Document:

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                                                                   Exhibit 10.17

                             DISTRIBUTION AGREEMENT

THIS AGREEMENT is between Oratec Interventions, Inc., a California corporation,
with its principal place of business at 3700 Haven Court, Menlo Park, California
94025, hereinafter referred to a "Oratec" and DePuy AcroMed, Inc., an Ohio
corportion with offices at 3303 Carnegie Ave., Cleveland, Ohio 44115 hereinafter
referred to as "DePuy," effective as of the 30 day of March, 1999 (the
"Effective Date").

WHEREAS, Oratec has developed, prototyped, and/or manufactured and verified
clinically products used to apply heat to the spine to denervate and shrink
spinal disc tissue, as further described herein; and

WHEREAS, DePuy has developed an extensive worldwide distribution capability and
desires to distribute the Products to surgeons worldwide, with the exception of
the united States; and

WHEREAS, Oratec desires to contract with DePuy to assist Oratec in conducting
selected clinical evaluations with surgeons outside the United States and in
obtaining regulatory approval for the Products outside the United States, and to
exclusively market, distribute and sell the Products, as further described
herein; and

WHEREAS, DePuy is willing to contract with Oratec to assist Oratec in conducting
such selected clinical evaluations, obtaining regulatory approval outside the
Untied States and to exclusively market, distribute and sell the Products;

NOW, THEREFORE, in consideration of the mutual covenants set forth below, the
parties agree as follows:

1.   DEFINITIONS

     1.1  "Products" shall mean all Oratec products developed, designed,
          intended or sold for the spine or neurosurgery markets for use by any
          medical practitioner, including any improvements or variations
          thereto.  The SpineCATH Intradiscal Catheter Product including any
          modification thereto, may not be sold into any other medical or
          surgical specialty without the prior written consent of DePuy.  All
          such Products currently in existence are listed on Appendix A.
          Appendix A shall be modified in writing as additional Products,
          including improvements and variations thereto, become available.

     1.2  "New Products" means those Oratec products developed, designed,
          intended or sold for the spine or neurosurgery markets for use by any
          medical practitioner which perform a significantly different function
          or perform in a significantly different manner from Products.

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*** Certain information in this document has been omitted and filed separately
    with the Securities Exchange Commission. Confidential Treatment has been
    requested with respect to the omitted portions.

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     1.3  "Specifications" shall mean the detailed written specifications for a
          Product in such form as Oratec shall provide and DePuy shall accept.

     1.4  "Territory" shall mean the entire world, excluding the United States.

2.   APPOINTMENT OF DEPUY AS EXCLUSIVE DISTRIBUTOR

     2.1  Oratec hereby grants DePuy the exclusive right to market, sell and
          distribute the Products in the Territory.

     2.2  Provided Oratec has first offered the New Products to DePuy and DePuy
          has declined the opportunity to market the New Products, Oratec may
          freely negotiate with other parties to market the New Products.  DePuy
          shall have ninety (90) days within which to accept or reject any such
          opportunity to market New Products.  In the case in which Oratec had
          first offered the New Products to DePuy and the parties were unable to
          negotiate mutually acceptable terms, Oratec is free to contact with
          other parties provided Oratec does not accept terms inferior to
          DePuy's last offer.  In the case in which the third party's offered
          terms are equal to or inferior to DePuy's last offer, Oratec will
          contract with DePuy under the terms of DePuy's last offer.

     2.3  If a third party appointed by Oratec to sell Oratec products for non-
          spine applications sells such products for spine applications within
          the Territory, Oratec shall take all reasonable steps to prevent such
          occurrences by said third party.  Sales by third parties resulting
          form such occurrences shall be applied toward DePuy's minimum purchase
          requirements.  DePuy shall not sell the Products for non-spine
          applications.  If a Distributor appointed by DePuy to sell the
          Products sells such Products for non-spine applications within the
          Territory, DePuy shall take all reasonable steps to prevent such
          occurrences by said Distributor.

3.   MUTUAL COOPERATION

     3.1  It is the parties intention to cooperate and communicate regarding the
          development and marketing of the Products.  The parties agree to make
          reasonable efforts to share general information received by either
          party on the Products and competitive activities.

4.   INTELLECTUAL PROPERTY

     4.1  Any and all technology and intellectual property developed by Oratec
          used in development or manufacture of a Product shall be the property
          of Oratec.  Oratec shall have sole responsibility for filing and
          maintaining any and all patents and patent applications which address
          or cover its Products.

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5.   ORATEC'S COVENANTS

     5.1  Oratec hereby agrees to supply the Products to DePuy in accordance
          with the terms set forth in this Agreement.

     5.2  Oratec will work actively to make available in sufficient quantities
          Products that meet mutually agreed upon specifications to meet DePuy's
          requirements; provided that, shipment of all orders by Oratec shall be
          on a "first in, first out" inventory basis, and may be subject to
          delays due to transportation difficulties, government regulations,
          inability to obtain new materials, and other circumstances beyond
          Oratec's control.

     5.3  Oratec will extend technical assistance to DePuy as DePuy may
          reasonably request to assist in the marketing and sale of the Products
          at periodic intervals to be agreed upon by Oratec and DePuy.  The
          parties will agree upon a mutually acceptable technical training
          program.

     5.4  Oratec will provide training to the DePuy sales force on the proper
          use of the Products at times and places mutually agreed upon by the
          parties throughout the duration of this Agreement.

     5.5  Oratec will use commercially reasonable efforts to obtain FDA
          approval, including 510(k) approval, ISO 9000 Certification and obtain
          CE marking(s) for each Product prior to the sale to DePuy of such
          Product.

     5.6  Oratec agrees to cooperate with DePuy and supply DePuy with any
          information required by DePuy to allow DePuy to respond to or comply
          with any inquiry or regulation from any foreign government agency
          regarding the use, marketing, sales or distribution of Products.

     5.7  Oratec will as soon as possible after receipt of notice advise DePuy
          of any claim, complaint, suit or action involving any Product sold by
          DePuy or involving DePuy's marketing, sale or distribution of the
          Products if such claim, complaint, suit or action relates to a Product
          performance issue or could have a potential adverse impact on DePuy.

     5.8  Oratec shall sell DePuy a reasonable number of demonstration samples
          of Products at the cost specified in Appendix B, for use by the DePuy
          sales force for customer presentations, for presentations at seminars,
          meetings, conventions and the like.  The samples will be marked "For
          demonstration only, not for human use."

6.   ORATEC'S REPRESENTATIONS AND WARRANTIES

     6.1  Oratec shall have full title and full right to manufacture all
          Products sold to DePuy hereunder.

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     6.2  Oratec represents and warrants that to the best of Oratec's knowledge,
          as of the date of this Agreement, the distribution, marketing,
          promotion and sale of Products by DePuy will not infringe any patents
          held by persons who are not parties to this Agreement.

     6.3  To Oratec's knowledge, there are no licenses or other agreements
          relating to the Products that would affect Oratec's ability to
          manufacture and deliver the Products or substantially equivalent
          products and none are contemplated or anticipated by Oratec, except
          for an agreement now in place with Oratec's vendor for generators.

     6.4  All necessary governmental approvals required by the federal, state
          and/or local governments of the United States for the Products will
          have been obtained by Oratec prior to the sale of the Products to or
          by DePuy, and will be obtained by Oratec should the need arise in the
          future.

     6.5  To Oratec's knowledge, all Products comprising each shipment or other
          delivery made to DePuy are and, at all times, will be as of the date
          of such shipment or delivery, in compliance with all applicable United
          States laws, as well as all regulations, rules, declarations,
          interpretations and orders issued thereunder.

     6.6  To Oratec's knowledge, no Product is in violation of any United States
          law, statute, executive order or regulation regarding packaging,
          labeling, manufacturing, distribution, or sale.  Oratec shall use
          commercially reasonable efforts to comply with any applicable foreign
          law, statute, executive order or regulation regarding, packaging,
          labeling, manufacturing, distribution, or sale made known to Oratec.

     6.7  Oratec has no pre-existing distribution or other arrangements
          concerning the Products in any country located within the Territory
          that would affect DePuy's ability to sell the Products in the
          Territory or DePuy's right to select and appoint Distributors or
          affiliates to sell the Products in the Territory.

7.   PACKAGING AND LABELING

     7.1  DePuy will use the Oratec trademark in marketing the Products unless
          prohibited by law or regulation.  DePuy will acknowledge Oratec and
          its patent pending or patented technology in Product promotional
          materials.  DePuy shall not modify any Oratec trademark in any way
          without Oratec's prior written approval or use any Oratec trademark
          with any goods or services other than the Products.

     7.2  During the term of this Agreement, the parties may, at their option,
          indicate on signs, advertising, publicity, or other sales, marketing,
          or promotional media or materials that DePuy is the authorized dealer
          or distributor of the Products for spine applications.  Neither party
          shall otherwise use the other party's name,

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          trademarks, service marks, trade names, commercial symbols or logos
          without having received the other party's prior written approval.

     7.3  Upon termination of this Agreement, each party's license in or right
          to use the other party's name, trademarks, services marks, trade
          names, commercial symbols or logos shall terminate, except that DePuy
          shall have the right to continue such use with respect to any
          inventory of Products not purchased by Oratec as provided by Section
          20.1.

     7.4  Oratec will provide the Products to DePuy sterile and in standard
          packaging.  In the event that Oratec's sterilization processes or
          standard product packaging is unacceptable to any regulatory or
          government agency, Oratec shall modify its sterilization processes
          and/or standard product packaging to comply with the requirements of
          such regulatory or government agency.  The parties shall evaluate the
          costs associated with any such required modifications by country,
          comparing the country sales forecast with extraordinary costs that
          Oratec would have to incur.

8.   DEPUY'S COVENANTS

     8.1  DePuy hereby agrees to sell the Products through its marketing and
          sales distribution network comprised of independent sales
          representatives (the "Distributors"), through employees who specialize
          in geographical regions or in designated professional fields, or
          through affiliated companies, provided that any such affiliated
          company is not a competitor of Oratec.  DePuy shall have the right to
          select and appoint all Distributors and affiliates to market and sell
          the Products in the Territory.  While DePuy has exclusive distribution
          rights in the Territory under this Agreement, DePuy will obtain the
          Products for sale in the Territory only from Oratec.

     8.2  Depuy will actively promote the Products and will provide its
          Distributors and employees with the following:

          1.  Product samples
          2.  Appropriate training related to Products
          3.  Exposure of Products at appropriate training courses and
              conventions

     8.3  Provided the Products are available in adequate quantities, DePuy will
          work to market the Products by including them as important promotional
          Products for its Distributors in 1999 and 2000.  For purposes of this
          Section 8.3, adequate quantities shall mean Product quantities
          necessary to support DePuy's sales forecasts for the Products.  DePuy
          will provide to Oratec an initial forecast of sales for a one year
          period for such Products.  When the parties agree to develop and
          market a Product not included in the original list of Products in
          Appendix A, DePuy will provide Oratec with a sales forecast for that
          Product within 30 days of the date a Product is available for sale and
          marketing.  All such forecasts will be

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          updated on a quarterly basis. Thereafter, DePuy will provide Oratec
          on the last day of October of each year during the duration of this
          Agreement, with a forecast for each forthcoming contract year for
          all Products sold by DePuy at that time in order to properly provide
          for all accounts, insure prompt service to customers and avoid out-
          of-stock conditions. Forecasts shall be provided on a country basis
          when it may be necessary to reduce minimums due to late regulatory
          approvals and/or mutual decisions not to market in a particular
          country.

     8.4  DePuy will show the Products at major meetings in 1999 and 2000 and
          will be responsible for all costs of exhibiting at such major meetings
          as well as local conventions and trade shows unless otherwise agreed
          by Oratec prior to such meeting, convention or trade show.

     8.5  DePuy will take reasonable and necessary steps to provide that DePuy's
          marketing, sale and distribution of the Products complies with
          applicable government regulations throughout the Territory and will
          provide reasonable assistance to Oratec as Oratec may reasonably
          request to allow Oratec to comply with regulatory requirements of
          government agencies throughout the Territory regarding the use, sale
          and distribution of the Products.

     8.6  DePuy shall, as soon as possible after receipt of notice, advise
          Oratec of any claim, suit, or other action regarding any of the
          Products sold by DePuy.

     8.7  DePuy will prepare and submit import licenses, registrations or other
          listings and regulatory approvals for the sale and import of the
          Products in countries within the Territory.  DePuy may use its system
          of independent companies and Distributors throughout the Territory to
          assist in obtaining import licenses and/or approvals.  DePuy will
          obtain necessary certifications for the Products where required.  Upon
          any termination of this Agreement other than for a material breach by
          Oratec which remains uncured by Oratec for more than forty-five (45)
          days after receipt of written notice from DePuy, DePuy shall transfer
          all import licenses, registrations, listings and regulatory approvals
          for the sale and import of the Products to Oratec, provided that
          Oratec reimburses DePuy at the time of transfer for the cost to DePuy
          to obtain and maintain all such import licenses, registrations,
          listings and regulatory approvals.  Any such transfer shall take place
          immediately upon receipt of the foregoing payment and Oratec's
          contractual commitment to buy back all inventory of Products
          maintained by DePuy, its affiliates or its Distributors.  DePuy makes
          no representation or warranty regarding the transferability of any of
          the foregoing licenses, registrations, listings, and approvals.

     8.8  DePuy will provide proposed Product literature to Oratec for approval
          of the content of Product marketing claims.  Oratec will respond to
          DePuy's request for Product literature approval within ten (10)
          working days.

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     8.9  DePuy will provide required multilingual labeling to Oratec for
          placement on the Product packaging during manufacture.

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9.   PRICES

     9.1  Initial Prices for the Products shall be as set forth on Appendix B.
          Prices for all Products will be based on a transfer price (as
          hereinafter defined) that allows DePuy, for the duration of this
          Agreement and any extension thereof, to receive a gross margin of at
          least ***, as exemplified  in Appendix B.  Transfer price
          shall mean the price charged to DePuy by Oratec for the Products.
          Oratec shall give DePuy at least six (6) months prior written notice
          of any price increase.  During the first nine (9) months that this
          Agreement is in effect, Oratec shall provide probes to DePuy at ***
          for each probe and catheters to DePuy at *** for each catheter.  The
          transfer price will then be revised to reflect a *** gross margin if
          the average end user selling price equals or exceeds *** per probe
          and *** per spine catheter.  The limit on the probe and spine
          catheter transfer prices will be set at *** and ***, respectively.

     9.2  DePuy retains the right to select its customers and to sell the
          Products at such prices and on such terms and conditions as it may
          elect.  DePuy intends to market the Products at competitive pricing
          that produces maximum revenues, but DePuy shall retain the right to
          sell the Products at a discount where DePuy, in its sole discretion,
          deems it necessary.

10.  CLINICAL TRIALS

     10.1 In the event that a limited clinical trial or similar testing of any
          Product is required to obtain governmental approval outside the Untied
          States before sale and use of the Product, the parties will conduct
          such trial(s) jointly.  DePuy will coordinate the trials through
          surgeons and other medical personnel and health care providers.
          Oratec will provide reusable and disposable products for such trials
          at no costs to DePuy.  However, any reuseable and disposable products
          such as generators, needle benders, cables, etc. will remain the
          property of Oratec and will be returned to Oratec when the need for
          the products has ended.  Should extensive clinical trials be required
          for a Product outside the United States, the parties will determine a
          mutually acceptable plan which will include financial incentives to
          DePuy regarding such extensive clinical trials.

11.  ORDERING

     11.1 All forecasts shall be non-binding.  Notwithstanding any forecast
          made by DePuy, DePuy shall place firm written purchase orders
          identifying the Products ordered and requested delivery date(s) with
          Oratec on DePuy purchase order forms with at least 90 days lead time
          to allow Oratec to optimize inventory and production patterns.  Oratec
          will ship Product pursuant to such purchase orders within ninety (90)
          days of the receipt by Oratec of such purchase order.

*** CONFIDENTIAL TREATMENT REQUESTED

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     11.2 DePuy will have *** purchase requirements in 1999 ***. Oratec and
          DePuy will agree upon minimum purchase requirements for the year 2000
          by October 31, 1999. If annual minimum purchase requirements for the
          year 2000 are not agreed to by October 31, 1999, the parties shall
          engage a mutually acceptable third party to consult with them to
          develop an acceptable compromise. Should the parties be unable to
          select a mutually acceptable third party to develop an acceptable
          compromise, the parties shall engage in arbitration as provided in
          Section 11.4. Minimum purchase requirements for subsequent years that
          the Agreement is in effect will be established in the same manner.
          DePuy shall have no obligation to purchase the minimum purchase
          requirements, provided that failure to do so shall trigger the rights
          provided to Oratec in Section 11.3. DePuy will generate a purchase
          order for samples and demo equipment within 30 days of the effective
          date of this Agreement. In the event that regulatory approvals
          required to market and sell the Products in any country located within
          the Territory are not secured or are delayed, minimum purchase
          requirements for the Products shall be appropriately reduced.

11.3      Beginning with the year 2000 and for any subsequent year this
          Agreement is in effect, provided that Oratec has supplied adequate
          quantities of Products that meet Specifications, if less than
          *** of the mutually agreed upon annual minimum purchase
          requirement for all Products is not achieved by DePuy by the end of
          any applicable year, DePuy's exclusive distribution rights under
          this Agreement may become non-exclusive at Oratec's option, written
          notice of which must be received by DePuy prior to November 1st of
          such year. Upon receipt of such written notice, DePuy may make up
          any shortfall in the minimum purchase requirement through a purchase
          of Products (the "Shortfall Purchase") by issuing a purchase order
          by December 1st of such year, specifying delivery by December 31st
          or as soon as possible thereafter. If DePuy makes this Shortfall
          Purchase, DePuy shall retain its exclusive distribution rights. If
          DePuy does not make the Shortfall Purchase, DePuy's exclusive
          distribution rights, may, at Oratec's option, become non-exclusive. If
          the Shortfall Purchase is not made, and if at least *** of the
          mutually agreed upon annual minimum purchase requirement for all
          Products is not achieved by DePuy in the next consecutive year this
          Agreement is in effect, and DePuy does not make a Shortfall Purchase
          in that next consecutive year, Oratec may, upon written notice to
          DePuy received within sixty (60) days after the end of such year,
          terminate this Agreement. In any event, the mutually agreed upon
          annual minimum purchase requirement for any year this Agreement is in
          effect will be considered to be met if at least *** of such minimum
          purchase requirement has been met by DePuy.

     11.4 All disputes, controversies, or differences arising between the
          parties hereto, out

*** CONFIDENTIAL TREATMENT REQUESTED

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          of, or in relation to, or in connection with, minimum purchase
          requirements which cannot be settled amicably by the parties shall be
          resolved by arbitration under the Rules of Procedure of the American
          Arbitration Association (the "Rules") then prevailing arbitration
          shall be by a single arbitrator chosen by the parties, provided that
          if the parties fail to agree and to appoint such single arbitrator
          within thirty (30) days after demand for arbitration, the arbitrator
          shall be chosen in accordance with the Rules.  The decision of the
          arbitrator shall be final and binding on the parties with respect to
          minimum purchase requirements.

12.  PAYMENT

     12.1 Depuy shall be responsible for the collection of all amounts due from
          customers for the Products.  DePuy shall pay for its purchases of
          Products (except for those Products returned pursuant to Section 15)
          within *** days of its receipt of the specific Products.  A
          late penalty of *** or the maximum rate permitted by law shall be
          levied on outstanding balances for every month extending beyond the
          *** day payment period beginning with the *** day.  DePuy shall be
          responsible for the payment of all taxes arising from the purchase and
          sale of the Products by DePuy except for taxes on the income of
          Oratec.  These taxes include import duties, forwarding taxes, value
          added taxes and any similar taxes imposed by the jurisdictions in
          which the Products are sold.

13.  SHIPPING

     13.1 Oratec shall deliver Products directly to DePuy via common or
          contract carrier.  All costs of transportation and shipping to DePuy's
          facilities in Cleveland, Ohio, Warsaw, Indiana, Raynham,
          Massachusetts, or Leeds, England will be paid by DePuy.  Title to
          shall transfer and risk of loss of the Products shall pass to DePuy
          upon DePuy's receipt of the Products.  Notwithstanding the foregoing,
          any fees to expedite shipments to DePuy at DePuy's request will be
          borne by DePuy, unless the need for expedited shipment was due to
          Oratec's failure to deliver promised quantities on time.

14.  WARRANTY

     14.1 Oratec represents and warrants to DePuy that all Products supplied in
          connection with this Agreement shall be of merchantable quality, free
          from defects in material and workmanship and shall be manufactured and
          provided in accordance and conformity with the Specifications and in
          compliance with this Agreement.

     14.2 DePuy may return non-conforming and/or defective Products, including
          Products which malfunction or fail to operate, or bear a sterilization
          date at the time of receipt by DePuy that is more than sixty (60) days
          old, to Oratec.  Oratec shall

*** CONFIDENTIAL TREATMENT REQUESTED

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          replace or repair such nonconforming and/or defective Products at no
          cost to DePuy or the customer.  Replacement of such non-conforming
          and/or defective Products includes payment of DePuy's reasonable
          shipping costs, both from and to Oratec.  Oratec shall replace or
          repair such non-conforming and/or defective Products promptly provided
          that the non-conformance or defect was caused by Oratec.  Oratec shall
          have no obligation to replace or repair Product adulterated, misused
          or repackaged by another party without the previous written approval
          of Oratec.

     14.3 NEITHER PARTY SHALL HAVE ANY LIABILITY TO EACH OTHER OR TO ANY THIRD
          PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
          ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR THE
          MANUFACTURE, SALE SUPPLY, DISTRIBUTION, MARKETING, ORDERING OR
          DELIVERY OF THE PRODUCTS, INCLUDING BY WAY OF EXAMPLE AND NOT BY WAY
          OF LIMITATION, ANY DAMAGES, EXPENSES OR LOSSES INCURRED BY REASON OF
          LOST REVENUES, LOST PROFITS, COSTS OF SUBSTITUTE PRODUCTS, AND ANY
          SIMILAR AND DISSIMILAR DAMAGES, EXPENSES OR LOSSES EVEN IF THAT PARTY
          HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXPENSES OR
          LOSSES.  NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL BE
          CONSTRUED TO LIMIT EITHER OF THE PARTIES' LIABILITY FOR DAMAGES OR
          PERSONAL INJURIES, INCLUDING PROPERTY DAMAGE AND DEATH, SUFFERED BY
          ANY THIRD PARTY AS A RESULT OF ACTIONS OR OMISSIONS OF SUCH PARTY.

LEGAL RELATIONSHIP AND INDEMNIFICATION

     15.1 DePuy is an independent contractor and the relationship between
          Oratec and DePuy is that of Vendor and Vendee.  Nothing herein is
          intended or shall be construed, either express or implied, to
          authorize either party to create or assume any liability or obligation
          of any kind for or on behalf of the other party.  Neither party will
          be considered or will represent itself as the agent or legal
          representative of the other party for any purpose whatsoever.

     15.2 The parties hereto are each responsible for their own acts, alleged
          acts or omissions and respectively agree to protect, indemnify, defend
          and hold harmless each other and any affiliate from and against any
          and all claims, losses, demands and liabilities, including attorneys'
          fees and court costs, which may arise therefrom.

     15.3 Notwithstanding anything in this Agreement to the contrary, Oratec
          agrees to indemnify and hold harmless DePuy from any loss, claim or
          judgment, including reasonable costs and expenses of defending same,
          arising out of bodily injury, property damage or any other damage or
          injury which is caused by any defect in

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          the design, material, or manufacture of a Product, but excluding any
          oral or written statements or representations by DePuy or its
          distributors or employees concerning the Products inconsistent with
          Oratec's training or literature. Oratec shall have control of the
          defense of any litigation arising out of alleged defect in the
          design, material or manufacture of a Product and DePuy agrees to
          cooperate with Oratec in such defense.

     15.4 DePuy agrees to indemnify and hold harmless Oratec from any loss,
          claim or judgment, including reasonable costs and expenses of
          defending same, arising out of any bodily injury caused by any
          negligent or intentional misrepresentation concerning the Products by
          DePuy or its sales employees inconsistent with Oratec's training or
          literature, to the extent that Oratec is damaged due to such negligent
          or intentional misrepresentation.

     15.5 Should any person assert a claim against DePuy based on the alleged
          infringement of a patent or other protected intellectual property
          right related to a Product, Oratec agrees to indemnify and hold
          harmless DePuy from and against any and all losses, claims, or
          judgments, including reasonable costs and expenses of defending same,
          arising directly or indirectly from any such claims of infringement of
          patents or other protected intellectual property rights.

     15.6 Oratec has or will have prior to the sale of the Products by DePuy
          and will maintain at all times while this Agreement is in effect, a
          product liability insurance policy providing at least *** dollars
          (***) coverage per occurrence and *** dollars (***) aggregate coverage
          per policy year, which policy shall either name DePuy as insured or
          shall, by endorsement or otherwise, provide such coverage to DePuy for
          any claim arising out of the sale of any Product by DePuy. Oratec
          shall furnish DePuy with acceptable certificates evidencing such
          insurance coverage prior to the release of any Products for clinical
          studies or evaluation. Such insurance certificates shall contain a
          provision that a thirty (30) day advance written notice will be given
          to DePuy prior to any material change or cancellation of such
          insurance.

16.  ASSIGNMENT AND ***

     16.1 Neither party shall have the right to assign this Agreement without
          the other's prior written consent, except that either party may assign
          its obligations hereunder to an entity under common control with,
          controlled by or which controls the assigning party.  Notwithstanding
          the foregoing, DePuy agrees that it will not assign its obligations
          hereunder to any such entity that competes with Oratec.

     16.2 In the event that Oratec should desire to ***, Oratec shall notify
          DePuy in writing of such desire. DePuy will have *** days after
          receipt of such written notice to ***

*** CONFIDENTIAL TREATMENT REQUESTED

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          During such *** day period, *** will not ***. This *** day period does
          not constitute ***. The foregoing provision shall not apply if, at the
          time of such ***, Oratec's securities are publicly traded.

     16.3 If the sale of Oratec's interests in any Products and/or a majority
          of it stock and/or assets would result in this Agreement being
          assigned to a competitor of DePuy, DePuy may, at its sole option,
          continue under the terms of this Agreement for a period of *** after
          such assignment or sale. If the sale of Oratec's interests in any
          Products and/or a majority of its stock and/or assets would result in
          this Agreement being assigned to a third party other than a competitor
          of DePuy, DePuy may, at its sole option, continue under the terms of
          this Agreement for a period of *** after such assignment or sale.
          Following the expiration of such *** or *** month period, the
          Agreement shall terminate.

17.  CONFIDENTIALITY

     17.1 Each party will keep confidential and not disclose to any third
          party, without the prior written consent of the disclosing party, any
          information received from the other party, including, without
          limitation, the technology, capabilities, business plans, operations,
          and personnel of the other party (the "Confidential Information").
          Confidential Information shall not include:  (a) information which is
          or later becomes generally available to the public by use, publication
          or the like, by a party other than the party receiving the
          Confidential Information pursuant to the Agreement; (b) is obtained by
          a party on a non-confidential basis from a third party; (c) is in the
          possession of the receiving party prior to its disclosure, as is
          evidenced by written record; or (d) is required by law to be
          disclosed.  The obligation of this Section 17 shall continue for a
          period of three (3) years from the date of termination of this
          Agreement.

18.  APPLICABLE LAW

     18.1 Any controversy or claim relating to this Agreement, or its breach,
          or to the relationship created by this Agreement, shall be resolved
          through legal proceedings initiated in the United States District
          Court for the Northern District of California.  The laws of the State
          of California shall control as to all such matters.  The parties waive
          the right to trial by jury, the right to seek or collect punitive or
          exemplary damages, and any claim of consequential damages.  If any
          portion of this Agreement itself is contrary to law, or declared
          invalid or unenforceable by a court of competent jurisdiction, the
          remaining provisions shall remain valid and enforceable.  The parties
          shall consult and use reasonable efforts to agree upon a valid and
          enforceable provision as a reasonable substitute for such provision in
          the light of the intent of this Agreement.

*** CONFIDENTIAL TREATMENT REQUESTED

                                      -13-
<PAGE>

19.  TERMINATION OF AGREEMENT

     19.1 The initial term of this Agreement shall be [five] years from the
          date first written above.  Thereafter, this Agreement will renew for
          successive periods of one (1) year each.  This Agreement may be
          terminated during either the initial term or the renewal term in
          accord with the provisions of Sections 19.2, 19.3, 19.4 or 19.5.

     19.2 This Agreement will be automatically terminated if a party files a
          voluntary petition for bankruptcy or reorganization, is the subject of
          an involuntary petition for bankruptcy, has its affairs placed in the
          hands of a receiver, enters into a composition for the benefit of
          creditors, or is deemed insolvent by a court of competent
          jurisdiction.

     19.3 This Agreement may also be terminated if a party is in material
          breach of this Agreement provided the non-breaching party has provided
          at least forty-five (45) days prior written notice and such breach has
          not been cured within said forty-five (45) days.

     19.4 This Agreement may be terminated by DePuy upon 180 days' prior
          written notice to Oratec.  Should DePuy provide such written notice of
          termination to Oratec, DePuy's distribution rights hereunder shall
          become non-exclusive during such 180 day period.

     19.5 This Agreement may also be terminated in accordance with the
          provisions of Article 11.3.

     19.6 This Agreement may be terminated by Oratec at the end of the initial
          term upon 180 days' prior written notice to DePuy, which termination
          shall take effect at the end of such 180 day period.

20  OBLIGATIONS UPON TERMINATION

     20.1 Upon termination or non-renewal of this Agreement by Oratec, DePuy
          will return all unsold saleable Products in its possession and will
          use commercially reasonable efforts to retrieve unsold saleable
          Products from its distributors.  DePuy agrees not to market Oratec
          Products beyond *** days following termination of this Agreement.
          Oratec will reimburse DePuy for such inventory in the following
          manner:

               Sealed, sterile disposable Product:  DePuy cost
               Unused generators and equipment:     DePuy cost
               Demo generators and equipment:       Not reimbursable

          Oratec will pay inventory-shipping costs unless DePuy initiates
          Agreement termination.

     20.2 In the event of termination, DePuy may, at its sole option, decide to
          make its customer listing available to Oratec.

21.  COMPLETE AGREEMENT

     21.1 This Agreement constitutes the entire agreement between DePuy and
          Oratec.  No modifications of this Agreement shall be binding on either
          party unless made in writing and signed by both parties, and this
          Agreement supersedes and cancels any and all previous contracts,
          arrangements or understandings that may have existed or may exist
          between the parties, whether written or verbal.  There are no
          understandings, representations or warranties of any such kind,
          expressed or implied, that are not expressly set forth herein.  The
          language of this Agreement shall for all purposes be construed as a
          whole, according to its fair meaning, not strictly for or against
          either party, and without regard to identity or status of any person
          who drafted all or any part of it.

22.  NOTICES

     22.1 All notices required under this Agreement shall be sent registered
          mail, return receipt requested, or by other means of verified
          delivery, or by personal delivery, as follows:

          If to Oratec:    Oratec Interventions, Inc.
                           3700 Haven Court
                           Menlo Park, CA  94025
                           Attn:  President

          If to DePuy:     DePuy AcroMed, Inc.
                           3303 Carnegie Ave.
                           Cleveland, OH  44115
                           Attn:  President

          With a copy to:  DePuy AcroMed, Inc.
                           325 Paramount Drive
                           Raynham, MA  02767
                           Attn:  President

          Either party may change its address for notice purposes by notifying
          the other party of such change of address, such notice to be as
          required herein. Notice is effective when actually received by the
          addressee or when the addressee refuses delivery, or is sent by
          Registered Mail, Return Receipt Requested, on the fifteen (15th) day
          following deposit. If sent by facsimile, notice shall be deemed
          effective when sender receives confirmation of receipt.

*** CONFIDENTIAL TREATMENT REQUESTED

                                      -14-
<PAGE>

23.  MISCELLANEOUS

     23.1 Notwithstanding any other provision in this Agreement, the parties
          agree that Sections 4.1, 5.6, 5.7, 7.3, 8.6, 12, 14, 15, 16, 17, 18,
          19, and 20 shall survive the termination of this Agreement.

     23.2 DePuy may not customize, modify or have customized or modified any
          Product.  In the event that DePuy should receive a request from a
          customer or other party for a customized or modified Product, such
          request shall be forwarded to Oratec who will solely be responsible
          for response and/or customization or modification of the Product.

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

Oratec Interventions, Inc.              DePuy AcroMed, Inc.

Date:  March 30, 1999                   Date:  April 1, 1999

                                      -15-
<PAGE>

Appendix A.

Item Number     Name / Description
-----------     ------------------

902002          SpineCATH Intradiscal Catheter
                Flexible Intradiscal Catheter specifically designed to provide
                precise hearing over a broad intradiscal surface. (IDET
                Procedure)

902003          ORAflex ElectroThermal Probe
                Unique RF probe featuring a deflectable rip for improved
                posterior access in thermal endoscopic herniated disk
                treatment.

805017          ORA 50 S ElectroThermal Spine System Generator
                Designed specifically for spinal procedures, the ORA 50 S
                provides the needed RF output for the SpineCATH and ORAflex
                products. Includes foot pedal and power cord.

902004          Needle Introducer (Box of 5)
                For use with the SpineCATH Intradiscal Catheter, the 17 gauge
                needle provides minimally invasive access to the internal
                disc.

802004          Needle Bender
                Instrument designed for contouring of the Introducer Needle.

805016          ElectroThermal System Extension Cable
                Featuring a universal 4 pin connector, the Extension cable
                links either the ORAflex probe or the Intradiscal Catheter to
                the generator.

805012/19       Indifferent Electrode Pad
                Grounding pad for monopolar applications (ORAflex).

805011/13       Indifferent Electrode Adapter
                Plug adapter to facilitate attachment of various indifferent
                electrodes.
<PAGE>

DePuy Transfer Spine Products Pricing Schedule

<TABLE>
<CAPTION>
Initial Pricing                                              Transfer Price                           Demo Price
---------------                                              --------------                           ----------
<S>                                                          <C>                                     <C>
                   SpineCATH(TM)                                ***                                   ***
                   ORAflex(TM)                                  ***                                   ***
                   SpineCATH Needles                            ***                                   ***
                   (box of 5)
                   Electro Thermal Spine                        ***                                   ***
                    Generator
                   Probe Cable                                  ***                                   ***
</TABLE>

*** CONFIDENTIAL TREATMENT REQUESTED<PAGE>

                                                                    EXHIBIT 10.8

                          FIRST AMENDMENT TO SUBLEASE

     THIS FIRST AMENDMENT TO SUBLEASE (the "Amendment") is made as of December
14, 1999 between Applied Materials, Inc., a Delaware corporation
("Sublandlord") and Vitria Technology, Inc., a California corporation
("Subtenant").

                                    RECITALS

      A.  Sublandlord and Subtenant have entered into that certain Sublease
dated as of April 6, 1999, for Premises commonly known as 945 Stewart Drive,
Sunnyvale, California.

      B.  Sublandlord and Subtenant desire to amend the Sublease to add to the
Premises subject thereto that certain building commonly known as 940 Stewart
Drive, Sunnyvale, California.

      NOW THEREFORE, Sublandlord and Subtenant agree to amend the Sublease as
provided herein.

1.  Amendment to Initial Paragraph.  The third sentence of the first grammatical
    -------------------------------
paragraph of the text of the Sublease shall be amended to read as follows:

          "Premises" or "Building" means the building or buildings subject to
          this Sublease as provided herein; for the period from the Effective
          Date of the Sublease through December 14, 1999, Premises or Building
          means the building designated 945 Stewart Drive, Sunnyvale, California
          ("Building C"); for the period December 15, 1999 through August 31,
          2003, Premises or Building means Building C and the building
          designated 940 Stewart Drive, Sunnyvale, California ("Building F");
          and for the period September 1, 2003 through October 5, 2007, Premises
          or Building means Building F.

2.  Amendment to Schedule.  The Schedule shall be amended to read as follows:
    ----------------------

          1.   Subtenant:  Vitria Technology, Inc.

          2.   Premises:  From August 1, 1999 to December 14, 1999, 945 Stewart
               Drive, Sunnyvale, California ("Building C"), as shown in Exhibit
                                                                        -------
               A attached hereto; from December 15, 1999, through August 31,
               -
               2003, Building C and 940 Stewart Drive, Sunnyvale, California
               ("Building F") as shown on Exhibit A attached hereto; from
                                          ---------
               September 1, 2003 to October 5, 2007, Building F.

                                     -1-
<PAGE>

          3.   Rentable Square Footage of the Premises: Building C, 63,781
               square feet; Building F, 44,702 square feet.

          4.   Subtenant's Proportionate Share:  Building C:  100% for Operating
               Costs and Taxes allocated to Building C, and 14.97% for Operating
               Costs and Taxes charged to the Project but not allocated to
               specific Buildings by Landlord.

               Building F:  100% for Operating Costs and Taxes allocated to
               Building F, and 10.49% for Operating Costs and Taxes charged to
               the Project but not allocated to specific Buildings by Landlord.

          5.   Lease Deposit: Building C: $83,135.10 paid upon execution of the
               Sublease, representing advance payment of the first month's rent
               ("Advance Rent Deposit"), plus a security deposit in cash in the
                                        ----
               amount of twice the last month's rent delivered upon execution of
               the Sublease ($283,733.10).

               Building F:  $55,875 due on December 15, 1999 (one month's rent
               prorated) plus a security deposit in cash in the amount of twice
                         ----
               the last month's rent ($274,889.10) ("Security Deposit").

          6.   Permitted Use:  Office; storage and shipping of equipment and
               parts; assembly (using parts manufactured elsewhere), repair and
               testing of machinery and equipment; research, testing and
               demonstration laboratory; and ancillary uses permitted under
               applicable laws.

          7.   Subtenant's Real Estate Broker for this Lease: CB Richard Ellis.

          8.   Sublandlord's Real Estate Broker for this Lease:  Wayne Mascia
               Associates.

          9.   Tenant Improvement Allowance:  For Building C, $1,594,525.00 Base
               Allowance plus an Additional Allowance of up to $637,810.00; for
               Building F, none.

          10.  Commencement Date:  For Building C, August 1, 1999; See Paragraph
               1.A.  For Building F, December 15, 1999.

          11.  Term:  Commencing on the Commencement Date for each Building and
               expiring on August 31, 2003, for Building C and October 5, 2007
               for Building F ("Termination Date").

          12.  Guarantor:  None.

                                     -2-
<PAGE>

          13.  Base Rent:

                         Months                  Base Rent
                         ------                  ---------
               Aug. 1999 - Dec. 15, 1999        $ 85,135.50
               Dec. 15, 1999 - Jan. 31, 2000    $196,890.50
               Feb. 1, 2000 - Jul. 31, 2000     $240,885.35
               Aug. 1, 2000 - Nov. 30, 2000     $244,074.40
               Dec. 1, 2000 - Jul. 31,2001      $247,427.05
               Aug. 1, 2001 - Nov. 30, 2001     $250,616.10
               Dec. 1, 2001 - Jul. 31, 2002     $254,069.33
               Aug. 1, 2002 - Nov. 30, 2002     $257,258.38
               Dec. 1, 2002 - Jul. 31, 2003     $260,815.21
               Aug. 1, 2003 - Aug. 31, 2003     $264,004.26
               Sept. 1, 2003 - Nov. 30, 2003    $122,117.71
               Dec. 1, 2003 - Nov. 30, 2004     $125,781.24
               Dec. 1, 2004 - Nov. 30, 2005     $129,554.67
               Dec. 1, 2005 - Nov. 30, 2006     $133,441.31
               Dec. 1, 2006 - Oct. 31, 2007     $137,444.55

          14.  Master Lease:  Lease dated September 9, 1997 between Applied
               Materials, Inc. as Tenant and CarrAmerica Realty Corporation as
               Landlord.

          15.  Landlord or Master Landlord:  CarrAmerica Realty Corporation.

3.  Amendment to Section 1. Section 1 of the Sublease shall be amended to read
    -----------------------
as follows:

          A.   Commencement Date.  The Commencement Date shall be the date
               ------------------
               established pursuant to this section, and the Sublease shall
               expire on the Termination Date set forth in the Schedule.
               Subject to Section 1 B below, the Commencement Date for Building
               C shall be the earliest occurring of the following:

               (i)  The date of Substantial Completion of the Tenant
                    Improvements, as such term is defined in the Work Letter
                    Agreement attached hereto as Exhibit C ("Work Letter
                                                 ---------
                    Agreement"); or

               (ii) August 1, 1999.

               The Commencement Date for Building F shall be December 15, 1999.

4.  Amendment to Section 2.A. Section 2.A(2) shall be amended to read as
    -------------------------
follows:

          (2.) Operating Costs Share Rent in an amount equal to (a) $4,800.00
               --------------------------
               per Building annual management fee charged by Sublandlord, plus
               (b) Subtenant's Proportionate Share of

                                     -3-
<PAGE>

               the Landlord Operating Costs for the applicable fiscal year of
               the Sublease, charged to Sublandlord by Landlord ("Landlord
               Operating Costs"). Operating Costs Share Rent shall be due
               monthly in advance in an estimated amount commencing with the
               Commencement Date, and thereafter on or before the first day of
               each month of the Term. Definitions of Landlord's Operating
               Costs and Subtenant's Proportionate Share, and the method for
               billing and payment of Operating costs Share Rent are set forth
               I Section 2B, 2C and 2D.

5.  Amendment to Section 3.A.  Section 3.A.(1) shall be amended to read as
    -------------------------
follows:

          (1)   The "Building Shell" shall mean the Building structure, exterior
                     --------------
                walls, glass, floor slab, utilities (phone, gas, electric,
                plumbing, fire, and water) to the Building, and roof, and shall
                include the parking lot, landscaping and the base for the street
                monument sign.  Landlord is responsible for bringing phone,
                electrical, gas and plumbing service to the Building (i.e.,
                stubbed but not distributed) and for installing the main fire
                sprinkler trunks (i.e., installed but not distributed or
                "dropped").  The Building Shell does not include any elevators,
                stairs, HVAC, roof screens or thermal insulation.
                Notwithstanding the foregoing, Landlord has installed all
                elevators, and Sublandlord has installed the improvements listed
                on Exhibit E (the "Shell Upgrades") in Building C and Building F
                   ---------
                and the additional items ("Base TI's") listed in Exhibit H in
                                                                 ---------
                Building F.

6.  Amendment to Section 3.B: Section 3.B shall be amended to read as follows:
    -------------------------

     B.        Construction of Interior Improvements.  Except for Sublandlord's
               --------------------------------------
               obligation to install the Tenant Improvements in Building C in
               accordance with the Work Letter Agreement, Sublandlord is leasing
               the Premises to Subtenant "as is" and subject to the warranties
               set forth in Section 3.A(2) above, without any obligation to
               alter, remodel, improve, or decorate any part of the Premises or
               Project.  Sublandlord shall cause the Tenant Improvements to be
               completed in accordance with the terms, conditions and
               limitations set forth in the Work Letter Agreement.  The Tenant
               Improvement Allowance shall be in the amount stated in the
               Schedule, subject to all terms and conditions of the Work Letter
               Agreement.

                                     -4-
<PAGE>

7.   Amendment To Section 22.B.  Section 22.B shall be amended by amending the
     ---------------------------
first sentence thereof to read as follows:

     Upon execution of this Sublease, Subtenant deposited with Sublandlord the
     cash sum of two times the last month's Base Rent for Building C (Two
     Hundred Eighty-Three Thousand Seven Hundred Seventy-Three and 10/100ths
     Dollars ($283,773.10)) and on or before the Commencement Date for Building
     F Subtenant shall deposit with Sublandlord the cash sum of two times the
     last month's Base Rent for Building F (Two Hundred Seventy-Four Thousand
     Eight Hundred Eighty-Nine and 10/100ths Dollars ($274,889.10)) as a
     security deposit ("Security Deposit").

And by amending the last sentence to read as follows:

     If Subtenant performs all of Subtenant's obligations hereunder, the portion
     of the Security Deposit delivered with respect to each Building or so much
     thereof  as had not theretofore been applied by Sublandlord shall be
     returned without payment of interest for its use to Subtenant (or, at
     Sublandlord's option, to the last assignee, if any, of Subtenant's interest
     hereunder) within ten (10) days after expiration of the term with respect
     to such Building  or ten (10) days after the date Subtenant has vacated the
     Building, whichever is later.

8.  Affirmation.  Except as amended herein, the Sublease remains in full force
    ------------
and effect.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to
Sublease.

SUBLANDLORD:                             SUBTENANT:

APPLIED MATERIALS, INC.,                 VITRIA TECHNOLOGY, INC.,
A Delaware corporation                   A California corporation

By: /s/ A.M. FENFROCK                   By: /s/ PAUL R. AUVIL, III
   --------------------------------        ---------------------------------
Print Name:     A.M. FENFROCK           Print Name:  PAUL R. AUVIL, III
           ------------------------                -------------------------
Print Title: MANAGING DIRECTOR          Print Title:  Vice President, Finance
            -----------------------               and Chief Financial Officer

                                     -5-

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