AMENDED AND RESTATED
                                              JOINT VENTURE AGREEMENT


     THIS AMENDED AND RESTATED  JOINT VENTURE  AGREEMENT  (the  "Agreement")  is
entered into as of the _____ day of August,  1997, by and between WRIGHT MEDICAL
TECHNOLOGY,  INC., a Delaware corporation,  having offices at 5677 Airline Road,
Arlington,  Tennessee 38002 ("Wright") and TISSUE ENGINEERING,  INC., a Delaware
corporation,  having  offices  at The  Fargo  Building,  451 D  Street,  Boston,
Massachusetts 02210 (the "Company").

     WHEREAS,   the  Company  has  developed  and  owns  technology  to  produce
collagen-based scaffolds which can be used, among other things, for ligament and
tendon  reconstruction,  for  cartilage  regeneration,  and for use with calcium
phosphate/sulfate as a bone graft substitute  (collectively,  the "Technology");
and

     WHEREAS,  Wright  and the  Company  agreed,  pursuant  to a  Joint  Venture
Agreement  dated July 12, 1996,  (the  "Original  Agreement")  to form a jointly
owned Delaware limited  liability company (the "LLC") for the purpose of broadly
commercializing  products for use in the treatment of  musculoskeletal  problems
based on the Technology (the "Products"); and

     WHEREAS,  the  partners  are  entering  into this  Agreement to clarify and
correct certain ambiguities in the Original Agreement;

     NOW,  THEREFORE,  in consideration of the premises and actual covenants set
forth  herein and for other good and  valuable  consideration,  the  receipt and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereby  agree as
follows:

     SECTION 1. AMENDMENT. The Original Agreement is hereby amended and restated
in its entirety by this Agreement.

     SECTION 2.  DEFINITIONS.  The  following  definitions  shall  apply to this
Agreement:

     "Additional  Note"  shall  have the  meaning  given to it in  Section  4(C)
hereof.

     "Approved Marketing Expenses" for any period shall mean the total amount of
marketing  expenses  mutually  agreed  upon by Wright and the  Company  for such
period  when  Products  become  available  for  marketing  (i.e.,  Food and Drug
Administration approval of the first Product). Within thirty (30) days following
the end of each Contract Year,

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Wright shall provide the LLC with a written  reconciliation  of actual marketing
expenses and the  Approved  Marketing  Expenses for such year.  In the event the
actual marketing expenses do not exceed the Approved Marketing Expenses that had
been  returned  to Wright  that  year,  the  difference  shall be added to Gross
Billings for the month in which the reconciliation is presented. Wright shall be
solely  responsible for any actual  marketing  expenses that exceed the Approved
Marketing Expenses for any year.

     "Approved  R&D  Expenses"  for any period  shall  mean the total  amount of
research and development expenses mutually agreed upon by Wright and the Company
for such  period,  either by  separate  agreement  or as included in a Budget as
defined below.  Within thirty (30) days following the end of each Contract Year,
the  Company  shall  provide  the LLC with a  written  reconciliation  of actual
research and  development  expenses and the Approved R&D Expenses for such year.
In the event that the actual research and development expenses do not exceed the
Approved R&D  Expenses  that had been  returned to the Company  that year,  such
difference  shall  be  added  to Gross  Billings  for the  month  in  which  the
reconciliation  is presented.  The Company shall be solely  responsible  for any
actual research and  development  expenses that exceed the Approved R&D Expenses
for any  year,  unless  provision  is made by the  LLC  for  such  research  and
development Expenses and for other mutually agreed upon research and development
expenses to be paid by funds raised by the LLC.

     "Budget" shall mean the annual budget of the LLC approved by Wright and the
Company,  which shall include,  among other things, budgets for sales forecasts,
Approved  Marketing  Expenses,  Approved  R&D  Expenses,  intellectual  property
development,  patent  prosecution and  maintenance  expenses,  pre-clinical  and
clinical costs and expenses,  administrative and accounting  expenses;  provided
that the initial budget for the LLC is attached hereto as Exhibit D.

     "CGS" shall mean the Company's  actual fully  absorbed costs to manufacture
each Product sold.

     "Commissions"  shall mean the actual sales commissions to be paid by Wright
on the sale of the Products.

     "Contract Year" shall mean each twelve month period commencing on January 1
and ending on December 31;  provided that the first Contract Year shall commence
upon execution of this Agreement and end on December 31, 1996.

     "Expenses" shall mean (1) Commissions;  provided,  however, that in any one
month period those Commissions may not exceed twenty percent

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(20%) of the Gross  Billings;  (2) the CGS;  (3)  Approved  Marketing  Expenses;
provided,  however, that such marketing expenses shall cease to be deducted when
the aggregate  Approved  Marketing Expenses for a given year have been repaid to
Wright;  (4) Wright's shipping costs for Products sold if such costs are able to
be billed by Wright to the  customer and if not  otherwise  included in CGS; (5)
Approved  R&D  Expenses,   manufacturing  scale-up  and  manufacturing  expenses
incurred by the Company;  (6) all costs and expenses of Wright  associated  with
pre-clinical  animal  studies and clinical  studies;  and (7) any other expenses
that Wright and the Company agree to deduct.

     "Field"  shall mean the field of  musculoskeletal  applications,  excluding
dental applications.

     "Formation Date" shall have the meaning given to it in Section 4(A) hereof.

     "Gross Billings" shall mean the sum of (1) the gross sales price charged by
Wright,  (2) excess  Approved  Marketing  Expenses  and (3) excess  Approved R&D
Expenses.

     "Initial  Note"  shall  have the  meaning  given to it in  Section  4(B)(1)
hereof.

     "License"  shall mean the royalty free,  exclusive  and  perpetual  license
granted by the Company for the Technology for use in the musculoskeletal  field,
excluding  dental  applications,  to the LLC  pursuant  to a  license  agreement
substantially in the form of Exhibit A attached hereto.

     "Net Profit" for any period shall mean the aggregate  Gross  Billings minus
Expenses.

     "Proprietary Information" shall mean any information of either party or the
LLC that might  reasonably  be  considered  proprietary,  secret,  sensitive  or
private,  including  but not limited to: (a)  technical  information,  know-how,
data,   techniques,   discoveries,   inventions,   ideas,   unpublished   patent
applications,  trade secrets,  formulae,  analyses,  laboratory  reports,  other
reports, financial information, studies, findings, or other information relating
to the LLC or the Technology or methods or techniques  used by the LLC,  whether
or not contained in samples, documents, sketches,  photographs,  drawings, lists
and the like;  (b) data and other  information  employed in connection  with the
marketing of the Products,  including cost  information,  business  policies and
procedures,  revenues and markets, distributors and customers, and similar items
of  information  whether  or  not  contained  in  documents  or  other  tangible
materials; or (c) any

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other  information  obtained  by any  party to this  Agreement  during  the term
hereof, that is not generally known to, and not readily  ascertainable by proper
means by, third parties.


     SECTION 3. PURPOSE OF THE LLC. The LLC will be established  for the purpose
of commercializing products in the Field based on the Technology. It is expected
that the LLC initially will focus a large share of its efforts  toward  products
that can be  manufactured  using the Technology and  commercialized  in the near
future.  It is also expected that an appropriate  balance of longer term product
opportunities will be maintained,  working to develop commercializable products.
The parties  hereto  agree to  negotiate in good faith to enter into one or more
additional  LLC  agreements  in the  event  transactions  contemplated  by  this
Agreement result in additional product ideas.


         SECTION 4.        FORMATION OF LLC; FURTHER CAPITAL CONTRIBUTIONS;
                           ADDITIONAL AGREEMENTS OF THE PARTIES.

     A. As soon as practicable  following the execution of this  Agreement,  the
parties hereto shall cause the LLC to be formed as a limited  liability  company
pursuant  to the laws of the  State  of  Delaware  by  entering  into a  Limited
Liability  Company  Agreement  (the  "Charter").  The  date  of such  filing  is
hereinafter referred to as the "Formation Date". To the extent that there is any
conflict  between the terms of the Charter and the terms of this Agreement,  the
terms of this Agreement shall control.

     B. On the Formation Date:

     1.  Wright  shall  contribute  to  the  LLC  (a)  initial   administrative,
accounting  and legal  support in order to create  the LLC and (b) a  promissory
note in the amount of $1,500,000 (the "Initial Note"),  which Initial Note shall
be drawn down on demand by the LLC in  accordance  with the Budget,  in exchange
for  issuance by the LLC on the  Formation  Date of 49% of the  validly  issued,
fully  paid and  nonassessable  shares of  capital  stock of the LLC  issued and
outstanding on the Formation Date.

     2. The Company shall contribute to the LLC the License to the Technology in
exchange  for  issuance by the LLC on the  Formation  Date of 51% of the validly
issued,  fully paid and nonassessable  shares of capital stock of the LLC issued
and outstanding on the Formation Date.


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     3.  Wright and the Company  shall  execute an  interest  holders  agreement
substantially in the form of Exhibit B attached hereto.

     C. Wright hereby agrees to make  additional  funding  contributions  to the
LLC, in furtherance of the LLC, in the amount of $1,500,000 on each of the first
and second annual  anniversary  of the Formation  Date;  provided that each such
obligation  shall be satisfied by delivering to the LLC a promissory note in the
amount of $1,500,000 (the "Additional Note"). To the extent that the LLC is able
to raise its own capital, or arrange for its own financing, Wright shall be able
to  charge  the LLC  reasonable  fees  reflecting  its fully  absorbed  cost for
providing  administrative,  accounting,  legal,  regulatory and clinical support
provided to the LLC and, in addition to the  research and  development  provided
pursuant to the Budget for the first  three  years,  beginning  on the four year
anniversary  of the  execution of this  Agreement,  the Company shall be able to
charge the LLC for  research  and  development  support  and  support of product
manufacturing at normal commercial rates for such services.

     D. The Company hereby agrees to grant to Wright an irrevocable voting proxy
for that number of shares of capital  stock of the LLC equal to 1% of the issued
and  outstanding  stock of the LLC on the Formation Date, it being the intent of
the parties  hereto that the Company and Wright each have a right to vote 50% of
the issued and  outstanding  stock of the LLC at all times;  provided,  however,
that in the event that Wright is a party to any agreement that prohibits it from
exercising  such voting  proxy,  such proxy  shall be granted to an  independent
third party  mutually  acceptable to both Wright and the Company;  and provided,
further,  that  Wright  shall have the option to purchase  such 1% interest  for
$1.00 at anytime following the Formation Date.  Furthermore,  the Company hereby
agrees to take all action  necessary to ensure that any such proxy  continues in
perpetuity, including without limitation, executing subsequent voting proxy upon
the  expiration of any existing proxy under  applicable  Delaware law or, at the
request of Wright,  entering into a voting trust to effectuate  the purposes set
forth in this Section 4(D).


         SECTION 5.        CORPORATE GOVERNANCE; MANAGEMENT.

     A. Except as  otherwise  required  by law or as  provided  in the  Charter,
responsibility  for the  management,  direction  and control of the LLC shall be
vested in the managers of the LLC. The Charter shall provide for the election of
four managers.



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     B. The managers of the LLC shall be elected  annually at annual meetings of
the members of the LLC. It is understood  and agreed by the parties  hereto that
two of the managers of the LLC shall be individuals  nominated by Wright and two
of the managers of the LLC shall be individuals  nominated by the Company.  Each
of the parties  hereto  covenants  and agrees to vote its shares of stock of the
LLC to cause the  election of the  managers  nominated  in  accordance  with the
foregoing.  In the event of the death,  incapacity,  resignation or removal of a
manager prior to the end of his or her term,  each of the parties  hereto agrees
to vote its shares of stock so as to appoint as his or her replacement a manager
nominated by the party hereto who nominated the manager whose death, incapacity,
resignation or removal was the cause of such vacancy.

     C. Wright and the Company shall take all actions  necessary or  appropriate
to ensure that the Charter  accurately  reflects the  arrangements  set forth in
this Section 5.

     D. The  management of the LLC shall be comprised of officers  designated by
the managers of the LLC. Each of the parties hereto hereby  covenants and agrees
to cause the  managers of the LLC  nominated  by it to cast their votes so as to
appoint as  officers of the LLC  individuals  who  qualify  under the  foregoing
provisions of this Section 5(D). In the event of death, incapacity,  resignation
or other removal of an officer prior to the end of his or her term,  each of the
parties  hereto  agrees to cause the directors of the LLC to cast their votes so
as to  appoint  his or her  replacement  a  nominee  who  qualifies  under  said
foregoing provisions of this Section 5(D).

     E.  Notwithstanding  anything to the contrary contained herein, the parties
hereto  hereby  agree to use their best efforts to avoid the  occurrence  of any
deadlock and further  agree to use their best efforts to resolve any deadlock as
expeditiously as possible.

     F. The  parties  hereto  agree that the  managers  of the LLC shall meet at
least  once each  calendar  quarter  at such time and  place  acceptable  to all
managers, and at each annual meeting of the managers, an annual operating Budget
of the LLC shall be adopted.

     G. If the parties are unable to agree at any managers'  meeting to act upon
a resolution  approving the LLC's annual operating plan and Budget,  the parties
hereto agree that a top-level meeting be convened between the parties,  attended
by corporate officers of each party with decision-making authority regarding the
dispute,  in order to  attempt  in good faith to  resolve  the  matter.  At such
meeting  each of the  parties  hereto  will use its best  efforts to resolve the
deadlock and such meeting shall continue until a resolution is achieved.

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         SECTION 6.        RESEARCH AND DEVELOPMENT ACTIVITIES.

     A. Wright will use its best efforts to obtain  regulatory  approval to sell
and distribute  the Products.  In connection  therewith,  Wright and the Company
will meet,  discuss and formulate a plan for Wright to fund pre-clinical  animal
studies and clinical  trials to be conducted by the LLC,  which funding shall be
reimbursed  pursuant to Section  4(c)  hereof.  Wright and the Company  agree to
establish a clinical trials committee (the "CTC"),  comprised equally of members
from Wright and the  Company.  The CTC will design and  supervise  the  clinical
trials and shall have the full  authority to direct the conduct of such clinical
trials. The CTC will operate by consensus,  however, in the event the members of
the CTC cannot  unanimously  agree upon any given  matter  (other  than  matters
related to the funding of the clinical trials), such matter shall be referred to
and  resolved  by an  oversight  committee  comprised  of  an  equal  number  of
independent members from the respective scientific advisory boards of Wright and
the Company.

     B.  Wright  agrees  that it shall use  commercially  reasonable  efforts to
assist  and  consult  with  the  LLC  with  respect  to  financial,  accounting,
regulatory, engineering and manufacturing matters relating to the Products.

     C. The LLC shall use the Company  exclusively  for research and development
services.  In providing  such services,  the Company shall retain  employees and
consultants  and purchase such  equipment  and supplies in  accordance  with the
Budget  and for its own  account.  The  Company  shall  be  reimbursed  for such
expenditures,  as well as for overhead and other  expenditures  set forth in the
Budget,  in  accordance  with the  Budget.  In the event the  Company  ceases to
provide such research and  development  services,  the LLC shall be permitted to
find alternatives sources of research and development services.

     D. (1) After the fourth  anniversary of this  Agreement,  the Company shall
provide research and development  services to the LLC and (2) upon  commencement
of production of any Products, the Company shall provide manufacturing services,
each on financial terms to be mutually  agreed upon by the Company,  the LLC and
Wright.

         SECTION 7.        DISTRIBUTION RIGHTS; INTELLECTUAL PROPERTY
                           RIGHTS.

     A. In furtherance of the LLC, the Company hereby agrees to cause the LLC to
grant and  convey to Wright the  world-wide  exclusive  rights to sell,  market,
distribute  and conduct all  incidental  and necessary  activities  thereto with
respect to the Products pursuant to

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a distribution agreement substantially in the form of Exhibit C attached hereto.

     B. The  Company  shall  own all  patents  associated  with the  Technology;
provided that the Company  hereby grants the LLC a  royalty-free  license to the
Company's  intellectual  property to the extent  necessary to make, use and sell
any Product,  including without  limitation,  any and all patents and registered
trademarks,  which  license  shall be exclusive  for  musculoskeletal  use. Such
license shall  automatically  transfer to any successors in interest of the LLC.
Wright shall have the right to develop and own trademarks and tradenames for the
sale of the Product;  provided that Wright shall undertake to acknowledge in any
Product  literature  that the  Company  participated  in the  invention  of such
Product.  Any intellectual  property  developed by either party, or by any third
party,  pursuant to work  commissioned as an Approved R&D Expense shall be owned
by the LLC.  Patent  prosecution  and  maintenance  costs  associated  with such
intellectual  property  shall  be  paid by the  LLC.  Research  and  development
conducted by either party, independent of this Agreement, or not commissioned as
an Approved R&D Expense,  and the intellectual  property  associated  therewith,
shall be owned by the party conducting such research and development.

     SECTION 8. PROFIT SHARING; SALES; FORECASTS, ETC.

     A. Profit  Sharing.  The LLC shall pay each of Wright and the Company fifty
percent  (50%) of all Net Profits,  if any, on the sale of any  Products  during
each month; provided that, if in any month Expenses exceed Gross Billings,  such
excess  Expenses shall be carried forward and deducted in the following month on
a pro rata basis  consistent  with the percentage of Expenses  incurred and paid
that month to Wright and the Company  respectively.  The Net Profit  calculation
shall be  conducted  by  Wright,  and the LLC shall  tender  any  payment to the
Company  and  Wright,  or in the case of  Wright,  reduce  the  Initial  Note or
Additional Notes, within 90 days of the end of each month.

     B. Sales.  Wright hereby agrees to use commercially  reasonable  efforts to
promote the Products in accordance with the Budgets.

     C.  Forecasts.  Wright shall provide  quarterly  sales  forecasts that will
include its best forecast for sales in the  succeeding  three (3) months as well
as projected sales for the succeeding twelve (12) months.

     D. Orders and  Receivables.  Wright shall take all orders for the Products.
Upon notification from Wright, the Company shall be

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responsible for promptly  delivering  such Products  directly to the customer or
Wright,  as directed by Wright from time to time.  The Company shall provide the
Product  packaged  and sterile  according  to Wright's  packaging  instructions.
Wright shall be responsible  for all billing and  collections.  Freight shall be
shipped  F.O.B.  the  Company  and shall be added by Wright to all  billings  to
customers, if acceptable to the marketplace.

     SECTION 9. ACCOUNTING AND GENERAL REPORTING.

     A. The  accounting  period of the LLC shall  commence  on January 1 of each
year end on December 31 of the  following;  provided  that the first  accounting
period of the LLC shall  commence as of the date this  Agreement is executed and
end on the next following December 31.

     B. Wright shall be responsible for keeping all books and records of the LLC
in accordance with sound and generally accepted accounting principles applicable
to the LLC and corporate practices  consistently applied.  Wright shall make and
keep books, records and accounts that in reasonable detail accurately and fairly
reflect the transactions of the LLC.

     C. Wright shall prepare monthly,  quarterly and annual financial statements
of the LLC.  Such  financial  statements  shall be prepared in  accordance  with
generally accepted accounting principles. Wright shall submit such statements to
the  Company as soon as  practicable  (but not later than 45 days in the case of
monthly and  quarterly  financial  statements  and 90 days in the case of annual
financial statements) after the end of each period.

     D. Each party  shall have the right,  upon 10 days  notice,  to inspect the
financial  records  of the other  party  and the LLC only as they  relate to the
calculation of Expenses  (including without  limitation,  commissions,  Approved
Marketing   Expenses  and  Approved  R&D  Expenses),   Gross  Billings  and  the
calculation of Net Profit.  All materials reviewed and all materials prepared by
the other party based upon the audit shall remain  confidential  and not be used
for any purpose other the operation or enforcement of this Agreement.

     SECTION 10. PROPRIETARY INFORMATION.

     A.  All  business,   technical,  research  and  development  and  financial
information and materials  containing such business information  provided by the
parties  to each  other,  including  without   limitation,   lists of present or
prospective  customers  or vendors  or of persons  that have or shall have dealt
with the respective  parties  hereto,  customer  requirements,  preferences  and
methods of operation,
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management  information  reports and other computer generated  reports,  pricing
policies  and  details,  details of  contracts,  operational  methods,  plans or
strategies,  business  acquisition  plans,  new  personnel   acquisition  plans,
product  information and samples,  technology,  know-how,  patent  applications,
designs and other  business,  technical,  research and development and financial
affairs  learned   heretofore  or  hereafter,   are  and  shall  be  treated  as
confidential.  Each party  agrees  for  itself  and on behalf of its  directors,
officers,  employees  and  agents to whom such  information  and  materials  are
disclosed,   that  it  and  they  shall  keep  such  information  and  materials
confidential  and retain them in strictest  confidence both during and after the
term of this Agreement. Such information and materials shall not be disclosed by
either party to any person except to its officers and employees  requiring  such
information  or materials to perform  services  pursuant to this  Agreement  and
except to other  persons  under a  confidentiality  agreement  with either party
protecting such information from disclosure.  Each party acknowledges and agrees
that it shall be liable to the other for  damages  caused by any  breach of this
provision  or by  any  unauthorized  disclosure  or  use  of  such  confidential
information and materials by its officers and employees or third parties to whom
unauthorized  disclosure  was made.  In addition to any other rights or remedies
that may be available to each party, each party shall be entitled to appropriate
injunctive relief or specific  performance against the other or its officers and
employees to prevent  unauthorized disclosure of such  confidential  information
and materials or other breach of this  provision.  Each party  acknowledges  and
agrees that such unauthorized  disclosure or other breach of this provision will
cause  irreparable  injury to the other  party and that money  damages  will not
provide an adequate  remedy.  Each party  shall be entitled to recover  from the
other its costs,  expenses and attorneys'  fees incurred in enforcing its rights
under this Section 9. Each party shall return to the other all such  information
and  materials  covered  under  this  Section 9 and  received  pursuant  to this
Agreement  and all  copies  thereof  immediately  upon the  termination  of this
Agreement.

     B. This  obligation of  confidentiality  shall not apply to any information
that (1) was known to the receiving party at the time of receipt as evidenced by
tangible  records;  (2) was in the  public  domain at the time of  receipt;  (3)
becomes  publicly  available  through no fault of the party obligated to keep it
confidential;  (4) such party  legitimately  learns  from third  parties who are
under no obligation of confidentiality  with respect to the information;  or (5)
is required by applicable law or court order or other mandatory legal process to
be disclosed.



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     C. The  provisions  of this  Section 10 shall  survive  the  termination or
expiration of this Agreement.

     SECTION 11. OPERATION OF THE LLC.

     A. The Company shall provide the LLC with product  research and development
services,  engineering  support,  patent  services,  as well as manufacture  the
Products  for sale by the LLC,  all  pursuant  to the  Budget  of  Approved  R&D
Expenses.  As set forth in the  Budget,  the  Company  hereby  agrees to provide
continuing  research and development  support necessary to meet customer demand,
technological  advances and as may reasonably be requested by the LLC or Wright,
and  employees of the Company  shall be regularly  available to consult and work
with the LLC and Wright on such  research  and  development.  In  addition,  the
Company shall  manufacture and supply all Products  necessary for the conduct of
the LLC's business; provided that the LLC may use an alternative manufacturer or
supplier that it determines is more cost effective than the Company. In order to
receive the  necessary  funding for the conduct of all Approved R&D Expenses and
all other  Expenses  set forth in the  Budget,  the LLC shall be allowed to draw
down upon the Initial Note on the first of each month an advance of $100,000, to
be used to fund  Approved R&D Expenses of the LLC.  Within seven days  following
the end of each calendar month,  the Company shall provide a  reconciliation  of
the previous month's Approved R&D Expenses. This advance shall be transferred by
wire directly to a segregated non-commingle  operating account of the Company by
the 1st of the month. If during any month the  reconciliation  reflects a credit
balance in excess of $10,000,  or if a large purchase is  anticipated  exceeding
$10,000,  this  monthly  advance  amount may be adjusted  accordingly  by mutual
agreement between Wright and the Company.

     B. Wright shall provide the LLC with  administrative  services,  accounting
services and marketing service, all pursuant to the Budget of Approved Marketing
Expenses.  In  addition,  Wright  shall  be  fully  responsible  for any and all
regulatory  approvals necessary for the public sale and marketing of the Product
and all labeling and warnings associated with the Product.  The Company promptly
shall provide  Wright notice of any and all claims from third parties  regarding
any of the  Products,  including  events that may be  reportable as an under any
current or future Food and Drug  Administration  MDR (medical device  reporting)
regulations.  Upon  request,  Wright shall  consult with the Company  regarding,
and/or provide the Company with proof of any regulatory approvals.  In order for
Wright and the Company to be  reimbursed  for expenses  detailed in Section 3(C)
hereof,  and for those  Approved  Marketing  Expenses and all other Expenses set
forth in the Budget,  Wright and the Company  shall provide the LLC with monthly
invoices, which invoices shall set forth in reasonable detail the

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services provided and which shall be paid within 15 days of receipt by the LLC.

     C. Wright shall be the exclusive distributor of all Products,  and shall be
entitled  to  distribute   the  Products  in   a  manner  consistent  with   the
distribution of its own products.

     D. The LLC shall be managed  in  accordance  with its  Budget and  detailed
business  plans.  In  accordance  with  the  initial  Budget,  the LLC  shall be
permitted  to draw  down the  Initial  Note  upon  demand  in  amounts  equal to
approximately  $800,000  for direct  expenses  and  approximately  $700,000  for
indirect  expenses.  In  addition,  the LLC shall be permitted to draw down upon
each Additional Note in amounts necessary to fund operations.

  SECTION 12. COVENANTS OF THE PARTIES.

     A. Except as otherwise  expressly  provided herein,  all costs and expenses
incurred in connection  with the preparation and execution of this Agreement and
the transactions  contemplated hereby, including without limitation,  attorneys'
fees and advisors'  fees, if any, will be paid by the party incurring such costs
and expenses.

     B. Each of the parties hereby agree to use all reasonable  efforts to take,
or cause to be taken,  all  actions  and to do, or cause to be done,  all things
necessary,  proper or advisable under  applicable laws, rules and regulations to
consummate and make effective the  transactions  contemplated by this Agreement,
including without limitation,  any state or federal regulatory  filings.  In the
event that at any time after the execution of this Agreement,  further action is
necessary or desirable to carry out the purposes of this  Agreement,  the proper
officers or directors of each of the parties shall take such necessary action.

     C. Upon execution of this  Agreement,  and continuing  during its term, the
Company  shall provide the LLC access to, or copies of, all documents and things
in the Company's  control which relate to the Products and are necessary for the
LLC to conduct its business, including without limitation,  obtaining regulatory
approval for any Product.

     D. The Company hereby agrees to use its reasonable  efforts during the term
of this  Agreement to actively  seek to develop the Products and to make prudent
and  efficient use of the Initial Note and  Additional  Note, as well as its own
research and  development  expenditures.   As used in this  Agreement,  the term
"best efforts"  shall mean the  commercially  reasonable  efforts that a prudent
person desiring to
                                                  Page 108 of 119

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achieve a  particular  result  would use in order to ensure  that such result is
achieved as expeditiously as possible.

     E. Each of the parties  hereto  hereby  agrees to at all times  conduct its
efforts  hereunder in strict compliance with all applicable  federal,  state and
local laws and regulations and with the highest government standards.

     F. Each of the  parties  hereto  hereby  agrees to use its best  efforts to
arrange for independent financing for the LLC; provided,  that in the event that
the LLC obtains such independent  financing,  the parties hereto hereby agree to
cause the LLC to distribute the first  $1,000,000 of any such proceeds to Wright
as a return of its Initial Note.

     SECTION 13. LIABILITY.

     A. The Company shall indemnify and hold harmless Wright from all liability,
damages, costs and expenses (including reasonable attorneys' fees) incurred as a
result of any claims, actions, judgments  and demands for injuries to persons or
property  arising  from  any and all  design  or  manufacturing  defects  in the
Products (collectively,  a "Claim"), and for any conduct of the Company, but not
for claims,  actions,  judgments,  and demands arising from Wright's negligence,
gross  negligence,   or  willful   misconduct  with  respect  to  the  sale  and
distribution of Products.

     B. Wright  shall  indemnify  and hold  harmless  the Company from any Claim
arising from Wright's negligence,  gross negligence,  or willful misconduct with
respect to the sale and distribution of Products.

     C. The  provisions of  paragraphs  13(A) and 13(B) hereof shall survive the
expiration and any termination of this Agreement.

     D.  Upon  commercialization  of  Products,  the LLC shall  carry  liability
insurance regarding the Products in an amount consistent with industry practice,
and each of the Company and Wright shall carry  commercially  reasonable amounts
of insurance commensurate with their respective obligations under this Agreement
(including without limitation,  its indemnification  obligations) and support of
the LLC's operations.

     E. With respect to any actual or potential  Claim or demand or commencement
of any  action,  or the  occurrence  of any other  event,  relating to any Claim
against which a party hereto is indemnified (the

                                                  Page 109 of 119

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"Indemnified  Party") by the other party (the  "Indemnifying  Party") under this
Section 13:

     1. Promptly after the Indemnified  Party first receives  written  documents
pertaining  to the Claim,  or if such Claim does not involve a third party Claim
(a "Third Party Claim"),  promptly after the Indemnified  Party first has actual
knowledge  of such  Claim,  the  Indemnified  Party  shall  give  notice  to the
Indemnifying  Party of such  Claim in  reasonable  detail,  stating  the  amount
involved, if known, together with copies of any such written documentation.

     2. The  Indemnifying  Party  shall  have no  obligation  to  indemnify  the
Indemnified  Party with respect to any Claim if the  Indemnified  Party fails to
give the notice with respect thereto in accordance with this Section 13.

     3. If the Claim involves a Third Party Claim,  then the Indemnifying  Party
shall  have  the  right,  at its  sole  cost,  expense  and  ultimate  liability
regardless  of the outcome,  and through  counsel of its choice  (which  counsel
shall be reasonably satisfactory to the Indemnified Party), to litigate, defend,
settle or  otherwise  attempt  to  resolve  such Third  Party  Claim;  provided,
however,  that if in the Indemnified  Party's reasonable  judgment a conflict of
interest may exist between the Indemnified Party and the Indemnifying Party with
respect to such Third Party Claim,  then the Indemnified Party shall be entitled
to  select  counsel  of   its  own  choosing,  reasonably  satisfactory  to  the
Indemnifying  Party, in which event the Indemnifying Party shall be obligated to
pay the  reasonable  fees and  expenses  of such  counsel.  Notwithstanding  the
preceding  sentence,  the  Indemnified  Party may elect,  at any time and at the
Indemnified Party's sole cost, expense and ultimate liability, regardless of the
outcome,  and through  counsel of its choice,  to  litigate,  defend,  settle or
otherwise attempt to resolve such Third Party Claim. If the Indemnified Party so
elects (for reasons other than the  Indemnifying  Party's  failure or refusal to
provide a defense to such Third Party Claim),  then the Indemnifying Party shall
have no  obligation  to  indemnify  the Indemnified  Party  with respect to such
Third Party Claim, but such disposition will  be without  prejudice to any other
right the Indemnified Party may have to  indemnification  under this Section 13,
regardless of the outcome of such Third Party Claim. If the  Indemnifying  Party
fails or  refuses  to  provide a  defense  to any Third  Party  Claim,  then the
Indemnified  Party shall have the right to undertake the defense,  compromise or
settlement of such Third Party Claim,  through counsel of its choice,  on behalf
of and for  the  account  and at the  risk of the  Indemnifying  Party,  and the
Indemnifying Party shall be obligated to pay the costs,  expenses and reasonable
attorneys' fees incurred by the Indemnified  Party in connection with such Third
Party Claim. In any

                                                  Page 110 of 119

<PAGE>


event,  Wright and the Company shall fully  cooperate  with each other and their
respective counsel in connection with any such litigation,  defense,  settlement
or other attempted resolution.

     SECTION 14. TERM AND TERMINATION.

     A. The term of the Agreement  shall commence as of the date of execution of
this Agreement and unless this agreement is terminated  earlier  pursuant to the
provisions hereof or otherwise, shall expire upon dissolution of the LLC. During
the term that this Agreement remains in effect, the Company and Wright agree not
to sell or distribute  any other product line similar to the Products for use in
the Field without the consent of the other party;  provided,  however, that this
restriction shall not apply to any product line incidentally  acquired by either
company through the purchase of another entity and  subsequently  contributed to
the LLC,  Wright's  ownership  interest in  OsteoBiologics,  Inc. or the sale or
distribution by Wright of products developed by OsteoBiologics, Inc.

     B. In addition to other events of termination  set forth in this Agreement,
this Agreement shall terminate in the following events:

     1. If either party  breaches a material term or provision of this Agreement
and the  breaching  party fails to cure the breach  within 180 days after notice
thereof,  the  non-breaching  party  may  terminate  this  Agreement,  with such
termination effective upon expiration  of the 180 day period.

     2. If any  governmental  authority  limits  the  ability  of the LLC or the
Company to manufacture or the LLC or Wright to sell the Products in any material
respect,  either party may terminate  this Agreement by giving written notice of
termination for such reason to the other party, such termination to be effective
upon the giving of such notice.

     C. Upon the expiration or termination of this Agreement,  Wright shall have
no right to order or  purchase  Products  from the  Company or the LLC,  but may
dispose of its  inventory  of the Products  through  normal  channels.  Upon the
termination of this Agreement, all intellectual  property owned by either party,
but licensed to the LLC, shall,  subject to the terms of any applicable  license
agreement, remain property of the respective party.

     SECTION 15. MISCELLANEOUS.

     A. Should any provision of this Agreement be determined by a
                                                  Page 111 of 119

<PAGE>



court having  jurisdiction over the parties and the subject matter to be illegal
or unenforceable in such jurisdiction, the parties agree that such determination
shall not affect or impair the validity or  enforceability  of such provision in
any other jurisdiction or the validity or enforceability of any other provision.
The  determination  by a court  having  jurisdiction  over the  parties  and the
subject matter that any provision of this Agreement is illegal or  unenforceable
in such jurisdiction shall also not affect the validity or enforceability of the
other provisions of the Agreement in that jurisdiction.

     B.  If a  claim  for  indemnification  arises  under  this  Agreement,  the
Indemnified Party shall give the Indemnifying Party prompt written notice of any
event  which might give rise to  a claim for  indemnification,  specifying   the
nature of the  possible  claim and the amount  believed to be  involved.  If the
claim for indemnification  arises from a claim or dispute with any third person,
the  Indemnifying  Party  shall have the right,  at its own  expense,  to defend
and/or settle such claim or dispute,  and the Indemnified  Party shall generally
cooperate  fully  in any  such  defense,  but at no  out-of-pocket  cost  to the
Indemnified Party.

     C. In the event that  either  party is unable to carry out its  obligations
under this Agreement due to force majeure (including,  without limitation,  acts
of God; war;  riot;  fire;  flood;  explosion;  labor  disputes;  embargoes;  or
unavailability or shortages of raw materials, bulk, equipment or transport), the
failure so to perform  shall be excused and not  constitute a default  hereunder
during the  continuation of the  intervention  of such force majeure.  The party
affected  by  such  force  majeure  shall  resume  performance  as  promptly  as
practicable  after such force majeure has been eliminated.  Notwith standing the
foregoing,  in the event  either  party is  unable to carry out its  obligations
hereunder by reason of such force majeure for a period of 180 days or more, than
either party may at any time thereafter  during the  continuation  of such force
majeure  terminate  this  Agreement upon notice to the other party setting forth
the circumstances of such force majeure.

     D. This  Agreement is binding upon and inures to the benefit of the parties
hereto and their respective permitted successors and assigns.

     E. This Agreement,  including the Exhibits annexed hereto,  constitutes the
entire agreement between the parties with reference to the subject matter hereof
and  supersedes  all  previous   agreements,   representations,   memoranda  and
undertakings whether verbal or written,  between the parties with respect to the
subject matter hereof and may not be changed  without the written consent of the
parties.
                                                  Page 112 of 119

<PAGE>



     F. Except as provided for in Section  5(G),  any  disputes  regarding  this
Agreement between the parties shall be settled by binding  arbitration under the
rules of the American  Arbitration  Association.  Each party shall pick a single
temporary  arbitrator  which   two  arbitrators  will  then  choose  the  single
arbitrator  before whom the dispute  shall be heard.  The dispute shall be heard
before  that  single arbitrator  in  Memphis,  Tennessee,  if  initiated  by the
Company and in Boston, Massachusetts, if initiated by Wright.

     G. All  notices and reports  required or  permitted  to be given under this
Agreement  shall be deemed  validly  given and made if in writing and  delivered
personally  (as of such  delivery)  or sent by  registered  or  certified  mail,
postage prepaid, return receipt re quested (as of ten (10) days after deposit in
the mail) or sent by facsimile or overnight courier service, charges prepaid (as
of the date of  confirmed  receipt)  to the party to be  notified in care of its
General Counsel at its address (or facsimile number if sent by facsimile)  first
set forth above.  Either  party may, by notice to the other,  change its address
and facsimile number for receiving such notices or reports.

     H. This Agreement shall be construed in accordance with and governed by the
laws of Tennessee without regard to its principles of conflicts of laws.

     I. Nothing contained in this Agreement shall be deemed to constitute either
party as the agent for the other,  or to establish a fiduciary  relationship  of
any kind between the parties.

                                                  Page 113 of 119

<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Agreement as of the day and year first above written.


                                     WRIGHT MEDICAL TECHNOLOGY, INC.


                                     By: /s/Lewis H. Ferguson, III

                                     Name: Lewis H. Ferguson

                                     Title: Senior Vice President



                                     TISSUE ENGINEERING, INC.


                                     By: /s/Eugene Bell

                                     Name: Eugene Bell

                                     Title: CEO & President


                                                  Page 114 of 119