclosure is reasonably necessary in complying with applicable law or
governmental regulations, conducting clinical trails, or exercising its rights
hereunder to develop or commercialize Licensed Products, provided that if a
party is required to make any such disclosure of another partys confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure and, will use
its best efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or otherwise).  16.3         Confidential Terms.  Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, disclosures may be made as
required by securities or other applicable laws, or to Affiliates, or to a
partys accountants, attorneys and other professional advisors provided that
such accountants, attorneys and other professional advisors are bound to retain
the terms of this Agreement as confidential. Disclosure to prospective
corporate partners or Affiliates is prohibited absent written consent from the
non-disclosing party. Neither party shall issue a press release or other public
announcement concerning this Agreement, the transactions contemplated herein or
the relationship between Collagen and ArthroCare without the prior written
consent of an authorized representative of the other party.  26 
   ARTICLE 17  INDEMNIFICATION  17.1         Indemnification of Collagen.  (a)           ArthroCare shall indemnify, defend,
and hold harmless Collagen, and its affiliates and their respective directors,
officers, employees, and agents, and the successors and assigns of any of the
foregoing (the Collagen Indemnitees) from and against all claims, losses,
costs, and liabilities (including, without limitation, payment of reasonable
attorneys fees and other expenses of litigation), and shall pay any damages
(including settlement amounts) finally awarded with respect to claims, suits,
or proceedings (any of the foregoing, a Claim) brought by third parties
against a Collagen Indemnitee, caused by (i) a failure by ArthroCare to
manufacture the Licensed Products in accordance with the specifications for
such Licensed Products as initially set forth in Exhibit F, (ii) breach of any
representation made by ArthroCare hereunder, (iii) the willful misconduct of
ArthroCare, (iv) a defect in the design of the Licensed Products or (v) a
failure to properly label the Licensed Products, except to the extent such
Claim is covered under Section 17.2 below or is caused by the negligence or
willful misconduct of a Collagen Indemnitee.  (b)           Collagen agrees that ArthroCare has
the right to defend, or at its option to settle, and ArthroCare agrees, at its
own expense, to defend or at its option to settle, any claim, suit or
proceeding brought against Collagen by any third party for: (1) infringement of
any U.S. or foreign patents or copyright or trade secret by the Licensed
Products arising out of or in connection with Collagens performance of this
Agreement; or (2) misappropriation of any trademarks arising out of or in
connection with Collagens use of any ArthroCare Marks in connection with this
Agreement, and ArthroCare agrees to indemnify, defend and hold harmless the
Collagen Indemnitees (as defined in above) from and against any and all claims,
losses, damages, costs and liabilities (including payment of reasonable
attorneys fees and other expenses of litigation) arising from such
infringement and shall pay any damages finally awarded with respect to such a
claim, suit or proceeding. Notwithstanding the provisions of this Section
17.1(b), ArthroCare assumes no liability for (i) any combination of Licensed
Products with other Licensed Products not provided by ArthroCare, which
infringement would not arise from such Licensed Products standing alone, or
(ii) the modification of such Licensed Products by Collagen or any third party
where such infringement would not have occurred but for such modifications.
Notwithstanding the foregoing, if it is adjudicatively determined that any
Licensed Product infringes, or in ArthroCares sole opinion, may be found to
infringe a third partys patent or copyright or constitute misuse of a trade
secret, or if the sale or use of the Licensed Products is enjoined, then
ArthroCare may, at its option and expense either: (i) replace the Licensed
Products with other noninfringing functionally equivalent Licensed Products; or
(ii) modify the Licensed Products to make the Licensed Products to make the
Licensed Products functionally equivalent and noninfringing; or (iii) if (i) -
(ii) are deemed commercially impracticable by ArthroCare, discontinue sale of
such Licensed Products.  THE FOREGOING
PROVISIONS OF THIS SECTION 17.1(b) STATE THE ENTIRE LIABILITY OF ARTHROCARE AND
THE EXCLUSIVE REMEDY OF  27 
   COLLAGEN WITH RESPECT TO ANY ALLEGED
INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY
RIGHTS BY THE LICENSED PRODUCTS OR ANY PART THEREOF  17.2         Indemnification of ArthroCare.  Collagen shall indemnify, defend, and hold
harmless ArthroCare, and its Affiliates and their respective directors,
officers, employees and agents, and the successors, and assigns of any of the
foregoing (the ArthroCare Indemnitees) from and against all claims, losses,
costs, and liabilities (including, without limitation, payment of reasonable
attorneys fees and other expenses of litigation), and shall pay any damages
(including settlement amounts) finally awarded with respect to a Claim brought
by third parties against an ArthroCare Indemnitee, arising out of or relating
to (a) acts or omissions of Collagen in the distribution or marketing of
Licensed Products or other performance by Collagen of its rights or obligations
under this Agreement; (b) breach of any of the representations or warranties
made by Collagen hereunder, or (c) the willful misconduct of Collagen except to
the extent such Claim is covered under Section 17.1 above or is caused by the
negligence or willful misconduct of an ArthroCare Indemnitee.  17.3         Indemnification Procedures.  A party (the Indemnitee) that intends to
claim indemnification under this Article 17 shall promptly notify the other
party (the Indemnitor) in writing of any claim in respect of which the
Indemnitee or any of its directors, officers, employees, agents, licensors,
successors, or assigns intends to claim such indemnification. The parties will
then determine whether complete or partial indemnification is appropriate in
such event. If the parties are unable to mutually agree on whether the
Indemnitee should be completely or partially indemnified by the Indemnitor, the
parties shall appoint an arbitrator to make a binding ruling on this issue. The
arbitrator will be appointed according to Section 21.  If the parties or the arbitrator determine
that indemnification is appropriate, the Indemnitor shall have sole control of
the defense and /or settlement thereof, provided that the indemnified party may
participate in any such proceeding with counsel of its choice at its own
expense. The indemnity agreement in this Article 17 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver written notice to the Indemnitor within a reasonable
time after the commencement of any such action, if prejudicial to its ability
to defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 17, but the omission to so deliver written notice
to the Indemnitor shall not relieve the Indemnitor of any liability that is may
otherwise have to any Indemnitee than under this Article 17. The Indemnitee
under this Article 17, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives and provide full information in the
investigation of any Claim covered by this indemnification. Notwithstanding
anything to the contrary contained in this Article 17, neither party shall be
liable for any costs or expenses incurred without its prior written
authorization.  17.4         Insurance.  ArthroCare shall purchase and maintain in
full force and effect, during the Term hereof, comprehensive general liability
insurance, in an amount not less than $5 million in the aggregate and $1
million per occurrence, and product liability insurance, in  28 
   an amount not less than $5 million in the
aggregate and $5 million per occurrence. ArthroCare shall, upon request from
Collagen from time to time, provide Collagen with certificates of insurance
showing compliance with the foregoing provisions.  ARTICLE 18  TERM, CONVERSION AND TERMINATION  18.1         Term.  The initial Term of this Agreement shall commence on the
Effective Date and continue in force until ten (10) years from January 27, 1999
(the Initial Term), unless terminated earlier under the provisions of this
Article 18. Thereafter, this Agreement will automatically renew for additional
renewal terms of one (1) year (each a Renewal Term), provided that (i)
Collagen has met or exceeded the minimum royalty payments in every Period
specified in Section 5.3; (ii) Collagen has purchased at least the minimum
quantity of Licensed Products from ArthroCare in each Period as specified in
Section 7.5; and (iii) the new minimum running royalty payment and minimum
purchase requirements for each succeeding year of the agreement is mutually
agreed upon in writing by the parties. If the new minimums cannot be agreed
upon by the parties, an arbitrator will be appointed by the parties to
determine the new minimums pursuant to section 21.  18.2         Termination for Cause.  Either ArthroCare or Collagen may terminate
this Agreement by written notice stating each partys intent to terminate in
the event the other shall have breached or defaulted in the performance of any
of its material obligations hereunder, including, but not limited to, a Change
in Control in Collagen by a Change in Control Entity as set forth in Section
15.1 or a breach by Collagen of the provision in Section 3.5, and such default
shall have continued for sixty (60) days after written notice thereof was
provided to the breaching party by the non-breaching party.  18.3         Termination for Bankruptcy.  Either party may terminate this Agreement
effective upon written notice to the other party in the event the other party
declares bankruptcy or becomes the subject of any voluntary or involuntary
proceeding under the U.S. Bankruptcy Code or any state insolvency proceeding,
and such proceeding is not terminated within one hundred twenty (120) days of
its commencement.  18.4         Effect of Termination.  (a)           Accrued Obligations.  Termination shall not relieve either party
of obligations incurred prior to the effective date of such termination.  (b)           Return of Materials.  All trademarks, marks, trade names, patents,
copyrights, designs, drawings, formulas or other data, photographs, samples,
literature, and sales and promotional aids of every kind shall remain the
property of ArthroCare. Within thirty (30) days after the termination or
expiration of this Agreement, Collagen shall destroy all tangible items
bearing, containing, or contained in, any of the foregoing, in its possession
or control and provide written certification of such destruction, or prepare
such tangible items for shipment to ArthroCare, as ArthroCare may direct, at
ArthroCares expense. Collagen shall not make or   29 
   retain any copies of any confidential items
or information which may have been entrusted to it. Effective upon the
termination of this Agreement, Collagen shall cease to use all trademarks and
trade names of ArthroCare and ArthroCare shall cease to use all trademarks and
trade names of Collagen with the limited exception of repurchased Licensed
Products pursuant to Section 18.4(c). During the Term and after any termination
or expiration of this Agreement, ArthroCare shall have the right to continue to
use and disclose for any purpose Customer lists, Customer data and other
Customer information and any and all clinical trial results and other data
relating to the Licensed Products and provided by Collagen to ArthroCare during
the Term.  (c)           Repurchase of Products. In the event
of a termination of this Agreement by either party pursuant to Sections 18.2
and 18.3, ArthroCare shall have the right, but not the obligation, to
repurchase Collagens salable inventory of Licensed Products at the original
sales price with a restocking fee of ten percent (10%). Licensed Products
repurchased from Collagen pursuant to this Section 18.4(c) shall be shipped
promptly by Collagen, at ArthroCares expense, to a location specified by
ArthroCare. In such event, Collagen will allow ArthroCare to sell the
repurchased products with the Collagen Marks thereon.  (d)           Limitation on Liability. In the event
of termination by either party in accordance with any of the provisions of this
Agreement, neither party shall be liable to the other, because of such
termination, for compensation, reimbursement or damages on account of the loss
of prospective profits or anticipated sales or on account of expenditures,
investments, leases, inventory or commitments in connection with the business
or goodwill of ArthroCare or Collagen.  (e)           Transition. Upon termination of this
Agreement, Collagen shall diligently cooperate with ArthroCare to effect a
smooth and orderly transition in the sale of the Licensed Products.  From the time that a notice of termination
is received by either party until the effective termination date, Collagen
shall refer all Product inquiries to ArthroCare, shall support ArthroCares
existing Customers (but shall not sell them new Licensed Products), and shall
cooperate fully with any newly appointed distributors.  (f)            Survival. The provisions of Sections
3.5, 9.4, 9.6, 9.7, 11.1, 11.2, 11.3, 12.3, 14.4, 14.5, 18.4 and 22.1 and
Articles 10, 16, 17, 19 and 21 shall survive the expiration or termination of
this Agreement for any reason. All other rights and obligations of the parties
shall cease upon termination of this Agreement.  18.6         Conversion. In the event
Collagen: (1) fails to meet the minimum royalty amount by the last day of any
Period pursuant to section 5.3; or (2) fails to make the minimum purchase
requirements by the last day of any Period pursuant to Section 7.5, then
ArthroCare has the right to: (i) continue under the terms of the existing
Agreement; or (ii) convert the exclusive licenses granted in Sections 2.1 and
4.1 into non-exclusive licenses, and the exclusive distributorship granted in
Section 3.1 into a non-exclusive distributorship (all other terms, including
royalties, license fees and pricing to remain the same) without paying a
conversion fee or any other fee.  30 
   ARTICLE 19  LIMITED LIABILITY TO COLLAGEN AND OTHERS  WITH THE SOLE EXCEPTION OF ARTICLE 17 AND
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, ARTHROCARES LIABILITY
ARISING OUT OF THIS AGREEMENT AND/OR SALE OF THE LICENSED PRODUCTS SHALL BE
LIMITED TO THE AMOUNT PAID BY COLLAGEN FOR THE PRODUCT.  IN NO EVENT SHALL ARTHROCARE BE LIABLE TO
COLLAGEN OR ANY OTHER ENTITY FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS, LOST
PROFITS, OR ANY OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT WHETHER
BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE.  THESE LIMITATIONS SHALL APPLY WHETHER OR NOT
ARTHROCARE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
HEREIN OR IN THE WARRANTY FOUND IN THE LICENSED PRODUCTS.  ARTICLE 20  REPRESENTATIONS AND WARRANTIES  20.1         Representations and Warranties.  ArthroCare represents and warrants, to the
best of its knowledge, that: (i) it is the sole and exclusive owner of all
right, title and interest in the Patent Rights and the Trademark Rights; (ii)
it has the right to grant the rights and licenses granted herein; and (iii) it
has not previously granted any right, license or interest in and to the Patent
Rights or the Trademark Rights inconsistent with the license granted to
Collagen herein.  20.2         Disclaimer.  Except as expressly provided in this
Agreement, nothing in this Agreement is or shall be construed as: (i) a
warranty or representation by ArthroCare as to the validity or scope of any
claim or patent within the Patent Rights; (ii) a warranty or representation
that anything made, used, sold, or otherwise disposed of under any license
granted in this Agreement is or will be free from infringement of any patent
rights or other intellectual property right of any third party; or (iii)
granting by implication, estoppel, or otherwise any licenses or rights under
patents or other rights of ArthroCare or third parties, regardless of whether
such patents or other rights are dominant or subordinate to any patent within
the Patent Rights.  31 
   ARTICLE 21  ARBITRATION  (a)   If a dispute arises between the parties
relating to the interpretation or performance of this Agreement or the grounds
for the termination thereof, representatives of the parties with
decision-making authority shall meet to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies. If within
sixty (60) days after such meeting the parties have not succeeded in
negotiating a resolution of the dispute, such dispute shall be submitted to
final and binding arbitration under the then current Commercial Arbitration
Rules of the American Arbitration Association (AAA), by one (1) arbitrator in
Santa Clara County, California; provided, however, California Code of Civil
Procedure Section 1283.05 shall apply to any such proceeding. Such arbitrator
shall be selected by the mutual agreement of the parties or, failing such
agreement, shall be selected according to the AAA rules. The parties shall bear
the costs of arbitration equally and shall bear their own expenses, including
professional fees. The decision of the arbitrator shall be final and
non-appealable and may be enforced in any court of competent jurisdiction.  (b)   If a dispute arises between Collagen and/or
ArthroCare and a third party having a contractual distribution relationship
with ArthroCare (hereinafter referred to as the Parties), relating to the
definition of the Field, or whether certain physicians are included within the
Field representatives of the Parties with decision-making authority shall meet
to attempt in good faith to negotiate a resolution of the dispute prior to
pursuing other available remedies. If within sixty (60) days after such meeting
the Parties have not succeeded in negotiating a resolution of the dispute, such
dispute shall be submitted to final and binding arbitration under the then
current Commercial Arbitration Rules of the American Arbitration Association
(AAA), by one (1) arbitrator in Santa Clara County, California; provided,
however, California Code of Civil Procedure Section 1283.05 shall apply to any
such proceeding; and provided that Collagen shall not be bound by any such
arbitrator ruling unless the third party has a similar agreement with
ArthroCare in which the third party would be bound by the arbitrators ruling.
Such arbitrator shall be selected by the mutual agreement of the parties or,
failing such agreement, shall be selected according to the AAA rules. The Parties
shall bear the costs of arbitration equally and shall bear their own expenses,
including professional fees. The decision of the arbitrator shall be final and
non-appealable and may be enforced in any court of competent jurisdiction.  ARTICLE 22  MISCELLANEOUS PROVISIONS  22.1         Governing Law; Venue.  This Agreement and any dispute, including
without limitation any arbitration, arising from the performance or breach
hereof shall be governed by and construed and enforced in accordance with the
laws of the state of California, without reference to conflicts of laws
principles.  32 
   22.2         Assignment.  The parties may not transfer or assign this
Agreement or any of the parties rights or obligations hereunder to any
non-Affiliated person without the written consent of the other party. Any such
attempted transfer or assignment shall be void. This Agreement shall be binding
upon and inure to the benefit of the parties and their present and past agents,
servants, officers, directors, partners, related companies, and the
predecessors, employees, franchisees, trustees, representatives, shareholders,
successors and assigns of each.  22.3         Waiver.  No waiver of any rights, shall be effective
unless consented to in writing by the party to be charged and the waiver of any
breach of default shall not constitute a waiver of any other right hereunder or
any subsequent breach or default.  22.4         Severability.  In the event that any provisions of this
Agreement are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall remain in full force and
effect without said provision.  22.5         Notices.  All notices, requests and other
communications hereunder shall be in writing and shall be personally delivered
or sent by telecopy or other electronic facsimile transmission or by certified
mail-return receipt requested, postage prepaid, or delivered by a nationally
recognized courier who guarantees next-day delivery in each case to the respective
address specified below, or such other address as may be specified in writing
to the other parties hereto:  Collagen:
  
  Collagen Aesthetics, Inc.1850 Embarcadero RoadPalo Alto, California
  94303Attn: Gary S. PetersmeyerFax: (650) 354-4375with a copy to:Charlene a. Friedman, Esq.Collagen Aesthetics, Inc.1850 Embarcadero RoadPalo Alto, California
  94303Fax: (650) 354-4751ArthroCare:
  
  ArthroCare Corporation595 North Pastoria AvenueSunnyvale, California
  94086Attn: Michael A. BakerFax: (408) 732-2752  33 
   with a copy to:John T. Raffle, Esq.ArthroCare Corporation595 North Pastoria AvenueSunnyvale, California
  94086Fax: (408) 530-9143  22.6         Independent Contractors.  Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute ArthroCare or Collagen as partners or joint
venturers with respect to this Agreement. Neither party shall have any express
or implied right or authority to assume or create any obligations on behalf of
or in the name of the other party or to bind the other party to any other
contract, agreement, or undertaking with any third party.  22.7         Patent Marking.  Collagen agrees to mark (or give directions
to ArthroCare to mark) all Licensed Products sold pursuant to this Agreement in
accordance with the applicable statute or regulations relating to patent
marking in the country or countries of manufacture and sale thereof.  22.8         Compliance with Laws.  In performing their respective obligations
under this Agreement, the parties shall fully comply in all material respects
with the requirements of any and all applicable laws, regulations, rules and
orders of any governmental body having jurisdiction over the exercise of rights
under this Agreement.  22.9         Use of Name.  Other than as expressly set forth in this
Agreement or the License Agreement, neither party shall use the name or
trademarks of the other party without the prior written consent of such other
party.  22.10       Entire Agreement: Amendment.  This Agreement constitutes the entire and
exclusive Agreement between the parties with respect to the subject matter
hereof and supersedes and cancels all previous discussions, agreements,
commitments and writings in respect thereof except for the License Agreement.
no amendment or addition to this Agreement shall be effective unless reduced to
writing and executed by the authorized representatives of the parties.  22.11       Counterparts.  This Agreement may be executed in any number
of counterparts and on separate signature pages by each party, each copy of
which shall for all purposes be deemed an original.  34 
   22.12       Force Majeure.  Neither party shall be liable for any
failure to perform or delay in performance hereunder where such failure or
delay is occasioned by circumstances beyond the partys control, including,
without limitation, fire, explosion, storms, interruption of utility services,
strikes or labor disputes, water, acts of God, war, civil disturbances, acts of
civil or military authorities, inability to secure raw materials or
transportation facilities, fuel or energy shortages, acts or omissions of
communications carriers, or other causes beyond the partys control whether or
not similar to the foregoing.  IN
WITNESS WHEREOF, ArthroCare and Collagen have executed this Agreement in
duplicate originals by duly authorized officers.  ARTHROCARE CORPORATION
  COLLAGEN AESTHETICS INC.By:
  /s/ Michael A. Baker
  
  By:
  /s/ Michael A. BatesPrint Name:
  /s/ Michael A. Baker
  
  Print Name:
  /s/ Michael A. BatesTitle:
  President & CEO
  
  Title:
  VP Finance & CFO
  35 
   Exhibit
A  Patent
Rights  File No.
  
  Application #
  
  Patent #016238-000100US
  
  07/204,668
  
  4,998,933C-1
  
  06/10/88
  
  03/12/91016238-000110US
  
  07/260,320
  
  5,178,620C-2
  
  02/22/91
  
  01/12/9307/817,575016238-000400US
  
  01/07/92016238-000410US
  
  07/958,977
  
  5,366,443C-3
  
  10/09/92
  
  11/22/9408/059,681016238-000420US
  
  05/10/93016238-000430US
  
  08/111,367
  
  5,419,767C-4
  
  08/24/93
  
  05/30/95016238-000440US
  
  08/446,767
  
  5,697,909A-1
  
  06/02/95
  
  12/16/97016238-000450US
  
  08/419886
  
  5,681,282U-1
  
  04/11/95
  
  10/28/97016238-000460US
  
  08/807,111A-1-1
  
  12/05/96016238-000470US
  
  08/761,096A-1-2
  
  12/05/96016238-000480US
  
  08/766,382A-1-3
  
  12/05/96016238-000490US
  
  08/760,768
  
  5,766,153A-1-4
  
  12/05/96
  
  06/16/98016238-000600US
  
  08/485,219
  
  5,697,281E-1
  
  06/07/95
  
  12/16/97016238-000610US
  
  08/746,800
  
  5,697,536E-1-1
  
  11/18/96
  
  12/16/97016238-000700US
  
  08/561,958
  
  5,697,882A-2
  
  11/22/95
  
  12/16/97016238-000710US
  
  08/562,332D-1
  
  11/22/95016238-000720US
  
  08/562,331
  
  5,683,366C-5
  
  11/22/95
  
  11/04/97016238-000740US
  
  08/795,686A-2-1
  
  02/05/97016238-001300US
  
  08/942,580A-3
  
  10/02/97016238-001310US
  
  08/942,579A-4
  
  10/02/97016238-001600US
  
  08/687,792
  
  5,843,019U-2
  
  07/18/96
  
  12/01/98016238-001610US
  
  08/690,159S-1
  
  07/18/96016238-001620US
  
  08/687,008
  
  5,810,764U-3
  
  07/18/96
  
  09/22/9816238-001640US
  
  08/970,239S-1-1
  
  11/14/97016238-001650US
  
  08/970,242U-3-1
  
  11/14/97016238-002200US
  
  08/753,227C-6
  
  11/22/96016238-002210US
  
  08/753,226
  
  5,860,951C-7
  
  11/22/96
  
  01/19/98016238-005600US
  
  08/874,173C-8
  
  06/13/97
  
   Exhibit
A  Patent
Rights  File No.
  
  Application #
  
  Patent #016238-006100us
  
  60/057,691C-9P
  
  08/27/97016238-007300US
  
  60/062,996A-6P
  
  10/23/97016238-007400US
  
  60/062,997A-5P
  
  10/23/9709/026,852A-1-5
  
  02/20/9809/041,934A-1-6
  
  03/13/9809/098,205A-2-2
  
  07/27/9809/134,542A-2-3
  
  08/13/9809/177,861A-2-4
  
  10/23/9809/010,382A-6
  
  01/21/9809/197,013A-6-1
  
  11/20/9860/096,150A-7P
  
  08/11/9809/089,012A-9
  
  06/02/9809/183,838A-13
  
  10/30/9809/002,254C-6-1
  
  12/31/9709/054,660C-6-2
  
  04/03/9809/062,869C-8-1
  
  04/20/9809/002,315C-9
  
  01/02/9860/079,922C-10P
  
  03/30/9809/083,533C-10-1
  
  05/22/9809/109,219CB-1
  
  06/30/9860/075,059CB-2P
  
  02/18/9809/058,571CB-2
  
  04/10/9809/032,375CB-3
  
  02/27/9809/058,336CB-4
  
  04/10/9860/098,122CB-7P
  
  08/27/9808/977,845D-2
  
  11/25/9708/978,340D-3
  
  11/25/9709/162,110D-7
  
  09/02/98
  
   Exhibit
A  Patent
Rights  File No
  
  Application #
  
  Patent #09/162,117D-8
  
  09/28/9809/205,640D-9
  
  12/03/9808/990,374E-3
  
  12/15/9709/083,526E-3-1
  
  05/22/9809/054,323E-5
  
  04/02/9809/074,020E-6
  
  05/06/9809/136,079E-7
  
  08/18/9809/181,936S-1-2
  
  10/28/9809/026,698S-2
  
  02/20/9809/026,851S-3
  
  02/20/9809/130,804S-4
  
  08/07/98
    EXHIBIT B  PRODUCT
PRICES  Licensed
  Product
  
  Price Per UnitControllers
  
  $
  6000Disposable Wands*
  
  See
  belowCables/Handpieces
  
  $
  400Adaptors**
  
  $
  1000***  Disposable Wand Transfer
Price:  Type Of Disposable
  
  PriceXL Rejuvenation Stylets
  
  $
  100SRS Rejuvenation Stylets
  
  $
  90MicroElectrode Dissectors
  
  $
  75  *The above transfer prices for Disposable
Wands will be reduced by 5% at the end of each year following ArthroCares
achievement of milestone (1) in Section 5.1; provided that the transfer price
of a Disposable Wand will never be lower than 110% of the fully allocated cost
of the Disposable Wand.  **Adaptors are devices that connect to
controllers that are not subject to this Agreement, and will allow such
controllers to power the above Disposable Wands.  ***In addition to the above transfer price for
Adaptors, Collagen shall pay to ArthroCare running royalties on Adaptors sold
by Collagen worldwide.  The running
royalties for all Adaptors sold worldwide shall be the greater of 20% of the
Transfer Price of the Adaptors as specified above or 20% of the Net Sales of
Adaptors, payable within forty-five (45) days after the close of a calendar
quarter in which the Adaptors are sold or otherwise distributed by Collagen.  36 
   EXHIBIT C  WARRANTY
PERIODS  Product
  
  PeriodController
  
  1 year from the date of
  Collagen saleCable/Handpiece
  
  30 days from the date of
  Collagen saleDisposable Wands
  
  single use of Product onlyAdaptors
  
  90 days from the date of
  Collagen sale  37 
   EXHIBIT D  COLLAGENS
ALTERNATIVE PRODUCTS  AS
OF THE EFFECTIVE DATE: NONE  38 
   EXHIBIT E  U.S.
TRADEMARK RIGHTS  Trademark
  
  Application No.COBLATION
  
  75/377,654PLASMA WAND
  
  75/521,613VISAGE
  
  75/434,553PLASMA SCALPEL
  
  75/478,775MED
  
  75/589,095Trademark
  
  Registration
  No.ARTHROCARE
  
  2,015,686  39 
   EXHIBIT F  SPECIFICATIONS  40