SPINE TECH INC, SC 14D1, 1997-12-19

SPINE TECH INC
SC 14D1, 1997-12-19
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
SPINE-TECH, INC.
(Name of Subject Company)

SULZER MEDICA ORTHOPEDICS ACQUISITION CORP.
AND
SULZER MEDICA LTD
(Bidder)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
848927109
(CUSIP Number of Class of Securities)
LAWRENCE H. PANITZ
SULZER MEDICA LTD
4000 TECHNOLOGY DRIVE
ANGLETON, TX 77515
(409) 848-4000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
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COPY TO:

PETER D. LYONS, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 848-4000
DECEMBER 19, 1997
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CALCULATION OF FILING FEE

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TRANSACTION VALUATION AMOUNT OF FILING FEE
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$618,015,542* $123,604
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/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: ________________________________________________________
Form or Registration No.: ______________________________________________________
Filing Party: __________________________________________________________________
Date Filed: ____________________________________________________________________

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* NOTE: The transaction value set forth above is calculated by multiplying
$52.00, the per share tender offer price, by the sum of 10,323,730 (the
number of outstanding shares of common stock, $01 par value, of Spine-Tech,
Inc.) and 2,233,331 (the number of shares of such common stock subject to
options outstanding), less the exercise price of such options.

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This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Sulzer Medica Orthopedics Acquisition Corp., a Minnesota
corporation ("Purchaser") and an indirect wholly owned subsidiary of Sulzer
Medica Ltd, a corporation organized under the laws of Switzerland ("Parent"), to
purchase all outstanding shares of common stock, $.01 par value (the "Common
Stock"), of Spine-Tech, Inc. a Minnesota corporation (the "Company"), and the
associated preferred share purchase rights (together with the Common Stock, the
"Shares") at a price of $52.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in Purchaser's Offer to Purchase
dated December 19, 1997 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively.

ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is Spine-Tech, Inc., which has its
principal executive offices at 7375 Bush Lake Road, Minneapolis, Minnesota
55439-2029.

(b) The class of equity securities being sought is all the outstanding
shares of Common Stock. The information set forth in the Introduction and
"Section 1. Terms of the Offer; Expiration Date" of the Offer to Purchase is
incorporated herein by reference.

(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in "Section 6. Price Range of Shares; Dividends" of the Offer
to Purchase is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of Purchaser, Parent and Sulzer AG
(the holder of a majority equity interest in Parent) and the information
concerning the name, business address, present principal occupation or
employment and the name, principal business and address of any corporation or
other organization in which such employment or occupation is conducted, material
occupations, positions, offices or employments during the last five years and
citizenship of each of the executive officers and directors of Purchaser, Parent
and Sulzer AG are set forth in the Introduction, "Section 8. Certain Information
Concerning Purchaser and Parent" and Schedule I of the Offer to Purchase and are
incorporated herein by reference.

(e) and (f) During the last five years, none of Purchaser, Parent, or
Sulzer AG and, to the best knowledge of Purchaser and Parent, none of the
persons listed in Schedule I of the Offer to Purchase has been (i) convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.

(a) The information set forth in "Section 8. Certain Information Concerning
Purchaser and Parent" and "Section 10. Background of the Offer; Contacts with
the Company; the Merger Agreement" of the Offer to Purchase is incorporated
herein by reference.

(b) The information set forth in the Introduction, "Section 7. Certain
Information Concerning the Company", "Section 8. Certain Information Concerning
Purchaser and Parent", "Section 10. Background of the Offer; Contacts with the
Company; the Merger Agreement" and "Section 11. Purpose of the Offer; Plans for
the Company After the Offer and the Merger" of the Offer to Purchase is
incorporated herein by reference.

2
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(c) The information set forth in "Section 9. Financing of the Offer and
the Merger" of the Offer to Purchase is incorporated herein by reference.

ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.

(a)-(e) The information set forth in the Introduction, "Section 10.
Background of the Offer; Contacts with the Company; the Merger Agreement" and
"Section 11. Purpose of the Offer; Plans for the Company After the Offer and the
Merger" of the Offer to Purchase is incorporated herein by reference.

(f) and (g) The information set forth in "Section 13. Effect of the Offer
on the Market for Shares, Exchange Listing and Exchange Act Registration" of the
Offer to Purchase is incorporated herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) and (b) The information set forth in "Section 8. Certain Information
Concerning Purchaser and Parent" of the Offer to Purchase is incorporated herein
by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.

The information set forth in the Introduction, "Section 8. Certain
Information Concerning Purchaser and Parent", "Section 10. Background of the
Offer; Contacts with the Company; the Merger Agreement" and "Section 11. Purpose
of the Offer; Plans for the Company After the Offer and the Merger" of the Offer
to Purchase is incorporated herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth in the Introduction and "Section 16. Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.

ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

The information set forth in "Section 8. Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase is incorporated herein by
reference.

ITEM 10. ADDITIONAL INFORMATION.

(a) Not applicable.

(b)-(c) and (e) The information set forth in "Section 14. Certain Legal
Matters and Regulatory Approvals" of the Offer to Purchase is incorporated
herein by reference.

(d) The information set forth in "Section 13. Effect of the Offer on the
Market for the Shares, Exchange Listing and Exchange Act Registration" of the
Offer to Purchase is incorporated herein by reference.

(f) The information set forth in the Offer to Purchase, Letter of
Transmittal and the Agreement and Plan of Merger, dated as of December 19, 1997,
among Parent, Purchaser and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), is incorporated herein by reference.

3
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

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(a)(1) Form of Offer to Purchase dated December 19, 1997.

(a)(2) Form of Letter of Transmittal.

(a)(3) Form of Notice of Guaranteed Delivery.

(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.

(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees
to Clients.

(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.

(a)(7) Summary Advertisement as published in The Wall Street Journal on December 19, 1997.

(a)(8) Press Release issued by Parent on December 16, 1997.

(b)(1) Commitment Letter dated December 17, 1997 by Credit Suisse First Boston with respect
to $250,000,000 Bridge Credit Facility to be provided to the Company.

(c)(1) Agreement and Plan of Merger, dated as of December 19, 1997, among Parent, Purchaser
and the Company.

(d) None.

(e) Not applicable.

(f) None.
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4
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

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December 19, 1997

SULZER MEDICA ORTHOPEDICS ACQUISITION CORP.

By: /s/ LAWRENCE H. PANITZ
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Name: Lawrence H. Panitz
Title: Vice President, Secretary
and General Counsel
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5
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

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December 19, 1997

SULZER MEDICA LTD

By: /s/ ANDRE P. BUCHEL
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Name: Andre P. Buchel
Title: President and
Chief Executive Officer
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6
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EXHIBIT INDEX

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EXHIBIT PAGE IN SEQUENTIAL
NO. NUMBERING SYSTEM
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(a)(1) Form of Offer to Purchase dated December 19, 1997....................................

(a)(2) Form of Letter of Transmittal........................................................

(a)(3) Form of Notice of Guaranteed Delivery................................................

(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees...

(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees
to Clients.........................................................................

(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9...........................................................................

(a)(7) Summary Advertisement as published in The Wall Street Journal on December 19, 1997...

(a)(8) Press Release issued by Parent on December 19, 1997..................................

(b)(1) Commitment Letter dated December 17, 1997 by Credit Suisse First Boston with respect
to $250,000,000 Bridge Credit Facility to be provided to the Company...............

(c)(1) Agreement and Plan of Merger, dated as of December 15, 1997, among Parent, Purchaser
and the Company....................................................................
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Offer to Purchase for Cash

All Outstanding Shares of Common Stock

(Including the Associated Preferred Share Purchase Rights)

Spine-Tech, Inc.

$52.00 Net Per Share

Sulzer Medica Orthopedics Acquisition Corp.

an indirect wholly owned subsidiary of

Sulzer Medica Ltd

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.

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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS AND (II)
ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF THE
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED. SEE "SECTION 14. CONDITIONS TO THE OFFER",
WHICH SETS FORTH IN FULL THE CONDITIONS TO
THE OFFER.

THE BOARD OF DIRECTORS OF SPINE-TECH, INC. (THE "COMPANY") AND A SPECIAL
COMMITTEE OF THE BOARD OF DIRECTORS HAVE UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER AND
THE MERGER (EACH AS DEFINED HEREIN) IS IN THE BEST INTERESTS OF
THE
COMPANY AND ITS SHAREHOLDERS AND RECOMMEND THAT THE
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.

IMPORTANT

Any shareholder desiring to tender all or any portion of his shares of
common stock, $.01 par value (the "Common Stock"), of the Company, and the
associated preferred share purchase rights (together with the Common Stock, the
"Shares"), should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) evidencing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
"Section 3. Procedures for Accepting the Offer and Tendering Shares" or (2)
request his broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for him. Any shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if he desires to tender such Shares.

A shareholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in "Section 3.
Procedures for Accepting the Offer and Tendering Shares."

Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may also be obtained from the Information Agent or the Dealer Manager.

The Dealer Manager for the Offer is:

[LOGO]

December 19, 1997
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TABLE OF CONTENTS

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PAGE
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INTRODUCTION...................................................................................................... 1
1. Terms of the Offer; Expiration Date.................................................................... 2
2. Acceptance for Payment and Payment for Shares.......................................................... 4
3. Procedures for Accepting the Offer and Tendering Shares................................................ 5
4. Withdrawal Rights...................................................................................... 7
5. Certain Federal Income Tax Consequences................................................................ 8
6. Price Range of Shares; Dividends....................................................................... 8
7. Certain Information Concerning the Company............................................................. 9
8. Certain Information Concerning Purchaser and Parent.................................................... 11
9. Financing of the Offer and the Merger.................................................................. 16
10. Background of the Offer; Contacts with the Company; the Merger Agreement............................... 17
11. Purpose of the Offer; Plans for the Company After the Offer and the Merger............................. 27
12. Dividends and Distributions............................................................................ 28
13. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration....... 29
14. Conditions to the Offer................................................................................ 30
15. Certain Legal Matters and Regulatory Approvals......................................................... 31
16. Fees and Expenses...................................................................................... 33
17. Miscellaneous.......................................................................................... 34

Schedule I. Directors and Executive Officers of Parent, Purchaser and Sulzer AG................................... I-1
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To the Holders of Common Stock of
Spine-Tech, Inc.:

INTRODUCTION

Sulzer Medica Orthopedics Acquisition Corp., a Minnesota corporation
("Purchaser") and an indirect wholly owned subsidiary of Sulzer Medica Ltd, a
corporation organized under the laws of Switzerland ("Parent"), hereby offers to
purchase all outstanding shares of common stock, $.01 par value (the "Common
Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company"), and the
associated preferred share purchase rights (together with the Common Stock, the
"Shares"), at a price of $52.00 per Share, net to the seller in cash (the "Per
Share Amount"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer").

Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Credit Suisse First Boston Corporation ("Credit Suisse First Boston"), which is
acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"),
Citibank, N.A. (the "Depositary") and Innisfree M&A Incorporated (the
"Information Agent") incurred in connection with the Offer. See "Section 16.
Fees and Expenses".

THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") AND A SPECIAL COMMITTEE
OF THE BOARD, FORMED IN ACCORDANCE WITH SECTION 302A.673 OF THE MINNESOTA
BUSINESS CORPORATION ACT ("MINNESOTA LAW"), HAVE UNANIMOUSLY DETERMINED THAT
EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS IN THE BEST INTERESTS OF
THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMEND THAT THE SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.

Piper Jaffray Inc. ("Piper Jaffray") has delivered to the Board its written
opinion that the consideration to be received by the shareholders of the Company
pursuant to each of the Offer and the Merger is fair to such shareholders from a
financial point of view. A copy of the opinion of Piper Jaffray is contained in
the Company's Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to the shareholders herewith.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION") AND (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO
THE OFFER HAVING EXPIRED OR BEEN TERMINATED. SEE "SECTION 14. CONDITIONS TO THE
OFFER", WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.

The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 15, 1997 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides among other things, that, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of law, Purchaser will be merged with
and into the Company (the "Merger"). Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will become an indirect wholly owned subsidiary of Parent. At the effective
time of the Merger (the "Effective Time"), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Parent or any direct or indirect wholly owned subsidiary of Parent or of the
Company, and other than Shares held by shareholders who shall have exercised and
perfected dissenters' rights, if any, under Minnesota Law) will be converted
automatically into the right to receive the Per Share Amount, or any other price
that may be paid per Share in the Offer, without interest (the "Merger
Consideration"). The Merger Agreement is more fully described in "Section 10.
Background of the Offer; Contacts with the Company; the Merger Agreement."
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The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer (provided that the Minimum Condition has been
satisfied) and from time to time thereafter, Purchaser shall be entitled,
subject to compliance with Section 14(f) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), to designate up to such number of directors,
rounded down to the next whole number (except where such rounding down would
cause Purchaser to not be entitled to designate at least a majority of directors
on the Board, in which case, such number will be rounded up) on the Board as
will give Purchaser representation on the Board equal to the product of the
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares then beneficially owned by Purchaser and its affiliates
following such purchase bears to the total number of Shares then outstanding. In
the Merger Agreement, the Company has agreed to promptly take all actions
necessary to cause Purchaser's designees to be elected or appointed as directors
of the Company, including increasing the size of the Board or securing the
resignations of incumbent directors or both.

The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the shareholders of the Company to the extent required
by Minnesota Law. See "Section 11. Purpose of the Offer; Plans for the Company
After the Offer and the Merger". Under the Company's Articles of Incorporation
and the Minnesota Law, the affirmative vote of the holders of a majority of the
outstanding Shares is required to approve and adopt the Merger Agreement and the
Merger. Consequently, if Purchaser acquires (pursuant to the Offer or otherwise)
at least a majority of the outstanding Shares, Purchaser will have sufficient
voting power to approve and adopt the Merger Agreement and the Merger without
the vote of any other shareholder.

Under Minnesota Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to complete the Merger without a vote of the Company's shareholders. In such
event, Parent, Purchaser and the Company have agreed to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
shareholders. If, however, Purchaser does not acquire at least 90% of the then
outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's shareholders is required under Minnesota Law, a significantly longer
period of time will be required to effect the Merger. See "Section 11. Purpose
of the Offer; Plans for the Company After the Offer and the Merger".

The Company has advised Purchaser that as of December 15, 1997,
approximately 10,323,730 Shares were issued and outstanding and 2,215,423 Shares
were reserved for issuance pursuant to certain employee stock options and 17,908
Shares were reserved for issuance pursuant to options issued to Smith & Nephew
Richards Inc. As a result, as of such date, the Minimum Condition would be
satisfied if Purchaser acquired 6,278,531 Shares, assuming no further issuances
of Shares by the Company.

THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.

1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Wednesday,
January 21, 1998, unless and until Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.

2
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Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any of the conditions specified in "Section
14. Conditions to the Offer", by giving oral or written notice of such extension
to the Depositary. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw its Shares. See "Section 4. Withdrawal
Rights".

Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted for
payment, payment for, any Shares pending receipt of any regulatory approval
specified in "Section 15. Certain Legal Matters and Regulatory Approvals", (ii)
to terminate the Offer and not accept for payment any Shares upon the occurrence
of any of the conditions specified in "Section 14. Conditions to the Offer"
prior to the Expiration Date, and (iii) to waive any condition or otherwise
amend the Offer in any respect, by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and by making a public
announcement thereof. The Merger Agreement provides that, without the consent of
the Company, Purchaser will not (i) decrease the price per Share payable
pursuant to the Offer, (ii) reduce the maximum number of Shares to be purchased
in the Offer, (iii) change the form of consideration to be paid in the Offer,
(iv) modify the conditions to the Offer set forth in "Section 14. Conditions to
the Offer", (v) impose conditions to the Offer in addition to those set forth in
"Section 14. Conditions to the Offer", or (vi) extend the Offer except as set
forth in "Section 14. Conditions to the Offer". Purchaser acknowledges that (i)
Rule 14e-1(c) under the Exchange Act requires Purchaser to pay the consideration
offered or return the Shares tendered promptly after the termination or
withdrawal of the Offer and (ii) Purchaser may not delay acceptance for payment
of, or payment for (except as provided in clause (i) of the first sentence of
this paragraph), any Shares upon the occurrence of any of the conditions
specified in "Section 14. Conditions to the Offer" without extending the period
of time during which the Offer is open.

Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to shareholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.

If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-4(c)
and l4d-6(d) under the Exchange Act.

Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to decrease the number of Shares being sought or
to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time notice
of any such decrease in the number of Shares being sought or such increase or
decrease in the consideration being offered is first published, sent or given to
holders of such Shares, the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.

3
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The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.

2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of any such extension or amendment), Purchaser will
accept for payment, and will pay for, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn promptly after the later to occur of
(i) the Expiration Date, or (ii) the expiration or termination of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"). Subject to applicable rules of the Commission,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares pending receipt of any necessary governmental approvals
specified in "Section 15. Certain Legal Matters and Regulatory Approvals" or in
order to comply in whole or in part with any other applicable law.

In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in "Section 3. Procedures for Accepting the Offer and
Tendering Shares", (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer and (iii) any other
documents required under the Letter of Transmittal.

On December 19, 1997, Parent filed with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Premerger Notification and Report Form under the HSR Act with
respect to the Offer. Accordingly, it is anticipated that the waiting period
under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York
City time, on January 3, 1998. Prior to the expiration or termination of such
waiting period, the FTC or the Antitrust Division may extend such waiting period
by requesting additional information from Parent with respect to the Offer. If
such a request is made with respect to the purchase of Shares in the Offer, the
waiting period will expire at 11:59 p.m., New York City time, on the tenth
calendar day after substantial compliance by Parent with such a request.
Thereafter, the waiting period may only be extended by court order. The waiting
period under the HSR Act may be terminated prior to its expiration by the FTC
and the Antitrust Division. Parent has requested early termination of the
waiting period, although there can be no assurance that this request will be
granted. See "Section 15. Certain Legal Matters and Regulatory Approvals" for
additional information regarding the HSR Act.

4
<PAGE>
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in "Section 3. Procedures for Accepting and Tendering Shares", such
Shares will be credited to an account maintained at such Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination of
the Offer.

Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering shareholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.

3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. In order for a
holder of Shares validly to tender Shares pursuant to the Offer either (a) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined below), and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either the Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (b) the tendering shareholder must comply with the
guaranteed delivery procedures described below.

THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.

BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the tendering shareholder must comply
with the guaranteed delivery procedure described below. DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Stock that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.

5
<PAGE>
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"), except in cases where Shares are tendered (i)
by a registered holder of Shares who has not completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate not accepted for payment or not tendered is to
be returned, to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.

GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:

(i) such tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and

(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
the Letter of Transmittal are received by the Depositary within three Nasdaq
Stock Market ("Nasdaq") trading days after the date of execution of such
Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.

In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and any other documents required by the Letter of Transmittal or, in the case of
a book-entry transfer, an Agent's Message.

DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity, in the tender of any
Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other

6
<PAGE>
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.

OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of Purchaser as such shareholder's
proxies, each with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment by
Purchaser (and with respect to any and all other Shares or other securities
issued or issuable in respect of such Shares on or after December 15, 1997). All
such proxies shall be considered coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment, all
prior proxies given by such shareholder with respect to such Shares (and such
other Shares and securities) will be revoked without further action, and no
subsequent proxies may be given nor any subsequent written consent executed by
such shareholder (and, if given or executed, will not be deemed to be effective)
with respect thereto. The designees of Purchaser will, with respect to the
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's shareholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares, Purchaser must be able to exercise full voting rights with respect
to such Shares.

The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.

UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF U.S. FEDERAL INCOME TAX LAW,
THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS OF
CASH PURSUANT TO THE OFFER. IN ORDER TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN SHAREHOLDERS OF THE PURCHASE
PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST
PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. CERTAIN
STOCKHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN FOREIGN
INDIVIDUALS AND ENTITIES) ARE NOT SUBJECT TO BACKUP WITHHOLDING. IF A
SHAREHOLDER DOES NOT PROVIDE ITS CORRECT TIN OR FAILS TO PROVIDE THE
CERTIFICATIONS DESCRIBED ABOVE, THE INTERNAL REVENUE SERVICE MAY IMPOSE A
PENALTY ON THE SHAREHOLDER AND PAYMENT OF CASH TO THE SHAREHOLDER PURSUANT TO
THE OFFER MAY BE SUBJECT TO BACKUP WITHHOLDING. ALL SHAREHOLDERS SURRENDERING
SHARES PURSUANT TO THE OFFER SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9
(INCLUDED IN THE LETTER OF TRANSMITTAL TO PROVIDE THE INFORMATION NECESSARY TO
AVOID BACKUP WITHHOLDING (UNLESS AN APPLICABLE EXEMPTION EXISTS AND IS PROVED IN
A MANNER SATISFACTORY TO THE DEPOSITARY). NON-CORPORATE FOREIGN SHAREHOLDERS
SHOULD COMPLETE AND SIGN A FORM W-8, CERTIFICATE OF FOREIGN STATUS (A COPY OF
WHICH MAY BE OBTAINED FROM THE DEPOSITARY), IN ORDER TO AVOID BACKUP
WITHHOLDING. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.

4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after February 16,
1998. If Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as described in this "Section 4.
Withdrawal Rights". Any such delay will be by an extension of the Offer to the
extent required by law.

7
<PAGE>
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in "Section 3. Procedures for Accepting the
Offer and Tendering Shares", any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.

All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.

Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares."

5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or in the Merger will be a taxable transaction for federal
income tax purposes and may also be a taxable transaction under applicable
state, local or foreign tax laws. In general, a shareholder will recognize gain
or loss for federal income tax purposes equal to the difference between the
amount of cash received in exchange for the Shares sold and such shareholder's
adjusted tax basis in such Shares. Assuming the Shares constitute capital assets
in the hands of the shareholder, such gain or loss will be capital gain or loss.
Capital gain generally will be taxed to an individual stockholder at a maximum
rate of 20 percent with respect to Shares held for more than 18 months and
generally will be taxed at a maximum rate of 28 percent with respect to Shares
held for more than one year but not more than 18 months. The tax rates
applicable to ordinary income will apply to the sale or exchange of Shares held
for one year or less. The highest marginal income tax rate applicable to an
individual shareholder is 39.6%. Capital losses not offset by capital gains may
be deducted against an individual shareholder's ordinary income up to a maximum
annual amount of $3,000. Unused capital losses may be carried forward
indefinitely by an individual stockholder. All net capital gain of a corporate
stockholder is subject to tax at ordinary corporate rates. A corporate
stockholder can deduct capital losses only to the extent of capital gains, with
unused losses being carried back three years and forward five years.

THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, SUCH AS FINANCIAL INSTITUTIONS, BROKER-DEALERS, PERSONS WHO
RECEIVED PAYMENT IN RESPECT OF OPTIONS TO ACQUIRE SHARES, SHAREHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE
AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS.

THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS
AND CHANGES IN SUCH TAX LAWS.

6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the National Market tier of Nasdaq. The following table sets forth,
for the quarters indicated, the high and low sales prices per Share on Nasdaq as
reported by the Dow Jones News Service. Since the Company's initial public
offering of Shares pursuant to a prospectus dated June 22, 1995, the Company has
not issued dividends on its Common Stock.

8
<PAGE>

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1995:
Second Quarter (beginning June 22, 1995).................................... $ 121/4 $ 9
Third Quarter............................................................... 171/4 95/8
Fourth Quarter.............................................................. 231/4 145/8
1996:
First Quarter............................................................... $ 29 $ 20
Second Quarter.............................................................. 353/4 223/4
Third Quarter............................................................... 291/4 181/2
Fourth Quarter.............................................................. 29 221/2
1997:
First Quarter............................................................... $ 321/4 $ 19
Second Quarter.............................................................. 401/4 261/2
Third Quarter............................................................... 611/4 351/2
Fourth Quarter (through December 15, 1997).................................. 473/4 291/2
</TABLE>

On December 15, 1997, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on Nasdaq was $45 1/2. On
December 18, 1997, the last full trading day prior to the commencement of the
Offer, the closing price per Share as reported on Nasdaq was $51 3/8.

SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.

7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth
herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser nor Parent
assumes any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Parent.

GENERAL. The Company is a Minnesota corporation with its principal
executive offices located at 7375 Bush Lake Road, Minneapolis, Minnesota
55439-2029. The Company designs, manufacturers and markets an innovative series
of spinal implants, instruments and procedures based on the Company's BAK-TM-
technology for the treatment of degenerative conditions of the human spine. The
Company's spinal implants are designed to facilitate fusion of spinal vertebrae
in order to reduce spinal instability that can cause chronic, disabling back
pain.

FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(the "Form 10-K") and the unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
(the "Form 10-Q"). More comprehensive financial information is included in the
Form 10-K, the Form 10-Q and other documents filed by the Company with the
Commission. The financial information that follows is qualified in its entirety
by reference to such reports and other documents, including the financial
statements and related notes contained therein. Such reports and other documents
may be examined and copies may be obtained from the offices of the Commission in
the manner set forth below.

9
<PAGE>
SPINE-TECH, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
------------------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994 1997 1996
------------ ------------- ------------- ------------- -------------
STATEMENT OF OPERATIONS DATA
Net sales............................ $ 10,153 $ 7,517 $ 4,398 $ 39,689 $ 4,471
Cost of goods sold................... 2,849 2,488 1,330 8,997 1,601
------------ ------ ------ ------------- -------------
Gross profit....................... 7,304 5,029 3,068 30,692 2,870
Operating expenses:
Sales and marketing.................. 5,387 1,563 962 12,306 2,641
General administrative............... 3,294 2,487 1,491 4,323 2,321
Research and development............. 1,777 1,597 1,202 2,360 1,369
------------ ------ ------ ------------- -------------
Total operating expenses......... 10,458 5,647 3,655 18,988 6,330
------------ ------ ------ ------------- -------------
Exclusive distribution
agreement fee...................... 40
Operating income (loss).............. (3,154) (618) (547) 11,704 (3,461)
Interest income...................... 1,223 896 168 747 1,071
------------ ------ ------ ------------- -------------
Net pretax income (loss)............. (1,931) 278 (379) 12,452 (2,389)
Provision (benefit) for income
taxes.............................. (1,684) 10 -- 4,983 --
- -------------------------------------------------------------------------------------------
Net income (loss)...................... $ (247) $ 268 $ (379) $ 7,469 $ (2,389)
- -------------------------------------------------------------------------------------------
Net income (loss) per weighted average
fully diluted share.................. $ (.02) $ .03 $ (.06) $ .65 $ (.24)
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994 1997 1996
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Current assets....................... $ 24,053 $ 27,652 $ 4,337 $ 37,510 $ 24,055
Current liabilities.................. 1,412 862 566 4,484 1,412
------------ ------------ ------------ ------------- -------------
Working capital...................... 22,641 26,790 3,771 33,026 22,643
Total assets......................... 34,058 32,667 5,549 45,467 34,059
Retained Earnings
(Accumulated Deficit).............. (2,562) (2,315) (2,378) 4,907 (2,561)
Shareholders' equity................. 32,646 31,805 4,983 40,983 32,647
</TABLE>

10
<PAGE>
PROJECTED FINANCIAL INFORMATION. In connection with Parent's review of the
Company and in the course of the negotiations between the Company and Parent
described in "Section 10. Background of the Offer; Contacts with the Company;
the Merger Agreement", the Company provided Parent with certain business and
financial information concerning the future financial performance of the Company
on a stand alone basis which Parent and Purchaser believe is not publicly
available, including the following (in thousands):

<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales........................................ $ 61,658 $ 119,000 $ 229,111 $ 283,850 $ 343,849
Operating income................................. 20,380 51,754 100,028 122,004 146,315
Income (loss) before income taxes................ 21,190 52,980 102,006 125,472 152,512
Net income (loss)................................ $ 12,714 $ 31,788 $ 61,203 $ 75,283 $ 91,507
</TABLE>

PARENT DOES NOT BELIEVE THAT SUCH INFORMATION REPRESENTS THE MOST LIKELY
FUTURE FINANCIAL PERFORMANCE OF THE COMPANY AS A SUBSIDIARY OF PARENT.
ACCORDINGLY, SUCH INFORMATION HAS BEEN INCLUDED ONLY BECAUSE IT WAS PROVIDED TO
PARENT BY THE COMPANY. MOREOVER, PROJECTED INFORMATION OF THIS TYPE IS BASED ON
ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO
PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL
RESULTS (INCLUDING THOSE FOR 1997) WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER
THAN THOSE SET FORTH ABOVE. IN ADDITION, THE COMPANY HAS ADVISED PARENT THAT
THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE. NONE OF
PARENT, PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.

The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at Seven World Trade Center, Suite 300,
New York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials may also be obtained by
mail, upon payment of the Commission's customary fees, by writing to its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports and other information regarding
registrants that file electronically with the Commission.

8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a newly
incorporated Minnesota corporation organized in connection with the Offer and
the Merger and has not carried on any activities other than in connection with
the Offer and the Merger. The principal offices of Purchaser are located at
Angleton, Texas. Purchaser is an indirect wholly owned subsidiary of Parent.

Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.

11
<PAGE>
Parent is a corporation organized under the laws of Switzerland. Its
principal offices are located at Zurcherstrasse 12, 8401 Winterthur,
Switzerland. Parent designs, manufactures and markets a broad range of
orthopedic and cardiovascular products, with a focus on implantable medical
products and materials technology.

Approximately 75% of the outstanding shares of Parent are owned by Sulzer
AG, a Swiss company that is listed on the Swiss Exchange.

The name, citizenship, business address, principal occupation or employment,
and five-year employment history for each of the directors and executive
officers of Purchaser, Parent and Sulzer AG and certain other information are
set forth in Schedule I hereto. Sulzer AG is active in the following markets:
weaving machines (Sulzer Ruti), plant and building services (Sulzer Infra),
medical technology (Sulzer Medica), the petroleum and chemical industries
(Sulzer Roteq), and in selected markets for mechanical engineering and plant
installation (Sulzer Winterthur). Sulzer AG's principal offices are located at
Zurcherstrasse 12, 8401 Winterthur, Switzerland.

On September 12, 1997, Sulzer Orthopedics Biologics Inc. ("Sulzer
Biologics"), an indirect wholly owned subsidiary of Parent, and the Company
entered into a Clinical Study Agreement (the "Clinical Agreement"). Pursuant to
the Clinical Agreement, Sulzer Biologics is conducting an investigational device
exemption study to obtain the Food and Drug Administration's marketing clearance
for the use of the Company's BAK Cage product in conjunction with Ne-Osteo, a
bone morphogenetic protein that is a mixture of naturally occurring bone growth
factors in a collagen matrix that was developed by Sulzer Biologics. Sulzer
Biologics is responsible for funding the study, and the Company has agreed to
pay $7,500 per quarter, up to a maximum of $150,000, to defray a portion of
those costs.

Set forth below are certain selected combined financial information relating
to Parent and its subsidiaries for Parent's last three fiscal years, which have
been excerpted or derived from the combined financial statements (the "Combined
Financial Statements") contained in Parent's prospectus dated July 14, 1997 and
from the unaudited financial statements contained in Parent's Report on Form 6-K
for the month of November, 1997, in each case filed or furnished by Parent with
the Commission. The Parent's selected combined financial information contained
herein is expressed on a "combined" rather than a "consolidated" basis because,
prior to the recapitalization of the Parent effected in conjunction with its
initial public offering in July 1997, not all of the Parent's present
subsidiaries were owned and controlled by the Parent. The Combined Financial
Statements were prepared in accordance with International Accounting Standards
("IAS") which differ in certain respects from accounting principles generally
accepted in the United States ("US GAAP"). More comprehensive financial
information is included in such reports and other documents filed by Parent with
the Commission, and the following financial information is qualified in its
entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be inspected and copies may be obtained from the offices of
the Commission in the same manner as set forth with respect to information about
the Company in "Section 7. Certain Information Concerning the Company".

12
<PAGE>
SULZER MEDICA LTD
SELECTED COMBINED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997 (1)(2) YEAR ENDED DECEMBER 31,
--------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1997 1996 1996 1996 1995 1994
------- ------- ------- ------ ----- ----- -----

<CAPTION>
US$(7) CHF CHF US$(3) CHF CHF CHF
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:

AMOUNTS IN ACCORDANCE WITH IAS:

Net sales
Orthopedics......................................................... 356.8 517.4 438.6 417 600 561 571
Electrophysiology................................................... 243.2 352.7 295.0 278 401 322 330
Cardiovascular Prostheses........................................... 114.2 165.6 117.9 112 161 162 155
Consolidation....................................................... (3.7) (5.5) (4.5) (4) (6) (2) --
------- ------- ------- ------ ----- ----- -----
Total net sales....................................................... 710.5 1,030.2 847.0 803 1,156 1,043 1,056
Cost of sales......................................................... (219.7) (318.5) (273.9) (262) (377) (343) (350)
Selling, general and administrative expense........................... (294.2) (426.6) (330.4) (316) (455) (383) (369)
Research and development expense...................................... (69.2) (100.4) (78.9) (73) (106) (94) (103)
Operating income before exceptional items and goodwill amortization
(4)................................................................. 125.3 181.7 166.4 158 227 219 232
Operating income (loss)............................................... 119.2 172.8 77.7 99 143 170 201
Net income (loss)..................................................... 65.4 94.8 28.5 52 75 67 85

AMOUNTS IN ACCORDANCE WITH US GAAP (5):

Net income............................................................ 52 75 67
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
SEPTEMBER 30, ---------------------------------
1997(1)(2) 1996 1996 1995
---------------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
US$(8) CHF US$(3) CHF CHF
BALANCE SHEET DATA:

AMOUNTS IN ACCORDANCE WITH IAS:
Cash and cash equivalents...................................... 735 1,066 79 114 136
Net current assets (6)......................................... 339 493 361 520 323
Total assets................................................... 1,626 2,359 882 1,270 1,008
Short-term borrowings.......................................... 83 120 166 240 62
Long-term borrowings........................................... 501 727 551 794 778
Shareholders' equity (deficit)................................. 770 1,117 (45) (64) (110)

AMOUNTS IN ACCORDANCE WITH US GAAP (5):
Cash and cash equivalents...................................... 79 114 136
Total assets................................................... 910 1,311 1,053
Short-term borrowings.......................................... 166 240 62
Long-term borrowings........................................... 585 843 792
Shareholders' equity (deficit)................................. (31) (45) (86)

<CAPTION>
1994
---------
<S> <C>
CHF
BALANCE SHEET DATA:
AMOUNTS IN ACCORDANCE WITH IAS:
Cash and cash equivalents...................................... 98
Net current assets (6)......................................... 328
Total assets................................................... 961
Short-term borrowings.......................................... 49
Long-term borrowings........................................... 882
Shareholders' equity (deficit)................................. (206)
AMOUNTS IN ACCORDANCE WITH US GAAP (5):
Cash and cash equivalents......................................
Total assets...................................................
Short-term borrowings..........................................
Long-term borrowings...........................................
Shareholders' equity (deficit).................................
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
OTHER DATA:
Number of employees.................................................................... 4,557 4,069 3,963
</TABLE>

13
<PAGE>
- ------------------------

(1) The financial data for the quarters ended September 30, 1997 and 1996
comprise selected unaudited income statement and balance sheet information.

(2) Unaudited.

(3) Translated solely for the convenience of the reader at the rate of CHF 1.44
= US$1.00, the Noon Buying Rate on March 31, 1997. Total net sales for 1996
of the Parent, translated at the average 1996 exchange rate of CHF 1.23 =
US$1.00 would have been $940 million.

(4) This item is not reportable under US GAAP.

(5) Amounts in accordance with US GAAP have not been prepared on a quarterly
basis. The Parent is not aware of any significant differences between the
Parent's IAS financial data and amounts in accordance with US GAAP that
might affect the quarterly financial information other than those described
in the Combined Financial Statements.

(6) "Net current assets," which is not a measure defined under US GAAP,
comprises current assets (net of cash and cash equivalents) less current
liabilities (excluding short-term borrowings).

(7) US dollar information is for convenience of the reader only. The exchange
rate used for the conversion of the cumulative January to September CHF
figures into USD was CHF 1.45 = US$1.00 and represents the average rate
during this accounting period.

(8) US dollar information is for convenience of the reader only. The exchange
rate used for the conversion of the CHF figures into USD was CHF 1.45 =
US$1.00 at the end of September 1997 representing the rounded actual rate at
this balance sheet date.

DIFFERENCES BETWEEN IAS AND US GAAP

The financial statements are prepared in accordance with IAS which differ in
certain respects from US GAAP.

There are no significant differences between IAS and US GAAP in the Combined
Financial Statements which lead to adjustments to net income for the years ended
December 31, 1996 and 1995. The principal differences between IAS and US GAAP
with respect to shareholders' equity are presented below with explanations of
certain adjustments that affect historical combined shareholders' equity as of
December 31, 1996 and 1995:

RECONCILIATION OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
1996 1995
MCHF MCHF
----------- -----------
<S> <C> <C>
Shareholders' equity under IAS.......................................... (64) (110)
Shareholders' equity under US GAAP...................................... (45) (86)
</TABLE>

MARKETABLE SECURITIES. In accordance with IAS 25, "Accounting for
Investments", Parent and its subsidiaries (the "Group") has classified its
marketable securities as long-term, and carries such investments at the lower of
cost and market value, determined on a total aggregate portfolio bases.
Reductions in the carrying value of marketable securities are charged to the
combined statement of income.

US GAAP Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("FAS 115") provides that
investments in marketable securities should be classified in one of three
categories and accounted for as follows:

-- "Held to maturity", which are defined as debt securities that a company
has the positive intent and ability to hold to maturity, are reported at
amortized cost.

14
<PAGE>
-- "Trading", which are defined as those securities that are bought and held
principally for the purpose of selling them in the near term, are reported
at fair value with unrealized gains and losses included in earnings.

-- "Available-for-sale", which include securities not classified in either
of the above categories, are reported at fair value with unrealized gains
and losses excluded from earnings and included as a separate component of
shareholders' equity.

The Group has classified its investments in marketable securities as
available-for-sale. The Group does not have any trading securities. Accordingly,
the effect of this treatment is included in the US GAAP reconciliation of
shareholders' equity. There were no reductions in the carrying value of
marketable securities charged to the combined statement of income for the years
ended December 31, 1996 and 1995, which would require a reconciliation of
combined net income under IAS and US GAAP.

The IAS cost and estimated fair value of available-for-sale securities at
December 31, are as follows:

<TABLE>
<CAPTION>
1996 1995
MCHF MCHF
----------- -----------
<S> <C> <C>
IAS cost.................................................................... 13 3
Gross unrealized gains...................................................... 30 39
Gross unrealized losses..................................................... -- --
-- --
Fair value in accordance with FAS 115....................................... 43 42
-- --
-- --
</TABLE>

The marketable securities shown above represent equity securities. The
Company did not realize any proceeds from the sale of available-for-sale
securities during 1996 and 1995.

GOODWILL. Both IAS and US GAAP require that goodwill arising on acquisition
be capitalized and amortized on a systemic basis over its useful life. In
addition the measurement of goodwill under IAS and US GAAP is similar and does
not result in any material difference.

Both IAS and US GAAP acknowledge that it is difficult to estimate the useful
life of goodwill and impose maximum limits on the useful life which are
arbitrary. Under IAS there is a presumption that for accounting purposes the
useful life of goodwill does not exceed 5 years, unless a longer period can be
clearly justified. In no case may the useful life of goodwill under IAS exceed
20 years. Under US GAAP, Accounting Principles Board Opinion No. 16, "Business
Combination", the useful life of goodwill may not exceed 40 years. Accordingly,
the application of US GAAP may result in differences in the period of
amortization for goodwill. As permitted by the Commission rules, the Parent has
not attempted to quantify those differences for purposes of the reconciliation
to US GAAP.

UNAMORTIZED PREMIUMS ON BANK LOANS. In the combined financial statements
prepared in accordance with IAS, unamortized premiums on bank loans of CHF 49
million and of CHF 14 million at December 31, 1996 and 1995, respectively, were
included in accrued liabilities and other long-term liabilities. Under US GAAP,
Accounting Principles Board Opinion No. 21 requires that such premiums be
reported as a direct addition to the amount of the related borrowings. This
difference does not result in a reconciling to shareholders' equity as of
December 31, 1996 and 1995 or net income for the years ended 1996 and 1995
between IAS and US GAAP.

DEFERRED TAXES. In the Combined Financial Statements deferred tax assets
and liabilities are classified as long-term and have been presented as such in
the assets and liabilities sections of the balance sheet. This presentation is
in accordance with IAS 12 "Accounting for Taxes on Income". US GAAP Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("FAS 109")
provides that deferred taxes must be separated into a current amount and a
noncurrent amount based on the classification of the related asset or liability.
This difference does not result in a reconciling adjustment to

15
<PAGE>
shareholders' equity as of December 31, 1996 and 1995, or net income for the
years ended 1996 and 1995 between IAS and US GAAP.

FOREIGN CURRENCY TRANSLATION. In the Combined Financial Statements prepared
in accordance with IAS goodwill related to the acquisitions of foreign
subsidiaries is translated using the exchange rate prevailing at the date of
acquisition. US GAAP Statement of Financial Accounting Standards No. 52 "Foreign
Currency Translation" requires that all elements of the financial statements,
including goodwill, must be translated by using the year-end rate of exchange.
This difference between IAS and US GAAP does not result in a material
reconciling adjustment to shareholders' equity as of December 31, 1996 and 1995,
or net income for the years ended 1996 and 1995.

OPERATING INCOME BEFORE EXCEPTIONAL ITEMS AND GOODWILL
AMORTIZATION. Disclosure of operating income before exceptional items and
goodwill amortization is not permitted under US GAAP. The exceptional items and
goodwill amortization would be included in the determination of operating income
under US GAAP. The staff of the Commission is of the opinion that inventory
writedowns included within exceptional items should be included within cost of
sales under US GAAP. In addition, a part of the restructuring costs of CHF 4
million recorded as exceptional items would not qualify for disclosure as
restructuring costs under US GAAP.

PROVISIONS. Under IAS 10 a potential loss may be reduced or avoided because
a contingent liability is matched by a related claim against a third party, for
example an insurance company. In such cases the amount recognized as a loss may
be determined after taking into account the probable recovery under the claim.
US GAAP however requires that both the loss provision and the recoverable amount
be recorded using a gross presentation basis. Under US GAAP short term
provisions and other accounts receivable should each be increased by
approximately CHF 2 million.

Except as described in this Offer to Purchase, (i) none of Purchaser, Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of Purchaser, Parent or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares and (ii)
none of Purchaser, Parent nor, to the best knowledge of Purchaser and Parent,
any of the persons or entities referred to above nor any director, executive
officer or subsidiary of any of the foregoing has effected any transaction in
the Shares during the past 60 days.

Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies. Except as set forth in this Offer to Purchase,
since January 1, 1994, neither Purchaser nor Parent nor, to the best knowledge
of Purchaser and Parent, any of the persons listed on Schedule I hereto, has had
any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since January 1, 1994, there have
been no contacts, negotiations or transactions between any of Purchaser, Parent,
or any of their respective subsidiaries or, to the best knowledge of Purchaser
and Parent, any of the persons listed in Schedule I to this Offer to Purchase,
on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.

9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds required
by Purchaser to consummate the Offer and the Merger and to pay related fees and
expenses is estimated to be

16
<PAGE>
approximately $630 million. Purchaser will obtain all of such funds from Parent.
Parent will provide approximately $380 million of such funds from available cash
and the liquidation of certain short term investments. Parent will provide
approximately $250 million of such funds from a credit facility set forth in a
commitment letter dated December 17, 1997 from an affiliate of Credit Suisse
First Boston Corporation, Credit Suisse First Boston, a Swiss bank (the "Bridge
Credit Facility"). Pursuant to the Bridge Credit Facility, Parent may borrow up
to $250 million. All amounts under the Bridge Credit Facility must be repaid by
March 31, 1998 and the annual rate of interest under this facility is 0.15% over
LIBOR. Parent expects to repay the Bridge Credit Facility from the liquidation
of certain investments expected to become due in the weeks leading up to March
31, 1998.

10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.

Following the completion of its initial public offering in July 1997, Parent
conducted an industry-wide search for potential acquisition candidates within
areas it previously had targeted for expansion and identified the Company as one
of the most attractive acquisition candidates in the spinal field. As a result,
Parent began its review of publicly available information concerning the
Company.

In early September 1997, with the consent of the Company, Piper Jaffray,
Inc., financial advisor to the Company ("Piper Jaffray"), contacted four medical
device companies, including Parent, concerning their interest in effecting a
possible transaction with the Company. Robert Cohen, Vice President Business
Development of Parent, indicated that Parent would have an interest in pursuing
discussions. The other three companies did not express an interest. On September
25, 1997, the Company and Parent entered into a confidentiality agreement and
Parent began its review and analysis of non-public information supplied to it by
the Company. On October 7, 1997, Mr. Cohen indicated to Piper Jaffray that
Parent was interested in continuing to explore a possible transaction. Parent
continued its analysis of the Company throughout October 1997.

On October 14, 1997, David W. Stassen, Chief Executive Officer and President
of the Company, Keith M. Eastman, Chief Financial Officer and Secretary of the
Company, and Douglas W. Kohrs, Vice President, Research and Development of the
Company, a representative of Piper Jaffray and Mr. Cohen and Jerry L. Marlar,
President Sulzer Orthopedics Inc., met in Houston. At the meeting, the Company's
representatives made a presentation to Parent's representatives concerning the
Company's operations, including its product development.

On October 30, 1997, Fritz Fahrni, Chairman of the Parent, Andre P. Buchel,
the President and Chief Executive Officer of Parent, and Mr. Cohen met with
Messrs. Stassen, Eastman and Kohrs and a representative of Piper Jaffray in
Minneapolis to discuss the Company's operations, the possibility of a
transaction and the integration of the companies in the event of such a
transaction.

From November 3 through November 5, 1997, representatives of Parent and the
Company met in Minneapolis to facilitate Parent's due diligence review of the
Company. During those meetings, Mr. Cohen indicated to Mr. Stassen that Parent
was interested in continuing to explore a transaction. Following these meetings,
Parent continued its analysis of a possible acquisition of the Company.

On November 20, 1997, Messrs. Stassen, Eastman and Kohrs met in London with
Mr. Cohen and Felix Scherrer, President of Sulzer Orthopedics Ltd., to continue
to discuss a potential transaction and the integration issues that might arise
in the event of such a transaction.

On November 27, 1997, Parent's Board of Directors reviewed the potential
acquisition of the Company and authorized Parent's management to continue to
pursue the potential transaction. On November 29, 1997, Mr. Cohen telephoned Mr.
Stassen and requested that they meet in New York so that Parent could make an
acquisition proposal to the Company.

On December 1, 1997, representatives of Parent and Credit Suisse First
Boston, and Shearman & Sterling, Parent's counsel, met in New York with Messrs.
Stassen and Eastman and Piper Jaffray. During

17
<PAGE>
those meetings, Parent made a proposal to acquire the Company that was
equivalent to approximately $49.40 per Share. The Company's representatives
indicated that they believed that Parent's proposal did not deliver sufficient
value to the Company's shareholders, but that they would review the proposal
with the Board. Shortly following the meeting, Parent delivered an initial draft
of the Merger Agreement to the Company.

At a Board meeting of the Company on December 4, 1997, the proposal and the
proposed terms of the initial draft of the Merger Agreement were reviewed by
Faegre & Benson LLP, counsel to the Company, with the Board, and Piper Jaffray
reviewed with the Board the process that had been undertaken and analyzed the
proposed transaction assuming the merger price proposed by Parent. The Board
instructed management to continue negotiations and to attempt to obtain a higher
price for the Company.

Following the December 4, 1997 Board meeting, Mr. Stassen advised Mr. Cohen
that the Board would consider a transaction that delivered $52.00 per share in
cash to the Company's shareholders, and on December 5, 1997, Faegre & Benson LLP
communicated to Shearman & Sterling the Company's initial response to the draft
Merger Agreement. After Parent reviewed this response, Mr. Cohen advised Mr.
Stassen on December 8, 1997 that Parent was willing to discuss such a
transaction, but only if Parent was able to reach a satisfactory agreement with
the Company's senior management concerning their continuing role in the Company
following the transaction. Shearman & Sterling and Faegre & Benson LLP continued
to negotiate the terms of the Merger Agreement.

On December 12, 1997, Parent reviewed the proposal to acquire the Company at
$52.00 per Share with the Board of Directors of Sulzer AG, which owns
approximately 75% of Parent's outstanding common stock, and Sulzer AG's Board of
Directors endorsed the transaction.

Prior to the meeting of the Company's Board on December 12, 1997, Piper
Jaffray, in separate conversations, contacted Mr. Cohen and Credit Suisse First
Boston and discussed whether Parent would be willing to increase its price. Mr.
Cohen and a representative of Credit Suisse First Boston each stated that it was
his belief that the Board of Directors of Parent would not entertain a request
for a higher price.

The Board of the Company met later on December 12 to discuss Parent's new
proposal to acquire the Company for $52.00 per Share. Mr. Stassen discussed
recent developments, including certain adverse rulings regarding the products of
two competitors by an FDA panel and the effect of this development on the
Company's stock price as well as its impact on the future prospects of the
Company. The Board also was informed (i) of Piper Jaffray's contact with Mr.
Cohen and a representative of Credit Suisse First Boston concerning whether
Parent would be willing to increase its price, (ii) that Piper Jaffray had been
informed by Mr. Cohen and the representative of Credit Suisse First Boston, and
believed, that it was unlikely that Parent would increase the price, (iii) that
Piper Jaffray had effectively canvassed the market of logical buyers and (iv)
that Piper Jaffray was prepared to deliver its opinion that as of such date and
based upon and subject to the matters considered by Piper Jaffray, the $52.00
price proposed to be received by the holders of Shares in the Offer and the
Merger was fair, from a financial point of view, to such holders. The most
recent draft of the Merger Agreement received from Shearman & Sterling that day
was distributed and reviewed with Faegre & Benson LLP and major outstanding
issues were discussed. Mr. Stassen reviewed with the Board Parent's position
that its proposal assumed that it would be able to reach satisfactory
arrangements with the Company's senior management concerning their role in the
Company following the transaction, and the Board was informed that Parent was
requesting a termination fee of $20 million and that certain conditions to the
Offer remained in the proposed Merger Agreement which the Board determined were
not acceptable. The Board authorized management to propose a termination fee of
$12 million and to continue negotiations on the other outstanding issues.

Shearman & Sterling and Faegre & Benson LLP continued their negotiation of
the Merger Agreement. On December 14, 1997, Messrs. Stassen and Eastman met with
representatives of Parent in

18
<PAGE>
Angleton, Texas, where they reached agreement concerning employment arrangements
following the transaction.

On December 15, 1997, the Company's Board met again. Management, Piper
Jaffray and Faegre & Benson LLP updated the Board on the status of discussions,
including the willingness of Parent to accept a $15 million termination fee and
to further limit its conditions to the Offer. Piper Jaffray updated certain
aspects of its fairness opinion presentation, and formally presented its opinion
to the Board. A special committee of the Board, consisting of all of the
independent directors of the Board for purposes of Section 302A.673 of the
Minnesota Law, unanimously approved the Offer, the Merger and the Merger
Agreement. Immediately thereafter, the Board unanimously approved the Offer, the
Merger and the Merger Agreement and determined that the terms of the Offer and
the Merger are in the best interests of the Company and its shareholders.

That evening the parties signed the Merger Agreement.

THE MERGER AGREEMENT

The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") filed by Purchaser and Parent with the Commission in connection with the
Offer. Such summary is qualified in its entirety by reference to the Merger
Agreement.

THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five business days after
the initial public announcement of Purchaser's intention to commence the Offer
provided (i) the Merger Agreement is not terminated by its terms and (ii) none
of the events described in "Section 14. Conditions to the Offer" have occurred
or are existing. The obligation of Purchaser to accept for payment and pay for
the Shares tendered pursuant to the Offer is subject to the satisfaction of (i)
the Minimum Condition and (ii) certain other conditions described in "Section
14. Conditions to the Offer". The Purchaser may waive any condition to the
Offer, increase the price per Share payable in the Offer and make any other
changes to the Offer. However, no change may (i) decrease the price per Share
payable in the Offer, (ii) reduce the maximum number of Shares to be purchased,
(iii) change the form of consideration to be paid in the Offer, (iv) modify the
conditions described in "Section 14. Conditions to the Offer", (v) impose
conditions to the Offer other than those described in "Section 14. Conditions to
the Offer", or (vi), except as provided in the following sentence, extend the
Offer. The Purchaser may, without the consent of the Company, (i) extend the
Offer beyond the scheduled expiration date (the initial scheduled expiration
date being January 21, 1998, if, at the scheduled expiration date, any of the
conditions to Purchaser's obligation to accept for payment, and to pay for, the
Shares, will not be satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation or interpretation of the Commission or the
staff thereof applicable to the Offer or (iii) extend the Offer for an aggregate
period of not more than five business days beyond the latest applicable date
that would otherwise be permitted under clause (i) or (ii) of this sentence, if
as of such date, all of the conditions to Purchaser's obligations to accept for
payment, and to pay for, the Shares are satisfied or waived, but the number of
Shares validly tendered and not withdrawn pursuant to the Offer equals 80% or
more, but less than 90%, of the outstanding Shares. The Per Share Amount will,
subject to the applicable withholding of taxes, be net to the seller in cash,
upon the terms and conditions of the Offer. Subject to the terms and conditions
of the Offer, Purchaser shall, and Parent will cause Purchaser to, promptly
after expiration of the Offer, accept for payment and pay for all Shares validly
tendered and not withdrawn.

THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with Minnesota Law, at the Effective
Time, Purchaser will be merged with and into the Company and the Company will
continue as the Surviving Corporation and will become an indirect wholly owned
subsidiary of Parent. Upon consummation of the Merger, each issued and
outstanding Share (other than any Shares held in the treasury of the Company or
owned by Purchaser, Parent or

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any direct or indirect wholly owned subsidiary of Parent or of the Company and
any outstanding Shares which are held by shareholders who have not voted in
favor of the Merger and who have properly exercised dissenters' rights with
respect to such Shares in accordance with Minnesota Law) will be converted
automatically into the right to receive the Per Share Amount in cash (the
"Merger Consideration"). Pursuant to the Merger Agreement, each share of common
stock, par value $.01 per share, of Purchaser issued and outstanding immediately
prior to the Effective Time will be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.

CHARTER DOCUMENTS; INITIAL DIRECTORS AND OFFICERS. The Merger Agreement
provides that, at the Effective Time, the Articles of Incorporation of
Purchaser, as in effect immediately prior to the Effective Time, will be the
Articles of Incorporation of the Surviving Corporation; PROVIDED, HOWEVER, that
Article I of the Articles of Incorporation of the Surviving Corporation will be
amended to read as follows: "The name of the corporation is Spine-Tech, Inc."
The Merger Agreement also provides that the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, will be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such By-laws. Pursuant to the
Merger Agreement, the directors of Purchaser immediately prior to the Effective
Time will be the initial directors of the Surviving Corporation and the officers
of the Purchaser immediately prior to the Effective Time will be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified in accordance with the
Articles of Incorporation and By-laws of the Surviving Corporation and Minnesota
Law.

SHAREHOLDERS' MEETING. The Merger Agreement provides that, if required by
applicable law in order to consummate the Merger, the Company, acting through
the Board, will, in accordance with applicable law and its Articles of
Incorporation and By-Laws, duly call, give notice of, convene and hold a special
meeting of its shareholders as soon as practicable following consummation of the
Offer for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby. Notwithstanding the foregoing, in the
event that Purchaser shall acquire at least 90% of the then outstanding Shares,
the parties have agreed, subject to the conditions to the Merger described
below, to take all necessary and appropriate action to cause the Merger to
become effective, in accordance with Section 302A.621 of the Minnesota Law, as
soon as reasonably practicable after such acquisition, without a meeting of the
shareholders of the Company.

FILINGS. The Merger Agreement provides that the Company will, as promptly
as reasonably practicable following consummation of the Offer and if required by
applicable law, file a proxy statement (the "Proxy Statement") with the
Commission, and will use its reasonable efforts to have the Proxy Statement
cleared by the Commission. The Company has agreed that, except if the Board
determines in good faith an alternative action is necessary in accordance with
its fiduciary duties to the Company and its shareholders under applicable law
after consultation with its outside legal counsel, the Proxy Statement will
contain the recommendation of the Board that the holders of the Shares approve
and adopt the Merger Agreement and the Merger.

CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
the Company has agreed that, between the date of the Merger Agreement and the
Effective Time, except as set forth in the disclosure schedule of the Company or
as expressly contemplated by any other provision of the Merger Agreement, unless
Parent or Purchaser will otherwise agree in writing, the businesses of the
Company and its subsidiaries will be conducted only in, and the Company and its
subsidiaries will not take any action with respect to their businesses except
in, the ordinary course of business; and each of the Company and its
subsidiaries will use its reasonable efforts to preserve substantially intact
the business organization of the Company and its subsidiaries, to keep available
the services of the current officers, employees and consultants of the Company
and its subsidiaries, and to preserve the current relationships of the Company
and its subsidiaries with physicians, customers, suppliers and other persons
with which the Company or any

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<PAGE>
of its subsidiaries has significant business relations. By way of amplification
and not limitation, except as contemplated by the Merger Agreement, neither the
Company nor any subsidiary thereof will, between the date of the Merger
Agreement and the Effective Time, directly or indirectly do any of the following
without the prior written consent of Parent or Purchaser:

(a) amend or otherwise change its Articles of Incorporation or By-laws
or equivalent organizational documents;

(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares
of capital stock of the Company or any of its subsidiaries, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any of its
subsidiaries (except for the issuance of Shares issuable pursuant to
outstanding options as of the date of the Merger Agreement, 6,500 Shares to
be issued pursuant to the Company's employee stock purchase plan and any
Shares required to be issued under the Rights Agreement, dated as of August
21, 1996, between the Company and Norwest Bank Minnesota, N.A. (the "Rights
Agreement")) or (ii) any assets of the Company or any of its subsidiaries,
except in the ordinary course of the business consistent with past practice;

(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock except that any subsidiary of the Company may declare and pay
a dividend to the Company;

(d) reclassify, combine, split, subdivide or redeem any of its capital
stock, or purchase or otherwise acquire, directly or indirectly, any of its
capital stock;

(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof; (ii) incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except in
the ordinary course of business; (iii) enter into any material contract or
agreement other than in the ordinary course of business; (iv) authorize any
single capital expenditure which is in excess of $100,000 or capital
expenditures which are, in the aggregate, in excess of $250,000 for the
Company and its subsidiaries taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement with respect to any of
the foregoing matters;

(f) increase the compensation payable or to become payable or the
benefits provided to its officers or key employees, or grant any severance
or termination pay to, or enter into any employment or severance agreement
with, any director or officer or other key employee of the Company or any of
its subsidiaries, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or similar plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except to
the extent such endorsement or termination is required by law;

(g) hire or retain any single employee or consultant at an annual rate
of compensation in excess of $50,000, or employees or consultants with
annual rates of compensation in excess of $250,000 in the aggregate;

(h) take any action, other than in the ordinary course of business
consistent with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable);

(i) make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability;

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<PAGE>
(j) commence or settle any litigation, suit, claim, action, proceeding
or investigation;

(k) amend, modify or consent to the termination of any material contract
or amend, modify or consent to the termination of the Company's or any of
its subsidiary's rights thereunder, in a manner materially adverse to the
Company or any of its subsidiaries, other than in the ordinary course of
business consistent with past practice;

(l) enter into any material contract, other than in the ordinary course
of business; or

(m) enter into any contract or agreement that contemplates the transfer
by the Company of any interest in certain owned or licensed intellectual
property.

DIRECTORS. The Merger Agreement provides that, promptly upon the purchase
by Purchaser of the Shares pursuant to the Offer (provided that the Minimum
Condition has been satisfied), and from time to time thereafter, Purchaser will
be entitled, subject to compliance with Section 14(f) of the Exchange Act, to
designate up to such number of directors, rounded down to the next whole number
(except where such rounding down would cause Purchaser to not be entitled to
designate at least a majority of directors on the Board, in which case such
number will be rounded up), on the Board as will give Purchaser representation
on the Board equal to the product of the total number of directors on the Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Purchaser or any affiliate of Purchaser following such purchase bears to the
total number of Shares then outstanding, and the Company will, at such time,
promptly take all actions necessary to cause Purchaser's designees to be elected
or appointed as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both. At such
times, the Company will, upon the written request of Purchaser, use its
reasonable efforts to cause persons designated by Purchaser to constitute the
same percentage as persons designated by Purchaser will constitute of the Board
of (i) each committee of the Board, (ii) the board of directors of each of the
Company's subsidiaries and (iii) each committee of each such board, in each case
only to the extent permitted by applicable law. Notwithstanding anything stated
herein, if Shares are purchased pursuant to the Offer, Parent and Purchaser will
use reasonable efforts to assure that until the Effective Time, the Board has at
least one director who is a director on the date of the Merger Agreement and is
not an employee of the Company.

Pursuant to the Merger Agreement, after the election of designees of
Purchaser pursuant to the preceding paragraph and prior to the Effective Time,
any amendment of the Merger Agreement or the Articles of Incorporation or
By-laws of the Company, any termination of the Merger Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights thereunder will require the concurrence of a majority of the
directors of the Company then in office who neither were designated by Purchaser
nor are employees of the Company.

NO SOLICITATION. The Company has agreed that it will, and will direct and
use all reasonable efforts to cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or negotiations
with any parties that may be ongoing with respect to any Acquisition Proposal
(as defined below). The Company will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director or
employee of, or any investment banker, accountant, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit or initiate, or knowingly encourage the submission of,
any Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal; PROVIDED, HOWEVER,
that, if and to the extent that, prior to the acceptance for payment of Shares
pursuant to the Offer, the Board determines in good faith that it is necessary
to do so in accordance with its fiduciary duties to the Company and its
shareholders under applicable law after consultation with its outside legal
counsel, the Company may, in response to a bona fide unsolicited

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<PAGE>
Acquisition Proposal, and subject to compliance with the notice requirements
described below, (x) furnish information with respect to the Company and provide
access to the person making such Acquisition Proposal pursuant to a customary
confidentiality agreement on terms no less favorable to the Company than those
contained in the confidentiality agreement dated September 25, 1997 between
Parent and the Company and (y) participate in discussions and negotiations
regarding such Acquisition Proposal.

For purposes of the Merger Agreement, "ACQUISITION PROPOSAL" means any bona
fide proposal or offer from any person relating to any direct or indirect
acquisition of over 20% of any class of equity securities of the Company or any
of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, sale of all or a substantial part of the
assets other than in the ordinary course of business, recapitalization,
liquidation, dissolution or similar transaction involving the Company and its
subsidiaries, other than the transactions contemplated by the Offer and the
Merger.

The Merger Agreement also provides that neither the Board nor any committee
thereof will (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Board or any
such committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that, prior to the time of
acceptance for payment of Shares pursuant to the Offer, the Board determines in
good faith that it is necessary in accordance with its fiduciary duties to the
Company and its shareholders under applicable law after consultation with its
outside legal counsel to enter into a definitive agreement with respect to a
Superior Proposal (as defined below), the Board may terminate the Merger
Agreement in accordance with clause (d)(ii) of "Termination" below and
concurrently with, or immediately after, such termination cause the Company to
enter into such agreement with respect to such Superior Proposal and withdraw or
modify its approval or recommendation of the Offer, the Merger or the Merger
Agreement. For purposes of the Merger Agreement, a "SUPERIOR PROPOSAL" means any
bona fide unsolicited proposal made by a third party to acquire, directly or
indirectly, more than 50% of the outstanding Shares or the shares of capital
stock of any surviving corporation in a merger with the Company on a fully
diluted basis or all or substantially all the assets of the Company and
otherwise on terms which the Board determines in its good faith judgment (after
consultation with its financial advisor) to be more favorable to the Company's
shareholders than the Offer and the Merger.

The Merger Agreement provides that the Company will promptly advise Parent
orally and in writing of any request for information or of any Acquisition
Proposal and the material terms and conditions of such request or Acquisition
Proposal but need not identify the person making such request or Acquisition
Proposal.

DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The Merger
Agreement provides that the Articles of Incorporation and By-laws of the
Surviving Corporation will contain provisions no less favorable with respect to
indemnification, expense advancement and exculpation than are set forth in
Section 4.01 of the By-laws or in the Articles of Incorporation of the Company,
which provisions will not be amended, repealed or otherwise modified for a
period of six years from the Effective Time (or, in the event any claim is
asserted within such six year period, until final disposition of that claim) in
any manner that would affect adversely the rights thereunder of individuals who
at the Effective Time or at any time prior thereto were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification is
required by Minnesota Law. To the extent that the obligations under such
provisions are not fully performed by the Surviving Corporation, Parent has
agreed to perform fully the obligations thereunder for the remaining period.

Parent or the Surviving Corporation will use its best efforts to maintain in
effect for a period of not less than six years from the Effective Time the
current directors' and officers' liability insurance policies

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<PAGE>
maintained by the Company (provided that Parent or the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less favorable to such directors and officers) with
respect to matters occurring prior to the Effective Time. Notwithstanding the
foregoing, in no event will Parent or the Surviving Corporation be required to
expend more than an amount per year equal to 150% of current annual premiums
paid by the Company for such insurance (which premiums the Company has
represented and warranted to be $120,000 in the aggregate); and, PROVIDED,
FURTHER, that if the Parent or the Surviving Corporation is not able to obtain
the amount of insurance for such aggregate premium, Parent or the Surviving
Corporation will obtain as much insurance as can be obtained for an annual
premium of 150% of such current premiums.

RIGHTS PLANS. Pursuant to the Merger Agreement, the Company will not redeem
any preferred share purchase rights issued pursuant to the Rights Agreement (the
"Rights") prior to the Effective Time unless the Merger Agreement has terminated
as provided below or unless required to do so by order of a court of competent
jurisdiction. The Board agrees to take, or cause to be taken, such action as is
necessary to effect the amendments to the Rights Agreement so that (a) none of
the execution or delivery of this Agreement, the making of the Offer, the
acceptance for payment or payment for Shares by Purchaser pursuant to the Offer
or the consummation of the Merger or any other transaction contemplated by the
Merger Agreement will result in (i) the occurrence of the "flip-in event"
described under Section 11 of the Rights Agreement, (ii) the occurrence of the
"flip-over event" described in Section 13 of the Rights Agreement, or (iii) the
Rights becoming evidenced by, and transferable pursuant to, certificates
separate from the certificates representing Common Stock, and (b) the Rights
(including any related alternative rights) will expire pursuant to the terms of
the Rights Agreement at the Effective Time.

EMPLOYEE STOCK OPTIONS. The Merger Agreement provides that the Company will
take all such actions as necessary to cause all stock options (including any
related alternative rights) granted under the Company's stock option plans
(including those granted to current or former employees, consultants and
directors of the Company or any of its subsidiaries) (the "Employee Stock
Options"), to become exercisable either prior to the purchase of the Shares
pursuant to the Offer or immediately prior to the Effective Time, as permitted
under the respective stock option plan. The Company agrees to take all such
actions as necessary to cause all Employee Stock Options that are outstanding
immediately prior to the Effective Time (whether or not then presently
exercisable or vested), to be cancelled. In exchange for the cancellation of
each such Employee Stock Option (whether or not presently exercisable or
vested), the holder thereof will be entitled to receive from the Company an
amount in cash equal to the product of the difference between the Per Share
Amount and the per share exercise price of such Employee Stock Option, and the
number of shares of Common Stock covered by such Employee Stock Option. All
payments in respect of Employee Stock Options will be made not later than five
business days following the Effective Time, subject to the Company's collection
of all applicable withholding taxes. The Company's stock option plans will be
terminated as of the Effective Time and thereafter the only rights of
participants therein will be the right to receive the consideration set forth in
the previous sentence.

S&N OPTIONS. The Merger Agreement provides that all stock options
(including any related alternative rights) issued to Smith & Nephew Richards
Inc. by the Company (the "S&N Options") will vest, terminate, become exercisable
and be cancelled according to their terms and conditions. The Company will take
all necessary action to cause all S&N Options that are outstanding immediately
prior to the Effective Time (whether or not then presently exercisable and
vested) to be cancelled. In exchange for the cancellation of each S&N Option,
the holder of the S&N Options (whether or not then presently exercisable or
vested) will be entitled to receive from the Company an amount in cash equal to
the product of the difference between the Per Share Amount and the per share
exercise price of such S&N Option, and the number of shares of Company common
stock covered by such S&N Option.

REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the Company's

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<PAGE>
corporate organization and qualification, capitalization, authority, filings
with the Commission and other governmental authorities, financial statements,
litigation, employment benefit matters, intellectual property, real property,
taxes, insurance, environmental matters, material contracts, compliance with law
and amendments to the Rights Agreement.

CONDITIONS TO CONSUMMATION OF THE MERGER. The Merger Agreement provides
that the respective obligations of each party to effect the Merger are subject
to the following conditions: (a) the Merger Agreement and the Merger will have
been approved and adopted by the affirmative vote of the shareholders of the
Company to the extent required by Minnesota Law and the Articles of
Incorporation of the Company; (b) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act will have expired
or been terminated; (c) no foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state court
of competent jurisdiction will have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting, preventing or
prohibiting consummation of the Offer or the Merger; and (d) Purchaser or its
permitted assignee will have purchased all Shares validly tendered and not
withdrawn pursuant to the Offer; PROVIDED, HOWEVER, that the obligation of
Parent and Purchaser to effect the Merger will not be subject to the condition
set forth in clause (d) above if the failure of Purchaser to purchase the Shares
pursuant to the Offer will have constituted a breach of the Offer or the Merger
Agreement.

TERMINATION. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated thereby may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of the
Merger Agreement and the transactions contemplated thereby by the shareholders
of the Company: (a) by mutual written consent of Parent, Purchaser and the
Company duly authorized by the Boards of Directors of Parent, Purchaser and the
Company; or (b) by Parent, Purchaser or the Company if (i) the Shares shall not
have been accepted for payment pursuant to the Offer on or before March 31,
1998; PROVIDED, HOWEVER, that the right to terminate the Merger Agreement
pursuant to the foregoing is not available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of, or resulted in,
the failure of the Shares to have been accepted for payment on or before such
date nor be available to Parent or Purchaser unless the failure to accept Shares
for payment pursuant to the Offer resulted from the failure of any one of the
conditions described in "Section 14. Conditions to the Offer" to have been
satisfied; or (ii) any court of competent jurisdiction or other governmental
authority will have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable or, if
a temporary order, shall not have been lifted within 20 days of being issued; or
(c) by Parent if due to an occurrence or circumstance, other than as a result of
a breach by Parent or Purchaser of their obligations hereunder, resulting in a
failure to satisfy any condition described in "Section 14. Conditions to the
Offer", Purchaser has (i) failed to commence the Offer within 30 days following
the date of the Merger Agreement or (ii) terminated the Offer without having
accepted any Shares for payment thereunder; or (d) by the Company, upon approval
of the Board, if (i) due to an occurrence or circumstance that would result in a
failure to satisfy any of the conditions described in "Section 14. Conditions to
the Offer", Purchaser has terminated the Offer without having accepted any
Shares for payment thereunder or (ii) prior to the purchase of Shares pursuant
to the Offer, if the Board determines in good faith, after giving effect to any
concessions that may be offered by Parent, that it is necessary to do so in
accordance with its fiduciary duties to the Company and its shareholders under
applicable law after consultation with its outside legal counsel in order to
enter into a definitive agreement with respect to a Superior Proposal, upon five
days' prior written notice to Parent, setting forth in reasonable detail the
final terms and conditions of, the Superior Proposal (but the Company will not
be required to disclose the identity of the person making the Superior
Proposal); PROVIDED, HOWEVER, that any

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termination of the Merger Agreement pursuant to the foregoing is not effective
until the Company has made full payment of all amounts described in "Fees and
Expenses" below.

FEES AND EXPENSES. The Merger Agreement provides that (a) in the event that
(i) any person (including, without limitation, the Company or any affiliate
thereof), other than Parent or any affiliate of Parent, has become the
beneficial owner of more than 20% of the then outstanding Shares; and the Merger
Agreement has been terminated as described in "Termination" above; or (ii) any
person has publicly made or communicated to the Company an Acquisition Proposal
that is publicly disclosed and the Board will have either (A) withdrawn, amended
or modified its recommendation of the Offer in a manner adverse to Parent and
Purchaser, (B) recommended such Acquisition Proposal or (C) taken any action
with respect to the Rights Agreement to facilitate such Acquisition Proposal,
and (x) the Offer will have remained open for at least 20 business days, (y) the
Minimum Condition will not have been satisfied and (z) the Merger Agreement will
have been terminated as described in "Termination" above; or (iii) the Merger
Agreement is terminated as described in clause (d)(ii) of "Termination" above;
or (iv) the Company enters into an agreement with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated, in each case within 18
months after the termination of the Merger Agreement as described in clause
(b)(i), (c) or (d)(i) of "Termination" above, which termination resulted from a
breach by the Company of its obligations thereunder, resulting in a failure to
satisfy any condition as described in "Section 14. Conditions to the Offer", and
the Company will not theretofore have been required to pay the Fee to Parent
pursuant to clause (a)(i), (a)(ii) or (a)(iii) hereof; then, in any such event,
the Company will pay Parent promptly (but in no event later than one business
day after the first of such events shall have occurred) a fee of $15,000,000
(the "Fee"), which amount shall be payable in immediately available funds, plus
all Expenses (as hereinafter defined). In no event will more than one Fee be
payable under the foregoing.

The Company will, at such time as a Fee is required to be paid, reimburse
each of Parent, Purchaser and their respective shareholders and affiliates (not
later than one business day after submission of statements therefor) for up to
$5,000,000 of actual and documented out-of-pocket expenses (including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other persons and their respective agents and
counsel, for arranging, committing to provide or providing any financing for the
transactions contemplated by the Offer or Merger or structuring the transactions
contemplated by the Offer or Merger and all fees of counsel, accountants,
experts and consultants to Parent, Purchaser and their respective shareholders
and affiliates, and all printing and advertising expenses) actually incurred by
either of them or on their behalf in connection with the transactions
contemplated by the Offer or Merger, including, without limitation, the
financing thereof, and actually incurred by banks, investment banking firms,
other financial institutions and other persons and assumed by Parent or
Purchaser in connection with the negotiation, preparation, execution and
performance of the Merger Agreement, the structuring and financing of the
transactions contemplated by the Offer or Merger and any financing commitments
or agreements relating thereto (all of the foregoing being referred to herein
collectively as the "Expenses").

Except as set forth above, all costs and expenses incurred in connection
with the Merger Agreement and the transactions contemplated by the Offer and
Merger will be paid by the party incurring such expenses, whether or not any
transaction contemplated by the Offer or Merger is consummated.

In the event that the Company fails to pay the Fee or any Expenses when due,
the term "Expenses" shall be deemed to include the out-of-pocket costs and
expenses actually incurred or accrued by Parent and Purchaser (including,
without limitation, fees and out-of-pocket expenses of counsel) in connection
with the collection under and enforcement of the foregoing, together with
interest on such unpaid Fee and Expenses, commencing on the date that the Fee or
such Expenses became due, at a rate equal to the rate of interest publicly
announced by Citibank, N.A., from time to time, in The City of New York, as such
bank's Prime Rate plus 2.00%.

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11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.

PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. The
purpose of the Merger is for Parent to acquire all Shares not purchased pursuant
to the Offer. Upon consummation of the Merger, the Company will become an
indirect, wholly owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement.

On December 4, 1997, the Board formed a Special Committee consisting of all
disinterested directors of the Company. Prior to the approval of the Merger
Agreement and the Merger by the Board on December 15, 1997, the Special
Committee unanimously approved the Merger Agreement, the Merger and the other
transactions contemplated by the Merger Agreement, the Offer and the acquisition
of Shares pursuant to the Offer. As a result of the approval by the Special
Committee, two of Minnesota's takeover statutes, Sections 302A.671 and 302A.673,
are inapplicable to the Offer and the Merger, provided that the Minimum
Condition is satisfied. See "Section 15. Certain Legal Matters and Regulatory
Approvals".

Under Minnesota Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger. The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, and, unless the
Merger is consummated pursuant to the short-form merger provisions under
Minnesota Law described below, the only remaining required corporate action of
the Company is the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares. Accordingly, if the Minimum Condition is satisfied,
Purchaser will have sufficient voting power to cause the approval and adoption
of the Merger Agreement and the transactions contemplated thereby without the
affirmative vote of any other shareholder.

In the Merger Agreement, the Company has agreed to convene a meeting of its
shareholders as soon as practicable after the consummation of the Offer for the
purpose of considering and taking action on the Merger Agreement and the
transactions contemplated thereby, if such action is required by Minnesota Law.
Parent and Purchaser have agreed that all Shares owned by them and their
subsidiaries will be voted in favor of the Merger Agreement and the Merger.

If Purchaser purchases Shares pursuant to the Offer (provided that the
Minimum Condition has been satisfied), the Merger Agreement provides that
Purchaser will be entitled to designate representatives to serve on the Board
substantially in proportion to Purchaser's ownership of Shares following such
purchase. See "Section 10. Background of the Offer; Contacts with the Company;
the Merger Agreement." Purchaser expects that such representation would permit
Purchaser effectively to control the Company's conduct of its business and
operations.

Under Minnesota Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, Purchaser will be able to
complete the Merger without a vote of the Company's shareholders. In such event,
Parent, Purchaser and the Company have agreed in the Merger Agreement to take
all necessary and appropriate action to cause the Merger to become effective as
soon as reasonably practicable after such acquisition, without a meeting of the
Company's shareholders. If, however, Purchaser does not acquire at least 90% of
the outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's shareholders is required under Minnesota Law, a significantly longer
period of time would be required to effect the Merger.

No dissenters' rights are available in connection with the Offer. However,
if the Merger is consummated, dissenting shareholders who comply with statutory
procedural requirements will be entitled to exercise dissenters' rights for the
fair value for their Shares under Section 302A.473 of the Minnesota Law. To be
entitled to payment, the dissenting shareholder must not accept the Offer, must
file with the Company, prior to the vote on the Merger, a written notice of
intent to demand payment of the fair value

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of the shares, must not vote in favor of the Merger and must satisfy the other
procedural requirements of Section 302A.473 of the Minnesota Law. Any
shareholder contemplating the exercise of dissenters' rights should review
carefully the provisions of Section 302A.471 and 302A.473 of the Minnesota Law,
particularly the procedural steps required to perfect such rights. SUCH RIGHTS
WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTION 302A.473 ARE NOT FULLY
AND PRECISELY SATISFIED. If a vote of shareholders is required to approve the
Merger under the Minnesota Law, the notice and proxy statement for the
shareholder meeting will again inform each shareholder of record as of the
record date of the shareholder meeting (excluding persons who tender all of
their Shares pursuant to the Offer if such Shares are purchased in the Offer) of
their dissenters' rights and shall include a copy of Section 302A.471 and
302A.473 of the Minnesota Law and a summary description of the procedures to be
followed under those Sections to obtain payment of fair value for their Shares
under those Sections. If a shareholder vote is not required to approve the
Merger, the Surviving Corporation will send a notice to those persons who are
shareholders of the Surviving Corporation immediately prior to the Effective
Time of the Merger which, among other things, includes a copy of Sections
302A.471 and 302A.473 of the Minnesota Law and a summary description of the
procedures to be followed under those Sections to obtain payment of fair value
for their Shares under those Sections.

Shareholders of the Company who do not exercise their dissenters' rights by
following the procedural requirements of Section 302A.473 of the Minnesota Law
shall generally be entitled to the Merger Consideration. A vote against the
Merger, however, is not necessary to entitle a shareholder to exercise statutory
dissenters' rights. Conversely, a vote against the Merger is not sufficient to
protect the rights of a shareholder as a dissenter without the concurrent
compliance with the procedural requirements under state law.

PLANS FOR THE COMPANY. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing development of the Company's potential in conjunction with Parent's
businesses. It is expected that the business and operations of the Company would
form an important part of Parent's future business plans.

Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any Subsidiary, a sale or transfer of a material amount
of assets of the Company or any Subsidiary or any material change in the
Company's capitalization or dividend policy or any other material changes in the
Company's corporate structure or business, or the composition of the Board or
the Company's management.

12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company shall not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Parent, (a) issue, sell, pledge,
dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of any shares of capital stock of any class of
the Company or any subsidiary of the Company or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any subsidiary of the Company (except
for the issuance of Shares issuable pursuant to stock options (including related
alternative rights) outstanding on the date hereof, Shares to be issued pursuant
to an employee stock purchase plan and any Shares required to be issued under
the Rights Agreement, (b) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock except that any

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subsidiary of the Company may declare and pay a dividend to the Company, or (c)
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock. See "Section 10. Background of
the Offer; Contacts with the Company; the Merger Agreement and Related
Agreements".

13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.

Purchaser intends to cause the Shares not to be listed for quotation on
Nasdaq following consummation of the Offer.

Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued including in Nasdaq.
According to Nasdaq's published guidelines, the Shares would not be eligible to
be included for listing if, among other things, the number of Shares publicly
held falls below 200,000, the number of holders of Shares falls below 400 or the
aggregate market value of such publicly held Shares does not exceed $1,000,000.
If these standards are not met, quotations might continue to be published in The
Nasdaq SmallCap Market, Inc., but if the number of holders of the Shares falls
below 300, or if the number of publicly held Shares falls below 100,000, or if
the aggregate market value of such publicly held Shares does not exceed $200,000
or there are not at least two registered and active market makers, one of which
may be a market maker entering a stabilizing bid, Nasdaq rules provide that the
securities would no longer qualify for inclusion in Nasdaq and Nasdaq would
cease to provide any quotations. Shares held directly or indirectly by an
officer or director of the Company or by a beneficial owner of more than 10% of
the Shares will ordinarily not be considered as being publicly held for this
purpose. In the event the Shares were no longer eligible for Nasdaq quotation,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of such Shares remaining at such time, the
interest in maintaining a market in such Shares on the part of securities firms,
the possible termination of registration of such Shares under the Exchange Act
as described below and other factors.

The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares could no longer be used as collateral
for loans made by brokers.

The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with shareholders' meetings and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for Nasdaq reporting. Purchaser currently intends to seek to
cause the Company to terminate the registration of the Shares under the Exchange
Act as soon after consummation of the Offer as the requirements for termination
of registration are met.

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<PAGE>
14. CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, Purchaser is not required to accept for payment or pay for any Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for Shares tendered, if (i)
the Minimum Condition is not satisfied after the Offer has remained open for at
least 20 business days, (ii) any applicable waiting period under the HSR Act has
not expired or terminated prior to the expiration of the Offer, or (iii) at any
time on or after the date of the Merger Agreement, and prior to the acceptance
for payment of Shares, any of the following conditions exist:

(a) there will have been threatened or instituted by any governmental
authority any action or proceeding before any court or governmental,
administrative or regulatory authority or agency of competent jurisdiction,
domestic or foreign, (i) challenging or seeking to make illegal, materially
delay or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, Purchaser or any other affiliate
of Parent, or the consummation of any other transaction contemplated by the
Offer or Merger, or seeking to obtain material damages in connection with
any transaction contemplated by the Offer or Merger; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, or
to compel the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any portion of the business or assets of the Company,
Parent or any of their subsidiaries, as a result of the transaction
contemplated by the Offer or Merger; (iii) seeking to impose or confirm
limitations on the ability of Parent, Purchaser or any other affiliate of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Company's shareholders, including, without limitation, the
approval and adoption of the Merger Agreement and the transaction
contemplated by the Offer or Merger; (iv) seeking to require divestiture by
Parent, Purchaser or any other affiliate of Parent of any Shares; or (v)
which otherwise gives rise to any circumstance, change in or effect on the
Company or any Subsidiary that is, or is reasonably likely to be, materially
adverse to the business, financial condition, results of operations, assets
or liabilities (including, without limitation, contingent liabilities) of
the Company and the Subsidiaries, taken as a whole ("Material Adverse
Effect").

(b) there will have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any transaction contemplated by the Offer or
Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign, other
than the routine application of the waiting period provisions of the HSR Act
to the Offer or the Merger, which is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above, except that the Offer may not be terminated or
amended solely because of a temporary order or injunction unless it is not
lifted within 20 days after being issued;

(c) there will have occurred any changes, conditions, events or
developments that have, individually or in the aggregate, a Material Adverse
Effect;

(d) there will have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Switzerland, or (iii)
any limitation (whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency of the United States or
Switzerland on the extension of credit by banks or other lending
institutions;

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(e) (i) it will have been publicly disclosed or Purchaser has otherwise
learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
more than 20% of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board or
any committee thereof has withdrawn or modified in a manner adverse to
Parent or Purchaser the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any acquisition proposal
or any other acquisition of Shares other than the Offer or the Merger or (B)
the Board or any committee thereof has resolved to do any of the foregoing;

(f) the representations or warranties of the Company in the Merger
Agreement will not be true and correct, ignoring for this purpose any
qualification as to materiality or Material Adverse Effect, as if such
representations or warranties were made as of such time on or after the date
of this Agreement, except where the failure to be so true and correct,
individually and in the aggregate, would not have a Material Adverse Effect;

(g) the Company has failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Agreement;

(h) the Agreement has been terminated in accordance with its terms; or

(i) Purchaser and the Company have agreed that Purchaser will terminate
the Offer or postpone the acceptance for payment of or payment for Shares
thereunder;

which, in the reasonable good faith judgment of Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.

The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances will not be
deemed a waiver with respect to any other facts and circumstances; and each such
right will be deemed an ongoing right that may be asserted at any time and from
time to time.

15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.

GENERAL. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
"Section 10. Background of the Offer; Contacts with the Company; the Merger
Agreement"), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company and
the Subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer, or, except as set
forth below, of any approval or other action by any domestic (federal or state)
or foreign governmental, administrative or regulatory authority or agency which
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is
Purchaser's present intention to seek such approval or action. Purchaser does
not currently intend, however, to delay the purchase of Shares tendered pursuant
to the Offer pending the outcome of any such action or the receipt of any such
approval (subject to Purchaser's right to decline to purchase Shares if the
conditions relating to the HSR Act or any of the other conditions in "Section
14. Conditions to the Offer" shall have occurred). There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Parent or that certain parts of the
businesses of the Company, Purchaser or Parent might not have to be

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disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or other action or in the event that such approval
was not obtained or such other action was not taken. Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
"Section 15. Certain Legal Matters and Regulatory Approvals." See "Section 14.
Conditions to the Offer".

STATE TAKEOVER LAWS. Section 302A.673 of the Minnesota Law ("Section
302A.673") generally provides that a publicly-held Minnesota corporation may not
engage in any Business Combination (defined to include a variety of
transactions, including mergers), or vote, consent or otherwise act to authorize
any of its subsidiaries to engage in a business combination, with any Interested
Shareholder (defined to include, among others, any person who beneficially owns
or controls 10% or more of a corporation's outstanding voting stock) for a
period of four years following the date such person became an Interested
Shareholder, unless before such person became an Interested Shareholder, a
committee consisting of all disinterested directors of the corporation approved
the Business Combination or approved the transaction in which the Interested
Shareholder became an Interested Shareholder. Because a committee of the Board
of Directors of the Company consisting of all of the disinterested directors of
the Company formed pursuant to Section 302A.673 has unanimously approved the
Offer and the Merger, Section 302A.673 will not apply to the Merger. Section
302A.671 of the Minnesota Law ("Section 302A.671") generally provides that a
shareholder beneficially owning stock with 20% or more of the voting power of
the outstanding capital stock of a publicly held corporation or certain other
corporations cannot vote more than 20% of the total voting power of the
outstanding stock of that corporation unless the stock is acquired in a cash
tender offer for all of the corporation's voting stock that is pre-approved by a
committee consisting of all of the corporation's disinterested directors and the
offerer acquires a majority of the voting stock in the tender offer. Because the
committee of disinterested directors has unanimously approved the Offer and the
Merger, Section 302A.671 will not apply, assuming that the Minimum Condition is
satisfied.

Chapter 80B of the Minnesota Statutes ("Chapter 80B") generally provides
that it is unlawful for any person to make a takeover offer unless a
registration statement on the form prescribed by the Commissioner of Commerce
shall have been filed with the Commissioner of Commerce and delivered to the
target company, and the material terms of and certain specified information
shall be delivered to all offerees residing in Minnesota as soon as practicable
after the filing of such registration statement. The Purchaser has complied with
Chapter 80B in connection with the Offer.

The Purchaser does not believe that any state takeover laws, other than
Section 302A.673 and Chapter 80B, apply to the Offer and it has not complied
with any other state takeover laws. If the Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, the Purchaser will make a good faith effort to comply with
such statute. If, after such good faith effort, the Purchaser cannot comply with
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. See "Section 14.
Conditions to the Offer".

The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See "Section 14. Conditions
to the Offer".

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ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer is subject to such requirements.
See "Section 2. Acceptance for Payment and Payment for Shares".

Pursuant to the HSR Act, on December 19, 1997, Parent filed a Premerger
Notification and Report Form in connection with the purchase of Shares pursuant
to the Offer with the Antitrust Division and the FTC. Under the provisions of
the HSR Act applicable to the Offer, the purchase of Shares pursuant to the
Offer may not be consummated until the expiration of a 15-calendar day waiting
period following the filing by Parent. Accordingly, the waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer will expire
at 11:59 p.m., New York City time, on Saturday, January 3, 1998, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division or
extended by a request from the FTC or the Antitrust Division for additional
information or documentary material prior to the expiration of the waiting
period. Pursuant to the HSR Act, Parent has requested early termination of the
waiting period applicable to the Offer. There can be no assurance, however, that
either the 15-day HSR Act waiting period will be terminated early or that
additional information or documentary material will not be requested. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and, in any event, the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the extended period expires on or
before the date when the initial 15-day period would otherwise have expired, or
unless the waiting period is sooner terminated by the FTC and the Antitrust
Division. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the HSR Act and the rules promulgated
thereunder, except by court order. Any such extension of the waiting period will
not give rise to any withdrawal rights not otherwise provided for by applicable
law. See "Section 4. Withdrawal Rights". It is a condition to the Offer that the
waiting period applicable under the HSR Act to the Offer expire or be
terminated. See "Section 2. Acceptance for Payment and Payment for Shares" and
"Section 14. Conditions to the Offer".

The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See "Section 14. Conditions to the
Offer" for certain conditions to the Offer, including conditions with respect to
litigation.

16. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer.

Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and has provided certain financial advisory services in connection
with the acquisition of the Company. Parent has agreed to pay Credit Suisse
First Boston as follows: (a) $100,000 payable upon execution of the financial
advisory agreement between Credit Suisse First Boston and Parent; (b) $500,000
payable upon the public announcement of the signing of the Merger Agreement; (c)
$650,000 payable upon the rendering of a written opinion in connection with the
Offer and the Merger; (d) $3,500,000 payable in connection with the completion
of the Merger; and (e) a discretionary bonus of up to $500,000 payable at the
closing of the

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Merger. Any amount paid under provisions (a), (b) or (c) are fully creditable
against (d). Parent has also agreed to reimburse Credit Suisse First Boston for
all reasonable out-of-pocket expenses incurred by Credit Suisse First Boston,
including the reasonable fees and expenses of legal counsel, and to indemnify
Credit Suisse First Boston against certain liabilities and expenses in
connection with its engagement.

Purchaser and Parent have retained Innisfree M&A Incorporated, as the
Information Agent, and Citibank N.A., as the Depositary, in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners.

As compensation for acting as Information Agent in connection with the
Offer, Innisfree M&A Incorporated will be paid a fee of $8,500 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including under federal securities laws. Brokers, dealers, commercial banks and
trust companies will be reimbursed by Purchaser for customary handling and
mailing expenses incurred by them in forwarding material to their customers.

17. MISCELLANEOUS. Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply with any
such state statute. If, after such good faith effort, Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in "Section 7. Certain Information
Concerning the Company" (except that they will not be available at the regional
offices of the Commission).

SULZER MEDICA ORTHOPEDICS

ACQUISITION CORP.

December 19, 1997

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SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER

1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, address, citizenship, age and present principal occupation or
employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years of each director and
executive officer of Parent. Unless otherwise indicated, the current business
address of each person is Sulzer Medica Ltd, Zurcherstrasse 12, 8401 Winterthur,
Switzerland. Unless otherwise indicated, each such person is a citizen of
Switzerland, and each occupation set forth opposite an individual's name refers
to employment with Parent.

<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- ------------------------------ --- ---------------------------------------------------------------------------
<S> <C> <C>
Dr. Fritz Fahrni 54 Chairman of the Board of Directors since 1997. President and Chief
Sulzer AG Executive Officer of Sulzer AG since 1988.
Postfach 8401 Winterthur,
Switzerland
Pierre Borgeaud 63 Director since 1997. Chairman of the Board of Sulzer AG since 1988.
Sulzer AG
Postfach 8401 Winterthur,
Switzerland
Dr. Peter Spalti 67 Director since 1997. Chairman and Chief Executive Officer of Winterthur
Winterthur Swiss Insurance Swiss Insurance Company, General Guisan-Strasse 40 P.O. Box 357 CH-8401
Company Winterthur, since 1989. Director of Sulzer AG since 1982 and Vice Chairman
General Guisan Strasse 40 of the Sulzer AG Board.
8401 Winterthur,
Switzerland
Dr. Reto F. Domeniconi 61 Director since 1997. Director of Sulzer AG since 1994. Chief Financial
Clos des Mesanges Officer of the Nestle Group, Vevey, Switzerland, from 1983 to 1996.
1807 Blonay, Switzerland Retired.
Max Link 57 Director since 1997. Chief Executive Officer of Corange Ltd Hamilton,
Tobelmofstrasse 30 Bermuda, from 1993 to 1994. Chairman of Sandoz Pharma, 4002 Basel,
8044 Zurich, Switzerland Switzerland, from 1992 to 1993, Chief Executive Officer of Sandoz Pharma
from 1987 to 1992.
Larry L. Mathis 54 Director since 1997. President and Chief Executive Officer of The Methodist
U.S. citizen Health Care System, 6565 Faunin St., Houston, TX 77030 since 1983. Chairman
The Methodist Health Care of the American College of Healthcare Executives, Past-Chairman of the
System American Hospital Association, the Texas Hospital Association, the Greater
3037 Reba Drive Houston Hospital Council and the National Task Force on Health Care
Houston, TX 77019 Technology Assessment.
Andre P. Buchel 58 President from 1990 and Chief Executive Officer since 1997. From 1990, also
President and Chief Executive Officer of Sulzer Medica USA Inc., 4000
Technology Drive, Angleton, TX 77515, and Executive Vice President of
Sulzer AG.
</TABLE>

I-1
<PAGE>
<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- ------------------------------ --- ---------------------------------------------------------------------------
<S> <C> <C>
Josef Ruegg 56 Chief Financial Officer since 1997 and Group Vice President Finance and
Controlling since 1989.
Vanessa Oelz.................. 44 Secretary General since 1997. Employed by Sulzer Management Ltd, from 1989
to 1997.
John H. Rankin 49 Vice President Human Resources since 1997. Employed by the Graduate School
U.S. citizen of Business & Public Administration, Olten, Riggenbachstrasse 16, 4601
Olten, Switzerland, from 1996 to 1997. Employed by Kraft Jacobs Suchard
European Headquarters, Klausstrasse 4, 8022 Zurich, Switzerland, from 1992
to 1996.
</TABLE>

2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, address, citizenship, age and present principal occupation or
employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years of each director and
executive officer of Purchaser. Unless otherwise indicated, the current business
address of each person is Sulzer Medica Orthopedics Acquisition Corp., 4000
Technology Drive, Angleton, TX 77515. Unless otherwise indicated, each such
person is a citizen of the United States of America, and each occupation set
forth opposite an individual's name refers to employment with Purchaser.

<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR
AND CURRENT BUSINESS ADDRESS AGE EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Andre P. Buchel 58 President, Chief Executive Officer, Chief Financial Officer and sole
Swiss citizen Director since 1997. President since 1990 and Chief Executive Officer
Sulzer AG since 1997 of Sulzer AG, Zurcherstrasse 12, 8401 Winterthur,
Zurcherstrasse 12 Switzerland. From 1990, President and Chief Executive Officer of
8401 Winterthur, Sulzer Medica USA Inc. and Executive Vice President of Sulzer AG.
Switzerland
Robert Cohen 39 Vice President Business Development since 1997. Group Vice President
Business Development of Sulzer Medica USA Inc. since 1992.
Lawrence H. Panitz 56 Vice President, Secretary and General Counsel since 1997. Group Vice
President and General Counsel of Sulzer Medica USA Inc. since 1997.
Vice President Legal Affairs of ICN Pharmaceuticals, 3300 Hylach
Avenue, Costa Mesa, CA, from 1993 to 1997. Partner and Head of
Corporate Finance Group of Messrs. Frere Cholmely, Attorneys, 15 Rue
Guillmard, 1050 Brussels, Belgium.
T.C. Selman II 47 Vice President Human Resources since 1997. Group Vice President Human
Resources and Facilities, Sulzer Medica USA Inc.
James H. Johnson 53 Vice President and Assistant Secretary since 1997. Assistant General
Counsel of Sulzer Medica USA Inc. Attorney and shareholder of Jenkins
& Gilchrist, a professional corporation, 1445 Ross Avenue, #3200,
Dallas TX 75202, from 1994 to 1997. Vice President, Associate General
Counsel and Secretary of Ornda Healthcorp., Dallas, TX and Nashville,
TN, from 1985 to 1994.
</TABLE>

I-2
<PAGE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF SULZER AG. The following table sets
forth the name, address, citizenship, age and present principal occupation or
employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years of each director and
executive officer of Sulzer AG. Unless otherwise indicated, the current business
address of each person is Sulzer AG, Postfach 8401 Winterthur, Switzerland.
Unless otherwise indicated, each such person is a citizen of Switzerland, and
each occupation set forth opposite an individual's name refers to employment
with Sulzer AG.

<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR
AND CURRENT BUSINESS ADDRESS AGE EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Pierre Borgeaud 63 Chairman of the Board of Directors since 1988.
Dr. Peter Spalti 67 Vice Chairman of the Board of Directors. Chairman and Chief Executive
Winterthur Swiss Insurance Company Officer of Winterthur Swiss Insurance Company.
General Guisan-Strasse 40
P.O. Box 357 CH-8401
Winterthur, Switzerland
Dr. Georges Blum 62 Director. President of the Board of Directors of Swiss Bank
Swiss Bank Corporation Corporation since 1996. President of the Corporate Executive
Postfach 4002 Basel, Management of Swiss Bank Corporation since 1993.
Switzerland
Urs Buhler 54 Director. Employed by Buhler AG since 1970.
Buhler AG
9240 Uzwil, Switzerland
Dr. Reto F. Domeniconi 61 Director. Chief Financial Officer of Nestle S.A., Vevey, Switzerland,
Clos des Mesanges, from 1983 to 1995. Retired.
1807 Blonay, Switzerland
Jan Kleinewefers 62 Director. Employed by Kleinewefers Beteiligungs-GmbH for the past
German citizen five years.
Kleinewefers Beteiligungs-GmbH
Postfach 1521, D-47715
Krefeld, Germany
Bernard Koechlin 67 Director. Employed by Zschokke Holding AG since 1992.
Zschokke Holding AG
42 Rue du 31-Decembre
1211 Genf 6, Switzerland
Dr. Guido Richterich 67 Director. Vice President of the Board of Directors since 1994 and
F. Hoffman-La Roche AG Member of the Executive Committee since 1982 of F. Hoffman- La Roche
Gienzachiestrasse 124 AG.
14070 Basel, Switzerland
Jacob Schmidheiny 54 Director. President of the Board of Directors of Zurcher Ziegeleien
Zurcher Ziegeleien Holding Postfach Holding since 1984.
8045 Zurich,
Switzerland
Dr. Leonardo E. Vannotti 58 Director. Chairman of Carlo Gavazzi since 1996. Self-employed from
Cerlo Gavazzi 1994 to 1996. Employed by Ascom Holding, Bern, Switzerland, from
Hertensteinstrasse 33 1990-1993.
5408 Ennetbaden, Switzerland
Dr. Fritz Fahrni 55 President and Chief Executive Officer since 1988.
</TABLE>

I-3
<PAGE>
<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR
AND CURRENT BUSINESS ADDRESS AGE EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Dr. Viktor Beglinger 59 Member of the Corporate Executive Management. Head of Human Research
Sulzer Management AG Development since 1994 and Head of Sulzer Infra Group from 1986 to
Postfach 8401 Winterthur, 1994.
Switzerland
Karl Boohsler 51 Member of the Corporate Executive Management. President of Sulzer
Sulzer Infra AG Infra Group for past five years.
Postfach 8401 Winterthur,
Switzerland
Andre P. Buchel 58 Member of the Corporate Executive Management. From 1990, Executive
Sulzer Medica AG Vice President of Sulzer AG, President of Sulzer Medica Ltd and
Postfach 8401 Winterthur, President and Chief Executive Officer of Sulzer Medica USA Inc. From
Switzerland 1997, Chief Executive Officer of Sulzer Medica Ltd.
Richard Burger 54 Member of the Corporate Executive Management. Head of Sulzer Roteq
Sulzer Roteq Group since 1995. Employed by Sulzer AG for past five years.
Hardstrasse 319
8023 Zurich, Switzerland
Dr. Cristoph Etter 59 Member of the Corporate Executive Management. Head of Sulzer
Sulzer International AG International Ltd for past five years.
Postfach 8401 Winterthur,
Switzerland
Erich Muller 59 Member of the Corporate Executive Management. Chief Financial Officer
Sulzer Management AG of Sulzer AG since 1984.
Postfach 8401 Winterthur,
Switzerland
Helmut Pirchl 62 Member of the Corporate Executive Management. Head of Sulzer Ruti Ltd
Austrian citizen for past five years.
Sulzer Ruti AG
8630 Ruti, Switzerland
Dr. Edward Rikli 46 Member of the Corporate Executive Management. Employed by Sulzer
Sulzer Management AG Escher Wyss AG from 1986 to 1996.
Postfach 8401 Winterthur,
Switzerland
Urs Scherrer 59 Member of the Corporate Executive Management. Employed by Sulzer
Sulzer Wintec AG Wintec AG for past five years.
Postfach 8401 Winterthur,
Switzerland
</TABLE>

I-4
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.

THE DEPOSITARY FOR THE OFFER IS:

CITIBANK, N.A.

<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER DELIVERY: BY HAND:

<S> <C> <C>
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data Distribution, c/o Citicorp Data Distribution, Corporate Trust Window
Inc. Inc. 111 Wall Street, 5th Floor
P.O. Box 7072 404 Sette Drive New York, New York 10043
Paramus, New Jersey 07653 Paramus, New Jersey 07652
</TABLE>

FACSIMILE FOR ELIGIBLE INSTITUTIONS:
(201) 262-3240

FACSIMILE CONFIRMATION ONLY:
(201) 422-2077

For information:
(800) 422-2077

Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may also be obtained from the
Information Agent or the Dealer Manager.

THE INFORMATION AGENT FOR THE OFFER IS:

[LOGO]

501 Madison Avenue
New York, NY 10022
(212) 750-5833
Call Toll Free (888) 750-5834

THE DEALER MANAGER FOR THE OFFER IS:

Credit Suisse First Boston Corporation

Eleven Madison Avenue
New York, NY 10010
Call Toll Free (800) 646-4543

<PAGE>
LETTER OF TRANSMITTAL

To Tender Shares of Common Stock

(Including the Associated Preferred Share Purchase Rights)

Spine-Tech, Inc.

Pursuant to the Offer to Purchase

dated December 19, 1997

Sulzer Medica Orthopedics Acquisition Corp.

an indirect wholly owned subsidiary of

Sulzer Medica Ltd

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:

CITIBANK, N.A.

<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER DELIVERY: BY HAND:

<S> <C> <C>
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data Distribution, Inc. c/o Citicorp Data Distribution, Inc. Corporate Trust Window
P.O. Box 7072 404 Sette Drive 111 Wall Street, 5th Floor
Paramus, New Jersey 07653 Paramus, New Jersey 07652 New York, New York 10043
</TABLE>

FACSIMILE FOR ELIGIBLE INSTITUTIONS:
(201) 262-3240

FACSIMILE CONFIRMATION ONLY:
(201) 422-2077

For information:
(800) 422-2077

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.

THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined below) is utilized, if delivery of
Shares is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure
described in "Section 3. Procedures for Accepting the Offer and Tendering
Shares" of the Offer to Purchase (as defined below). Delivery of documents to a
Book-Entry Transfer Facility does not constitute delivery to the Depositary.

Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver either their Share Certificates
or a Book-Entry Confirmation (as defined in "Section 3. Procedures for Accepting
the Offer and Tendering Shares" of the Offer to Purchase) with respect thereto
to the Depositary prior to the Expiration Date (as defined in "Section 1. Terms
of the Offer; Expiration Date" of the Offer to Purchase) on a timely basis and
who wish to tender their Shares must do so pursuant to the guaranteed delivery
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase. See Instruction 2.
<PAGE>

<TABLE>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT
ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Check Box of Applicable Book-Entry Transfer Facility:
(check one) / / DTC / / PDTC
Account Number
Transaction Code Number

/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY
SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING (PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE
OF GUARANTEED DELIVERY):
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
</TABLE>

<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
<S> <C> <C> <C>
Share
Certificate(s)
and Share(s)
Name(s) and Address(es) of Registered Holder(s) Tendered
(Please fill in, if blank, exactly as name(s) (Attach
appear(s) on additional list,
Share Certificate(s)) if necessary)
Total Number of
Shares Evidenced
Share By Number of
Certificate Share Shares
Number(s)* Certificate(s)* Tendered**
Total Shares
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate
delivered to the Depositary are being tendered hereby. See Instruction 4.
</TABLE>

<TABLE>
<S> <C>
/ / CHECK HERE IF ANY OF THE SHARE CERTIFICATES THAT YOU OWN HAVE BEEN LOST OR DESTROYED AND SEE
INSTRUCTION 10.
Number of Shares represented by the lost or destroyed Share Certificates:
</TABLE>

2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY

Ladies and Gentlemen:

The undersigned hereby tenders to Sulzer Medica Orthopedics Acquisition
Corp., a Minnesota corporation ("Purchaser") and an indirect wholly owned
subsidiary of Sulzer Medica Ltd, a corporation organized under the laws of
Switzerland, the above-described shares of Common Stock, $.01 par value (the
"Common Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company"),
and the associated preferred share purchase rights (together with the Common
Stock, the "Shares") pursuant to Purchaser's offer to purchase all Shares, at a
price of $52.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated December 19, 1997
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase, constitute
the "Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.

Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after December 15, 1997 (collectively,
"Distributions") and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.

The undersigned hereby irrevocably appoints Lawrence H. Panitz and Robert
Cohen, and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his sole discretion, deem proper and
otherwise act (by written consent or otherwise) with respect to all the Shares
tendered hereby which have been accepted for payment by Purchaser prior to the
time of such vote or other action and all Shares and other securities issued in
Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with other terms of the Offer. Such acceptance
for payment shall revoke all other proxies and powers of attorney granted by the
undersigned at any time with respect to such Shares (and all Shares and other
securities issued in Distributions in respect of such Shares), and no subsequent
proxy or power of attorney shall be given or written consent executed (and if
given or executed, shall not be effective) by the undersigned with respect
thereto. The undersigned understands that, in order for Shares to be deemed
validly tendered, immediately upon Purchaser's acceptance of such Shares for
payment, Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including, without limitation, voting at any meeting of
the Company's shareholders then scheduled.

The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.

3
<PAGE>
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance of such Shares for payment will constitute a
binding agreement between the undersigned and Purchaser upon the terms and
subject to the conditions of the Offer.

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.

4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if the check for the purchase price of Shares or Share
Certificates evidencing Shares not tendered or not purchased to be issued in the
name of someone other than the undersigned, or if Shares tendered hereby and
delivered by book-entry transfer which are not purchased are to be returned by
credit to an account at one of the Book-Entry Transfer Facilities other than
that designated above.

Issue / / check / / Share Certificate(s) to:
Name ___________________________________________________________________________

(PLEASE PRINT)
Address
________________________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________

Taxpayer identification or Social Security Number (See Substitute Form W-9 on
reverse side)

/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:

Check appropriate box:

/ / DTC / / PDTC
Account Number: ________________________________________________________________

SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if the check for the purchase price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or the undersigned at an address
other than that shown under "Description of Shares Tendered".

Mail / / check / / Share Certificate(s) to:

Name ___________________________________________________________________________

(PLEASE PRINT)

Address

________________________________________________________________________________

(ZIP CODE)

________________________________________________________________________________

Taxpayer Identification or Social Security Number (See Substitute Form W-9 on
reverse side)

5
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
__________________________________________________________________________
__________________________________________________________________________

(SIGNATURE(S) OF HOLDER(S))
Dated: ____________, 199 _

(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5).
Name(s): ___________________________________________________________________

(PLEASE PRINT)
Capacity (full title) ______________________________________________________

Address:
____________________________________________________________________________

(INCLUDE ZIP CODE)
Area Code and Telephone No: ________________________________________________
Taxpayer Identification or Social Security No.: ____________________________

(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________

(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________

FOR USE BY FINANCIAL INSTITUTIONS ONLY,
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW

6
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer

1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution") unless (i) this Letter of Transmittal is signed by
the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Shares) tendered
hereby and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in "Section
3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase. Share Certificates evidencing all physically tendered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility of all Shares delivered by book-entry transfer as
well as a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the reverse
hereof prior to the Expiration Date (as defined in "Section 1. Terms of the
Offer; Expiration Date" of the Offer to Purchase). If Share Certificates are
forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Shareholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in "Section 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase. Pursuant to such procedure: (i) such tender must be made by or through
an Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by Purchaser, must
be received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three Nasdaq Stock Market trading days after
the date of execution of such Notice of Guaranteed Delivery, all as described in
"Section 3. Procedures for Accepting the Offer and Tendering Shares" of the
Offer to Purchase.

The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.

The method of delivery of this Letter of Transmittal, Share Certificates and
all other required documents, including delivery through any Book-Entry Transfer
Facility, is at the option and risk of the tendering shareholder, and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.

No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.

7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.

5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.

If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.

If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.

If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.

6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such shareholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.

8
<PAGE>
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective addresses or telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and other
tender offer materials may be obtained from the Information Agent or the Dealer
Manager.

9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether such shareholder is subject to backup withholding of
federal income tax. If a tendering shareholder has been notified by the Internal
Revenue Service that such shareholder is subject to backup withholding, such
shareholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such shareholder has since been notified by the Internal
Revenue Service that such shareholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such shareholder. If
the tendering shareholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such shareholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.

10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificates have
been lost, destroyed or stolen, the shareholder should promptly notify the
Depositary. The shareholder will then be instructed by the Depositary as to the
steps that must be taken in order to replace the Share Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedure for replacing lost, destroyed or stolen Share Certificates has been
followed.

11. WAIVER OF CONDITIONS. The conditions of the Offer may be waived, in
whole or in part, by Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Shares tendered.

Important: This Letter of Transmittal (or facsimile hereof), properly
completed and duly executed (together with any required signature guarantees and
Share Certificates or confirmation of book-entry transfer and all other required
documents) or a properly completed and duly executed Notice of Guaranteed
Delivery, must be received by the Depositary prior to the Expiration Date (as
defined in the Offer to Purchase).

9
<PAGE>
IMPORTANT TAX INFORMATION

Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.

Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.

If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.

Purpose of Substitute Form W-9

To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such shareholder is awaiting a TIN), and that (i) such
shareholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such shareholder
that such shareholder is no longer subject to backup withholding.

What Number to Give the Depositary

The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and dated the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.

10
<PAGE>
PAYER'S NAME: CITIBANK, N.A.

<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------------------------

SUBSTITUTE FORM W-9 Part I--Taxpayer Identification Number--For all
accounts, enter your taxpayer identification
number in the box at right. (For most individuals, Social Security Number
this is your social security number. If you do not OR
have a number, see Obtaining a Number in the Taxpayer Identification
enclosed Guidelines.) Certify by signing and Number
dating below. Note: If the account is in more than
one name, see the chart in the enclosed Guidelines (If awaiting TIN write
to determine which number to give the payer. "Applied For")
Payer's Request for Taxpayer ------------------------------------------------------------------------------------
Identification Number (TIN)

Part II--For Payees Exempt From Backup Withholding, see the enclosed Guidelines and
complete as instructed therein.

CERTIFICATION--Under penalties of perjury, I certify that:

(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued
to me), and

(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS
has notified me that I am no longer subject to backup withholding.

CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified
by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)

SIGNATURE ---------------------------------------------------------------- DATE-----------------, 199
----

- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

Facsimiles of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal certificates evidencing Shares and
any other required documents should be sent or delivered by each shareholder to
such shareholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.

11
<PAGE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager, and copies will be furnished promptly
at Purchaser's expense. No fees or commissions will be paid to brokers, dealers
or other persons (other than the Information Agent and the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.

THE INFORMATION AGENT FOR THE OFFER IS:

[LOGO]

501 Madison Avenue, 20th Floor
New York, New York 10022
(212) 750-5833
or
Call Toll Free: (888) 750-5834

THE DEALER MANAGER FOR THE OFFER IS:

Credit Suisse First Boston Corporation

Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543

<PAGE>
NOTICE OF GUARANTEED DELIVERY

for

Tender of Shares of Common Stock

(Including the Associated Preferred Share Purchase Rights)

Spine-Tech, Inc.

(Not to be Used For Signature Guarantees)

This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Share
Certificates") evidencing shares of common stock, $.01 par value (the "Common
Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company") and the
associated preferred share purchase rights (together with the Common Stock, the
"Shares"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to Citibank, N.A., as Depositary
(the "Depositary"), prior to the Expiration Date (as defined in "Section 1.
Terms of the Offer; Expiration Date" of the Offer to Purchase (as defined
below)) or (iii) if the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or mail or transmitted by telegram or facsimile transmission to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in the Offer to Purchase) and a representation that the shareholder owns the
Shares, and that the tender of the Shares effected thereby complies with Rule
14e-4 under the Securities Exchange Act of 1934, as amended, each in the form
set forth in this Notice of Guaranteed Delivery. See "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase.

The Depositary for the Offer is:

CITIBANK, N.A.

<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER DELIVERY: BY HAND:

FACSIMILE FOR ELIGIBLE INSTITUTIONS:
(201) 262-3240

FACSIMILE CONFIRMATION ONLY:
(201) 422-2077

For information:
(800) 422-2077

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.

THE GUARANTEE INCLUDED HEREIN MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:

The undersigned hereby tenders to Sulzer Medica Orthopedics Acquisition
Corp., a Minnesota corporation and an indirect wholly owned subsidiary of Sulzer
Medica Ltd, a corporation organized under the laws of Switzerland, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
December 19, 1997 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure described in
"Section 3. Procedures for Accepting the Offer and Tendering Shares" of the
Offer to Purchase.

<TABLE>
<S> <C>
Number of Shares: Signature(s) of Holder(s)
Certificate Nos. (If Available): Dated: , 199
Check one box if Shares will be Name(s) of Holders:
delivered by book-entry transfer: Please Type or Print
/ / The Depository Trust Company Address
/ / Philadelphia Depository Trust Company Zip Code
Account No. Area Code and Telephone No.
</TABLE>
<PAGE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)

The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
hereby (a) represents that the above named person(s) "own(s)" the Shares
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended ("Rule 14e-4"), (b) represents that the tender of Shares
effected hereby complies with Rule 14e-4, and (c) guarantees delivery to the
Depositary, at one of its addresses set forth above, of certificates evidencing
the Shares tendered hereby in proper form for transfer, or confirmation of
book-entry transfer of such Shares into the account maintained by the Depositary
at The Depository Trust Company or the Philadelphia Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees, or
an Agent's Message (as defined in "Section 3. Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within three New York Stock Exchange,
Inc. trading days after the date of execution of this Notice of Guaranteed
Delivery.

The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
All terms used herein have the meanings set forth in the Offer to Purchase.

(PLEASE PRINT)

Name of Firm: __________________________________________________________________

Address: _______________________________________________________________________

(Zip Code)

AUTHORIZED SIGNATURE: __________________________________________________________

Name: __________________________________________________________________________

________________________________________________________________________________

Title: _________________________________________________________________________

Daytime Area Code and Tel. No.: ________________________________________________

Dated: ____________________________

NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

<PAGE>
CREDIT SUISSE FIRST BOSTON
CORPORATION

[LOGO]
Eleven Madison
Avenue Telephone (212) 325-2000
New York, NY 10010-3629

Offer to Purchase for Cash

All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)

Spine-Tech, Inc.
at

$52.00 Net Per Share

Sulzer Medica Orthopedics Acquisition Corp.

an indirect wholly owned subsidiary of

Sulzer Medica Ltd

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.

December 19, 1997

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

We have been appointed by Sulzer Medica Orthopedics Acquisition Corp., a
Minnesota corporation ("Purchaser") and an indirect wholly owned subsidiary of
Sulzer Medica Ltd, a corporation organized under the laws of Switzerland
("Parent"), to act as Dealer Manager in connection with Purchaser's offer to
purchase all of the outstanding shares of common stock, $.01 par value (the
"Common Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company"),
and the associated preferred share purchase rights (together with the Common
Stock, the "Shares"), at a price of $52.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase dated December 19, 1997 (the "Offer to Purchase") and the related
Letter of Transmittal (which, together with the Offer to Purchase, constitute
the "Offer") enclosed herewith. Please furnish copies of the enclosed materials
to those of your clients for whose accounts you hold Shares registered in your
name or in the name of your nominee.

The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer at least a
majority of the Shares then outstanding on a fully diluted basis and (ii) any
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
applicable to the purchase of the Shares pursuant to the Offer having expired or
terminated.

Enclosed for your information and for forwarding to your clients are copies
of the following documents:

1. Offer to Purchase dated December 19, 1997;

2. Letter of Transmittal for your use and for the information of your
clients. Facsimile copies of the Letter of Transmittal may be used to tender
Shares;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or cannot
be delivered to Citibank, N.A. (the "Depositary") by the Expiration Date (as
defined in the Offer to Purchase) or if the procedure for book-entry transfer
cannot be completed by the Expiration Date;

4. A letter to shareholders of the Company from David W. Stassen, Chief
Executive Officer and President of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;

5. A printed form of a letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Offer; and

6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JANUARY 21, 1998, UNLESS THE
OFFER IS EXTENDED.

Your attention is invited to the following:

1. The tender price is $52.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer.

2. The Offer is being made for all outstanding Shares.

3. The Board of Directors of the Company (the "Board") and a special
committee of the Board, formed in accordance with Section 302A.673 of the
Minnesota Law, have unanimously determined that each of the Offer and the Merger
(as defined in the Offer to Purchase) is in the best interests of the Company
and its shareholders and recommend that the shareholders accept the Offer and
tender their Shares pursuant to the Offer.

4. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Wednesday, January 21, 1998, unless the Offer is extended.

5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer at least
a majority of the Shares then outstanding on a fully diluted basis and (ii) any
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
applicable to the purchase of the Shares pursuant to the Offer having expired or
been terminated. The Offer is also subject to other terms and conditions
contained in the Offer to Purchase.

6. Tendering shareholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Information Agent or,
except as otherwise provided in Instruction 6 of the Letter of Transmittal,
stock transfer taxes with respect to the purchase of Shares by Purchaser
pursuant to the Offer. However, backup federal income tax withholding at a rate
of 31% may be required, unless an exemption applies or unless the required
taxpayer identification information is provided. See Instruction 9 of, and
"IMPORTANT TAX INFORMATION" in, the Letter of Transmittal.

7. In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents. See "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase.

2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer or, if applicable, to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedure described in "Section 3. Procedures for Accepting
the Offer and Tendering Shares" of the Offer to Purchase.

Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Shares pursuant to the Offer. However, Purchaser will reimburse
you for customary mailing and handling expenses incurred by you in forwarding
any of the enclosed materials to your clients. Purchaser will pay or cause to be
paid any stock transfer taxes payable with respect to the transfer of Shares to
it, except as otherwise provided in Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation, the Dealer Manager, or Innisfree M&A
Incorporated, the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.

Additional copies of the enclosed material may be obtained from the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.

Very truly yours,

Credit Suisse First Boston Corporation

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

<PAGE>
Offer to Purchase for Cash

All Outstanding Shares of Common Stock

(Including the Associated Preferred Share Purchase Rights)

Spine-Tech, Inc.

$52.00 Net Per Share

Sulzer Medica Orthopedics Acquisition Corp.

an indirect wholly owned subsidiary of

Sulzer Medica Ltd

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.

To Our Clients:

Enclosed for your consideration are an Offer to Purchase dated December 19,
1997 (the "Offer to Purchase") and a related Letter of Transmittal in connection
with the offer by Sulzer Medica Orthopedics Acquisition Corp., a Minnesota
corporation ("Purchaser") and an indirect wholly owned subsidiary of Sulzer
Medica Ltd, a corporation organized under the laws of Switzerland ("Parent"), to
purchase all outstanding shares of common stock, $.01 par value (the "Common
Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company"), including
the associated preferred share purchase rights (together with the Common Stock,
the "Shares"), at a price of $52.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in the related Letter of Transmittal (which, together with the Offer to
Purchase, constitute the "Offer").

Shareholders who desire to tender Shares pursuant to the Offer and whose
certificates for such Shares are not immediately available or the procedures for
book-entry transfer set forth in the Offer to Purchase cannot be completed on a
timely basis or time will not permit all required documents to reach Citibank,
N.A. (the "Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase) may nevertheless tender their Shares according to the guaranteed
delivery procedures set forth in "Section 3. Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase.

We are (or our nominee is) the holder of record of Shares held by us for
your account. A tender of such Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is furnished
to you for your information only and cannot be used by you to tender Shares held
by us for your account.

We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.

Your attention is invited to the following:

1. The tender price is $52.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer.

2. The Offer is being made for all outstanding Shares.

3. The Board of Directors of the Company (the "Board") and a special
committee of the Board, formed in accordance with Section 302A.673 of the
Minnesota Law, have unanimously determined that each of the
<PAGE>
Offer and the Merger (as defined in the Offer to Purchase) is in the best
interests of the Company and its shareholders and recommend that the
shareholders accept the Offer and tender their Shares pursuant to the Offer.

4. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Wednesday, January 21, 1998, unless the Offer is extended.

7. In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of certificates for, or a
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to,
such Shares and a Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
all other documents required by the Letter of Transmittal. See "Section 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.

If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the Offer.

The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares.

Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Credit Suisse First
Boston Corporation or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.

2
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
All Outstanding Shares of Common Stock of

Spine-Tech, Inc.

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated December 19, 1997 and the related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by Sulzer Medica
Orthopedics Acquisition Corp., a Minnesota corporation and an indirect wholly
owned subsidiary of Sulzer Medica Ltd, a corporation organized under the laws of
Switzerland, to purchase all outstanding shares of common stock, $.01 par value
(the "Common Stock"), of Spine-Tech, Inc., a Minnesota corporation, and the
associated preferred share purchase rights (together with the Common Stock, the
"Shares"), at a price of $52.00 per Share, net to the seller in cash, without
interest thereon.

This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase.

SIGN HERE

Number of Shares to Be Tendered:
- ----------------------------------------
____________ Shares*
- ----------------------------------------
Signature(s)

-----------------

Dated: , 199
- ---------------------------------------------------
Please type or
print name(s)

-----------------
- ---------------------------------------------------
Please type or
print address

-----------------
Area Code and
Telephone Number

-----------------
Taxpayer
Identification or
Social Security
Number

- ------------------------------

* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.

<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
Give the TAXPAYER
For this type of account: IDENTIFICATION
NUMBER of--
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. a. The usual The
revocable savings grantor-trustee(1)
trust (grantor is
also trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
state law.
5. Sole proprietorship The owner(3)
6. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(4)
- -----------------------------------------------------

<CAPTION>
Give the TAXPAYER
For this type of account: IDENTIFICATION
NUMBER of--
<S> <C> <C>
- -----------------------------------------------------
7. Corporate account The corporation
8. Religious, The organization
charitable, or
educational
organization account
9. Partnership account The partnership
10. Association, club, The organization
or other tax-exempt
organization
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>

- ---------------------------------------------
- ---------------------------------------------

(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.

(2) Circle the minor's name and furnish the minor's social security number.

(3) Show your individual name. You may also enter your business or "doing
business as" name. You may use either your social security number or your
employer identification number.

(4) List first and circle the name of the legal trust, estate, or pension trust.

NOTE: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2

Note: Section references are to the Internal Revenue Code unless otherwise
noted.

Obtaining a Number

If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.

Payees and Payments Exempt from Backup Withholding

The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisors Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation
(other than certain hospitals described in Regulations section 1.6041-3(c)) that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (1) through (5) are exempt from backup
withholding for barter exchange transactions and patronage dividends.

(1) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).

(2) The United States or any of its agencies or instrumentalities.

(3) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.

(4) A foreign government or any of its political subdivisions, agencies or
instrumentalities.

(5) An international organization or any of its agencies or instrumentalities.

(6) A corporation.

(7) A foreign central bank of issue.

(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.

(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.

(10) A real estate investment trust.

(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940

(12) A common trust fund operated by a bank under section 584(a).

(13) A financial institution.

(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc.,
Nominee List.

(15) A trust exempt from tax under section 664 or described in section 4947.

Payments of dividends and patronage dividends that generally are exempt from
backup withholding include the following:

- - Payments to nonresident aliens subject to withholding under section 1441.

- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.

- - Payments of patronage dividends not paid in money.

- - Payments made by certain foreign organizations.

- - Section 404(k) payments made by an ESOP.

Payments of interest that generally are exempt from backup withholding include
the following:

- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payor.

- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).

- - Payments described in section 6049(b)(5) to non-resident aliens.

- - Payments on tax-free covenant bonds under section 1451.

- - Payments made by certain foreign organizations.

- - Payments of mortgage interest to you.

Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).

Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations promulgated thereunder.

Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail
to furnish your correct taxpayer identification number to a requester, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.

<PAGE>
================================================================================

This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
19, 1997 and the related Letter of Transmittal, and is being made to all holders
of Shares. Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with such state statute. If, after such
good faith effort, Purchaser cannot comply with such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by Credit Suisse
First Boston Corporation ("Credit Suisse First Boston") or by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.

Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Spine-Tech, Inc.
at
$52.00 Net Per Share
by
Sulzer Medica Orthopedics Acquisition Corp.
an indirect wholly owned subsidiary of

Sulzer Medica Ltd

Sulzer Medica Orthopedics Acquisition Corp., a Minnesota corporation
("Purchaser") and an indirect wholly owned subsidiary of Sulzer Medica Ltd, a
corporation organized under the laws of Switzerland ("Parent"), is offering to
purchase all outstanding shares of common stock, $.01 par value (the "Common
Stock"), of Spine-Tech, Inc., a Minnesota corporation (the "Company"), including
the associated preferred share purchase rights (together with the Common Stock,
the "Shares"), at a price of $52.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
December 19, 1997 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"). Following the Offer,
Purchaser intends to effect the Merger described below.

- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

The Board of Directors of the Company (the "Board") and a special
committee of the Board have unanimously determined that each of the Offer and
the Merger is in the best interests of, the Company and its shareholders, and
recommend that the shareholders accept the Offer and tender their Shares
pursuant to the Offer.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to Citibank
N.A. (the "Depositary") of Purchaser's acceptance for payment of such Shares
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payments
from Purchaser and transmitting such payments to tendering shareholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
"Section 2. Acceptance for Payment and Payment for Shares" of the Offer to
Purchase) pursuant to the procedures set forth in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in "Section 3. Procedures for Accepting the Offer and Tendering Shares"
of the Offer to Purchase) in connection with a book-entry transfer, and (iii)
any other documents required under the Letter of Transmittal.

Purchaser expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any of the conditions specified in
"Section 14. Conditions to the Offer" of the Offer to Purchase, by giving oral
or written notice of such extension to the Depositary. Any such extension will
be followed as promptly as practicable by public announcement thereof, such
announcement to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date of the Offer. During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering shareholder to
withdraw its Shares.

Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 midnight, New York City
time, on Wednesday, January 21, 1998 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after February 16, 1998. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in "Section 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in "Section 3. Procedures for Accepting the
Offer and Tendering Shares" of the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares. All questions as to the form
and validity (including time of receipt) of any notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding.

The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.

The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares whose names appear
on the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.

The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read before any decision is made with
respect to the Offer.

Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers as set forth below. Additional copies of the Offer to Purchase, the
Letter of Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager, and copies will be furnished promptly
at Purchaser's expense. No fees or commissions will be paid to brokers, dealers
or other persons (other than the Information Agent and the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:
Innisfree
M&A Incorporated
501 Madison Avenue
20th Floor
New York, New York 10022
Call Toll Free (888) 750-5834

The Dealer Manager for the Offer is:

CREDIT SUISSE/FIRST BOSTON
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 646-4543

December 19, 1997
================================================================================

<PAGE>
Exhibit (a)(8)

SULZERMEDICA

[INVESTOR NEWS]

Winterthur, December 16, 1997 Investor Relations Office

Sulzer Medica Ltd
Zurcherstrasse 12
8401 Winterthur, Switzerland
Phone ++41 52 262 72 40
Fax ++41 52 262 00 23

SULZER MEDICA AGREES TO ACQUIRE SPINE-TECH INC.

Sulzer Medica Ltd, a leading orthopedic and cardiovascular device company
headquartered in Winterthur, Switzerland, and with a significant presence in the
US, is realizing a major strategic step in orthopedics. Sulzer Medica agreed
with Spine-Tech Inc. of Minneapolis, Minnesota, USA, to acquire all of the
outstanding shares of Spine-Tech. Spine-Tech, a rapidly growing company, is a
leader in the spinal implant market with its innovative line of interbody fusion
devices. The transaction involves a cash tender offer for all outstanding
Spine-Tech common shares at 52 USD per share for a total net value of
approximately 595 million USD. The tender offer is expected to expire on
January 20, 1998.

With this acquisition, the Orthopedics Division of Sulzer Medica will achieve a
major entry into the spinal market segment, a strategic goal outlined during
Sulzer Medica's recent public offering. The tender offer, which has been
approved by the Board of Directors of each company, will be conditioned on the
tender of a majority of the outstanding Spine-Tech shares, the expiration of
antitrust waiting periods and other customary conditions.

Since FDA approval of Spine-Tech's principal product, the BAK implant, in
September 1996, Spine-Tech has sold over 53 million USD of devices through
November 1997. Due to the innovative design and approach of Spine-Tech's
products, as well as the rapid growth of the spinal implant market, Sulzer
Medica expects to achieve significant growth in both sales and earnings in the
spinal market. The BAK implant involves a less invasive procedure with shorter
hospital stay, more rapid patient recovery and, as such, may result in reduced
overall cost compared to traditional treatment. The technology, therefore,
offers advantages for patients, hospitals, surgeons, and economic buyers.
Furthering its record of product innovation, Spine-Tech is preparing to launch
the industry's first second generation interbody fusion device.

The impact on Sulzer Medica's earnings is expected to be dilutive in 1998, but
accretive thereafter. Andre P. Buchel, President and CEO of Sulzer Medica said

<PAGE>

Page 2 of 2 / December 16, 1997
Sulzer Medica agrees to acquire Spine-Tech Inc.

"With this acquisition, we are executing an important step in the continuing
expansion program for our orthopedic and cardiovascular businesses, as outlined
in our initial public offering. The acquisition of Spine-Tech illustrates our
strategy of entrance into high-growth, high-margin segments of our markets."
Felix Scherrer, President of Sulzer Medica's Orthopedics Division, adds "With
the addition of Spine-Tech, we can strengthen our position in the worldwide
orthopedics market. Additionally, we can leverage our direct distribution
system in Europe and Asia, while complementing our product range."

Spine-Tech will operate as a business unit of Sulzer Orthopedics. David
Stassen, President of Spine-Tech, will become global head of Sulzer Medica's
spinal business. Mr. Stassen and his key management at Spine-Tech have
expressed their commitment to stay with the company in order to aid its
continued growth and prosperity. "This is an excellent opportunity for both
organizations and our customers, in that the combined organization will benefit
from overall faster growth and improved performance," commented Mr. Stassen.

Sulzer Medica, with sales of approximately 1 billion USD, currently employs more
than 4800 people worldwide. Sulzer Medica is focused on the development of
implantable medical devices and biomaterials for the cardiovascular and
orthopedic markets worldwide. The company's products include heart valves,
pacemakers, defibrillators, ablation catheters, vascular grafts, artificial
knees, hips, shoulder, and dental implants. (Zurich Stock Exchange: SMEN;
NYSE: SM)

THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. This press release contains forward-looking statements that involve
risks and uncertainties, including but not limited to, projections of future
sales, returns or invested assets and other risks detailed from time to time in
the company's Securities and Exchange Commission filings.

Please note that a conference call is scheduled to take place today at 4:00 p.m.
Swiss time where Sulzer Medica and Spine-Tech management will be available to
answer analyst and investor questions. The invitation including respective
phone access numbers is attached.

FOR INQUIRIES PLEASE CONTACT DORIS SCHURDAK, SULZER MEDICA LTD, PHONE
+41 52 26272 40 OR LARRY PANITZ, SULZER MEDICA USA, PHONE (409) 848-4180

<PAGE>
Exhibit (b)(1)

CREDIT SUISSE FIRST BOSTON

Uetibergstrasse 231 Telephone +41 1 333 62 73
P.O. Box 800 Telefax +41 1 333 78 00
CH 8070 Zurich

Corporate & Investment Banking Sulzer Medica Ltd.
Switzerland Attn. Mr. Ernst Schwarz
Mathias Luchsinger/ Beat Kofmel Zurcherstrasse 12
8401 Winterthur

By Fax: + 41 52 262 03 23

+41 1 333 62 73 December 17, 1997 FBFC 13/ BK

USD 250 MM BRIDGE CREDIT FACILITY BY CREDIT SUISSE FIRST BOSTON

Dear Sirs

We refer to our recent discussions and are pleased to inform you that Credit
Suisse First Boston has approved to provide you with the following Credit
Facility:

BORROWER Sulzer Medica Ltd., Winterthur

LENDER Credit Suisse First Boston

AMOUNT USD 250,000,000 - (US Dollars two hundred and fifty million
00/100)

TYPE Short Term Bridge Credit Facility

PURPOSE Acquisition Financing Spine Tech, Inc.

COMMITMENT December 17, 1997

FUNDING January 23, 1998

MATURITY March 31, 1998

AMORTIZATION 02.02.98 USD 65MM
24.02.98 USD 41MM
26.02.98 USD 14MM
27.02.98 USD 53MM
02.03.98 USD 20MM
31.03.98 USD 57MM

PRICING COMMITMENT FEE of 10 bp p.a.

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2

SPREAD of 15 bp p.a. over LIBOR

DOCUMENTATION Facility Agreement to be concluded

JURISDICTION Swiss Law/ Zurich 3 Court

We are pleased to provide you with our services and look forward to smoothly
execute the above transaction.

Yours sincerely

CREDIT SUISSE FIRST BOSTON

/s/ Christian E. Rohrback /s/ Mathias Luchsinger
- -------------------------------- --------------------------------
Christian E. Rohrback Mathias Luchsinger
Managing Director Senior Advisor Director

CC: Mr. Brian Polzak, Credit Suisse First Boston, New York
By Fax: +1 212 325 8000

<PAGE>

FINAL COPY

================================================================================

AGREEMENT AND PLAN OF MERGER

Among

SULZER MEDICA LTD,

SULZER MEDICA ORTHOPEDICS ACQUISITION CORP.

and

SPINE-TECH, INC.

Dated as of December 15, 1997

================================================================================

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i

TABLE OF CONTENTS
PAGE

ARTICLE I

THE OFFER

SECTION 1.01. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Company Action. . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II

THE MERGER

SECTION 2.01. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. Articles of Incorporation; By-laws. . . . . . . . . . . . . . 5
SECTION 2.05. Directors and Officers. . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Conversion of Securities. . . . . . . . . . . . . . . . . . . 5
SECTION 2.07. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.08. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.09. Surrender of Shares; Stock Transfer Books . . . . . . . . . . 7

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 3.01. Organization and Qualification; Subsidiaries. . . . . . . . . 8
SECTION 3.02. Articles of Incorporation; By-laws. . . . . . . . . . . . . . 9
SECTION 3.03. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.04. Authority Relative to this Agreement. . . . . . . . . . . . . 10
SECTION 3.05. No Conflict; Required Filings and Consents. . . . . . . . . . 10
SECTION 3.06. Permits; Company Products; Regulation . . . . . . . . . . . . 11
SECTION 3.07. SEC Filings; Financial Statements . . . . . . . . . . . . . . 12
SECTION 3.08. Absence of Certain Changes or Events. . . . . . . . . . . . . 13
SECTION 3.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.10. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . 14
SECTION 3.11. Offer Documents; Schedule 14D-9; Proxy Statement. . . . . . . 16
SECTION 3.12. Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.13. Intellectual Property . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.15. Environmental Matters . . . . . . . . . . . . . . . . . . . . 20

<PAGE>

SECTION 3.16. Material Contracts. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.17. Employee Confidentiality. . . . . . . . . . . . . . . . . . . 22
SECTION 3.18. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.19. Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.20. Amendment to Rights Agreement . . . . . . . . . . . . . . . . 24
SECTION 3.21. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.22. No Implied Representation . . . . . . . . . . . . . . . . . . 24

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

SECTION 4.01. Corporate Organization. . . . . . . . . . . . . . . . . . . . 25
SECTION 4.02. Authority Relative to this Agreement. . . . . . . . . . . . . 25
SECTION 4.03. No Conflict; Required Filings and Consents. . . . . . . . . . 25
SECTION 4.04. Offer Documents; Proxy Statement. . . . . . . . . . . . . . . 26
SECTION 4.05. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.06. Interim Operations of Purchaser . . . . . . . . . . . . . . . 26
SECTION 4.07. Absence of Litigation . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.08. Ownership of Company Capital Stock. . . . . . . . . . . . . . 27
SECTION 4.09. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.10. No Implied Representation . . . . . . . . . . . . . . . . . . 27

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 5.01. Conduct of Business Pending the Merger. . . . . . . . . . . . 27

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01. Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.02. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.03. Company Board Representation; Section 14(f) . . . . . . . . . 31
SECTION 6.04. Access to Information; Confidentiality. . . . . . . . . . . . 31
SECTION 6.05. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.06. Employee Stock Options and Other Employee Benefits. . . . . . 34
SECTION 6.07. S&N Options . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.08. Directors' and Officers' Indemnification and Insurance. . . . 35
SECTION 6.09. Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.10. Notification of Certain Matters . . . . . . . . . . . . . . . 36

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iii

SECTION 6.11. Further Action; Reasonable Efforts. . . . . . . . . . . . . . 36
SECTION 6.12. Public Announcements. . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.13. Confidentiality Agreement . . . . . . . . . . . . . . . . . . 37

ARTICLE VII

CONDITIONS TO THE MERGER

SECTION 7.01. Conditions to the Merger. . . . . . . . . . . . . . . . . . . 37

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.03. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.05. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE IX

GENERAL PROVISIONS

SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.04. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.05. Entire Agreement; Assignment. . . . . . . . . . . . . . . . . 45
SECTION 9.06. Parties in Interest . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.07. Specific Performance. . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.09. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.10. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.12. Company Disclosure Schedule . . . . . . . . . . . . . . . . . 46

ANNEX A Conditions to the Offer

EXHIBIT I Articles of Incorporation of Purchaser

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iv

Glossary of Defined Terms

Defined Term Location of Definition

Action . . . . . . . . . . . . . . . . . . . . . . . Section 3.09
acquisition proposal . . . . . . . . . . . . . . . . Section 6.05(a)
affiliate. . . . . . . . . . . . . . . . . . . . . . Section 9.03(a)
Agreement. . . . . . . . . . . . . . . . . . . . . . Preamble
Articles of Merger . . . . . . . . . . . . . . . . . Section 2.02
beneficial owner . . . . . . . . . . . . . . . . . . Section 9.03(b)
Blue Sky Laws. . . . . . . . . . . . . . . . . . . . Section 3.05(b)
Board. . . . . . . . . . . . . . . . . . . . . . . . Recitals
business day . . . . . . . . . . . . . . . . . . . . Section 9.03(c)
Certificates . . . . . . . . . . . . . . . . . . . . Section 2.09(b)
Code . . . . . . . . . . . . . . . . . . . . . . . . Section 3.10(a)
Company. . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . Recitals
Company Disclosure Schedule . . . . . . . . . . . . Article III
Company Options. . . . . . . . . . . . . . . . . . . Section 3.03
Company Preferred Stock. . . . . . . . . . . . . . . Section 3.03
Company Rights . . . . . . . . . . . . . . . . . . . Section 3.03
Company Stock Plans. . . . . . . . . . . . . . . . . Section 3.03
Confidentiality Agreement. . . . . . . . . . . . . . Section 6.04(b)
Constituent Corporations . . . . . . . . . . . . . . Preamble
control. . . . . . . . . . . . . . . . . . . . . . . Section 9.03(d)
controlled by. . . . . . . . . . . . . . . . . . . . Section 9.03(d)
CSFB . . . . . . . . . . . . . . . . . . . . . . . . Section 4.09
Current Premiums . . . . . . . . . . . . . . . . . . Section 6.08(b)
Dissenting Shares. . . . . . . . . . . . . . . . . . Section 2.08(a)
Effective Time . . . . . . . . . . . . . . . . . . . Section 2.02
Employee Stock Options . . . . . . . . . . . . . . . Section 6.06(a)
Employment Contracts . . . . . . . . . . . . . . . . Section 6.06(b)
Environmental Laws . . . . . . . . . . . . . . . . . Section 3.15(a)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . Section 3.10(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . Section 1.02(b)
Expenses . . . . . . . . . . . . . . . . . . . . . . Section 8.03(b)
FDA. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.06(b)
Fee. . . . . . . . . . . . . . . . . . . . . . . . . Section 8.03(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . Section 3.07(b)

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v

Governmental Authority . . . . . . . . . . . . . . . Section 3.05(b)
Hazardous Substances . . . . . . . . . . . . . . . . Section 3.15(a)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . Section 3.05(b)
Intellectual Property. . . . . . . . . . . . . . . . Section 9.03(e)
IRS. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.10(a)
knowledge of the Company . . . . . . . . . . . . . . Section 9.03(f)
Law. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.05(a)
Licensed Intellectual Property . . . . . . . . . . . Section 9.03(g)
Marks. . . . . . . . . . . . . . . . . . . . . . . . Section 9.03(e)
Material Adverse Effect. . . . . . . . . . . . . . . Section 3.01
Material Contracts . . . . . . . . . . . . . . . . . Section 3.16(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . Section 2.06(a)
Minimum Condition. . . . . . . . . . . . . . . . . . Section 1.01(a)
Minnesota Law. . . . . . . . . . . . . . . . . . . . Recitals
Multiemployer Plan . . . . . . . . . . . . . . . . . Section 3.10(b)
Multiple Employer Plan . . . . . . . . . . . . . . . Section 3.10(b)
NASD . . . . . . . . . . . . . . . . . . . . . . . . Section 3.05(b)
Offer. . . . . . . . . . . . . . . . . . . . . . . . Recitals
Offer Documents. . . . . . . . . . . . . . . . . . . Section 1.01(b)
Offer to Purchase. . . . . . . . . . . . . . . . . . Section 1.01(b)
Order. . . . . . . . . . . . . . . . . . . . . . . . Section 6.11(b)
Owned Intellectual Property. . . . . . . . . . . . . Section 9.03(h)
Parent . . . . . . . . . . . . . . . . . . . . . . . Preamble
Paying Agent . . . . . . . . . . . . . . . . . . . . Section 2.09(a)
Per Share Amount . . . . . . . . . . . . . . . . . . Recitals
Permits. . . . . . . . . . . . . . . . . . . . . . . Section 3.06(a)
person . . . . . . . . . . . . . . . . . . . . . . . Section 9.03(i)
Piper Jaffray. . . . . . . . . . . . . . . . . . . . Section 1.02(a)
Plans. . . . . . . . . . . . . . . . . . . . . . . . Section 3.10(a)
Products . . . . . . . . . . . . . . . . . . . . . . Section 3.06(b)
Proxy Statement. . . . . . . . . . . . . . . . . . . Section 3.11
Purchaser. . . . . . . . . . . . . . . . . . . . . . Preamble
Rights Agreement . . . . . . . . . . . . . . . . . . Section 3.03
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . Section 1.02(b)
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . Section 1.01(b)
SEC. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.01(a)
SEC Reports. . . . . . . . . . . . . . . . . . . . . Section 3.07(a)
Securities Act . . . . . . . . . . . . . . . . . . . Section 3.07(a)
Shares . . . . . . . . . . . . . . . . . . . . . . . Recitals
Shareholders' Meeting. . . . . . . . . . . . . . . . Section 6.01(a)
S&N. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.03
S&N Options. . . . . . . . . . . . . . . . . . . . . Section 6.07(a)

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vi

subsidiary . . . . . . . . . . . . . . . . . . . . . Section 9.03(j)
Subsidiaries . . . . . . . . . . . . . . . . . . . . Section 3.01
Superior Proposal. . . . . . . . . . . . . . . . . . Section 6.05(b)
Surviving Corporation. . . . . . . . . . . . . . . . Section 2.01
Tax/Taxes. . . . . . . . . . . . . . . . . . . . . . Section 3.14(b)
Tax Return . . . . . . . . . . . . . . . . . . . . . Section 3.14(c)
Transactions . . . . . . . . . . . . . . . . . . . . Section 3.04
under common control with. . . . . . . . . . . . . . Section 9.03(d)
WARN . . . . . . . . . . . . . . . . . . . . . . . . Section 3.10(f)

<PAGE>

AGREEMENT AND PLAN OF MERGER, dated as of December 15, 1997 (this
"AGREEMENT"), among SULZER MEDICA LTD, a corporation organized under the laws of
Switzerland ("PARENT"), SULZER MEDICA ORTHOPEDICS ACQUISITION CORP., a Minnesota
corporation and an indirect wholly owned subsidiary of Parent ("PURCHASER"), and
SPINE-TECH, INC., a Minnesota corporation (the "COMPANY") (Purchaser and the
Company being sometimes hereinafter referred to as the "CONSTITUENT
CORPORATIONS").

WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
shareholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;

WHEREAS, it is proposed that Purchaser shall make a cash tender offer
(as it may be amended from time to time as permitted hereunder, the "OFFER") to
acquire all of the issued and outstanding shares of common stock, $0.01 par
value, of the Company ("COMPANY COMMON STOCK") (such shares of Company Common
Stock, including the Company Rights (as defined in Section 3.03) associated with
such shares, being hereinafter collectively referred to herein as "SHARES") for
$52.00 per Share (such amount, or any greater amount per Share paid pursuant to
the Offer, being the "PER SHARE AMOUNT") net to the seller in cash, upon the
terms and subject to the conditions of this Agreement and the Offer;

WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously consented to the making of the Offer by Purchaser and resolved and
agreed to recommend that holders of Shares tender their Shares pursuant to the
Offer;

WHEREAS, the Boards of Directors of Parent (on its own behalf and as
the sole shareholder of Purchaser), Purchaser and the Company have each approved
this Agreement and the merger (the "MERGER") of Purchaser with and into the
Company in accordance with the Minnesota Business Corporation Act (the
"MINNESOTA LAW") following the consummation of the Offer and upon the terms and
subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:

ARTICLE I

THE OFFER

SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing (and shall not have
been waived by Purchaser),

<PAGE>
2

Purchaser shall commence the Offer as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the initial
public announcement of Purchaser's intention to commence the Offer. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the condition (the "MINIMUM
CONDITION") that a number of Shares that, when added to the Shares already owned
by Parent, shall constitute at least a majority of the then outstanding Shares
on a fully diluted basis (including, without limitation, all Shares issuable
upon the conversion of any outstanding convertible securities or upon the
exercise of any outstanding options, warrants or rights (other than the Company
Rights)) shall have been validly tendered and not withdrawn prior to the
expiration of the Offer and also shall be subject to the satisfaction or waiver
of each of the other conditions set forth in Annex A hereto. Purchaser
expressly reserves the right to waive any such condition, to increase the price
per Share payable in the Offer, and to make any other changes in the terms and
conditions of the Offer; PROVIDED, HOWEVER, that no change may be made which
decreases the price per Share payable in the Offer, reduces the maximum number
of Shares to be purchased in the Offer, changes the form of consideration to be
paid in the Offer, modifies the conditions to the Offer set forth in Annex A
hereto or imposes conditions to the Offer other than those set forth in Annex A
hereto or, except as provided in the next sentence, extends the Offer.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date, which shall
be 20 business days following the commencement of the Offer, if, at the
scheduled expiration of the Offer, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation or interpretation of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer, or (iii) extend the Offer
for an aggregate period of not more than 5 business days beyond the latest
applicable date that would otherwise be permitted under clause (i) or (ii) of
this sentence, if, as of such date, all of the conditions to Purchaser's
obligations to accept for payment, and to pay for, the Shares are satisfied or
waived, but the number of Shares validly tendered and not withdrawn pursuant to
the Offer equals 80 percent or more, but less than 90 percent, of the
outstanding Shares. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Subject to the terms and conditions of the
Offer, Purchaser shall, and Parent shall cause Purchaser to, promptly after
expiration of the Offer, accept for payment and pay for all Shares validly
tendered and not withdrawn.

(b) As promptly as practicable on the date of commencement of the
Offer, Purchaser shall file with the SEC a Tender Offer Statement on Schedule
14D-1 (together with all amendments and supplements thereto, the "SCHEDULE
14D-1") with respect to the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase (the "OFFER TO PURCHASE") and
forms of the related letter of transmittal and any related summary advertisement
(the Schedule 14D-1, the Offer to Purchase and such other documents, together
with all supplements and amendments thereto, being, collectively, the "OFFER
DOCUMENTS"). Purchaser shall disseminate the Offer to Purchase, the related
letter of

<PAGE>
3

transmittal and other Offer Documents to the extent required by applicable
federal securities laws. The Offer Documents will comply in all material
respects with the provisions of applicable federal securities laws. Each of
Parent, Purchaser and the Company agrees to correct promptly any information
provided by it for use in the Offer Documents which shall have become false or
misleading, and Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.

(c) Purchaser and Parent will file with the Commissioner of Commerce
of the State of Minnesota any registration statement relating to the Offer
required to be filed pursuant to Chapter 80B of the Minnesota Statutes.

SECTION 1.02. COMPANY ACTION. (a) The Company hereby consents to
the Offer and represents that (i) the Board, at a meeting duly called and held
on December 15, 1997, and a special committee of the Board, formed in accordance
with Section 302A.673 of the Minnesota Law, at a meeting duly called and held on
December 15, 1997, have, in each case, unanimously (A) determined that this
Agreement and the transactions contemplated hereby are in the best interests of
the Company and its shareholders, (B) approved this Agreement, the Merger, the
Offer and the other transactions contemplated hereby and (C) resolved to
recommend that the shareholders of the Company accept the Offer and approve and
adopt this Agreement and the transactions contemplated hereby, and (ii) Piper
Jaffray Inc. ("PIPER JAFFRAY") has delivered to the Board its opinion that the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares from a financial point of
view. The Company hereby consents to the inclusion in the Offer Documents of
the recommendation of the Board described in the immediately preceding sentence
unless the Board shall determine in good faith that it is necessary to withdraw
such recommendation in accordance with its fiduciary duties to the Company and
its shareholders after consultation with its outside legal counsel..

(b) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "SCHEDULE 14D-9") containing the recommendation of the Board
described in Section 1.02(a), unless the Board determines in good faith in
accordance with Section 6.05(b) an alternative recommendation to be necessary in
accordance with its fiduciary duties to the Company and its shareholders under
applicable law after consultation with its outside legal counsel. The Company
shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and any other applicable federal securities laws. The Schedule 14D-9
will comply in all material respects with the provisions of applicable federal
securities laws. Each of the Company, Parent and Purchaser agrees to correct
promptly any information provided by it for use in the Schedule 14D-9 which
shall have become false or misleading, and the

<PAGE>
4

Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.

(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of shareholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall, and each of Parent and Purchaser shall cause its affiliates, associates,
agents, representatives and advisors to, hold in confidence the information
contained in such labels, listings and files, shall use such information solely
in connection with the Offer and the Merger, and, if this Agreement shall be
terminated in accordance with Section 8.01 or if the Offer is otherwise
terminated, shall promptly deliver to the Company all copies (whether in human
or machine readable form) of such information and any information derived
therefrom then in their possession or the possession of their agents and
representatives.

ARTICLE II

THE MERGER

SECTION 2.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Minnesota
Law, at the Effective Time (as hereinafter defined) Purchaser shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease, and the Company shall continue as the
surviving corporation of the Merger (the "SURVIVING CORPORATION").

SECTION 2.02. EFFECTIVE TIME. As promptly as practicable, but not
later than three business days, after the satisfaction or waiver of the
conditions set forth in Article VII, the parties hereto shall cause the Merger
to be consummated by filing articles of merger (the "ARTICLES OF MERGER") with
the Secretary of State of the State of Minnesota, in such form as is required
by, and executed by the party or parties required to execute the Articles of
Merger in accordance with the relevant provisions of, the Minnesota Law (the
date and time of such filing being the "EFFECTIVE TIME").

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5

SECTION 2.03. EFFECT OF THE MERGER. At the Effective Time, the
Merger shall have the effect provided in the applicable provisions of the
Minnesota Law.

SECTION 2.04. ARTICLES OF INCORPORATION; BY-LAWS. (a) At the
Effective Time the Articles of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, (in the form attached as Exhibit I)
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of Incorporation;
PROVIDED, HOWEVER, that, at the Effective Time, by virtue of the Merger and this
Agreement and without any further action by the Constituent Corporations,
Article I of the Articles of Incorporation shall be amended to read as follows:
"The name of the corporation is Spine-Tech, Inc."

(b) The By-laws of Purchaser, as in effect immediately prior to the
Effective Time, by virtue of the Merger and this Agreement and without any
further action by the Constituent Corporations, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-laws.

SECTION 2.05. DIRECTORS AND OFFICERS. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation and the Minnesota Law,
and the officers of the Purchaser immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified in accordance
with the Articles of Incorporation and By-laws of the Surviving Corporation and
the Minnesota Law.

SECTION 2.06. CONVERSION OF SECURITIES. The manner and basis of
converting the shares of stock of each of the Constituent Corporations is
hereinafter set forth in this Section 2.06. At the Effective Time, by virtue of
the Merger and without any further action on the part of Purchaser, the Company
or the holders of any of the following securities:

(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.06(b) and any Dissenting Shares (as hereinafter defined)) shall be
converted automatically into the right to receive the Per Share Amount in
cash (the "MERGER CONSIDERATION"), prorated for fractional shares, payable,
without interest, to the holder of such Share, upon surrender, in the
manner provided in Section 2.09, of the certificate that formerly evidenced
such Share and all such Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled;

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6

(b) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and

(c) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.

SECTION 2.07. OPTIONS. All outstanding Employee Stock Options (as
defined in Section 6.06(a)) and S&N Options (as defined in Section 6.07(a)) will
be cancelled immediately prior to the Effective Time and, in consideration of
such cancellation, the Company will, and Parent agrees to cause the Company to,
pay each holder of an Employee Stock Option or S&N Option, as the case may be,
the cash amount determined in accordance with Section 6.06(a) or Section
6.07(a), respectively.

SECTION 2.08. DISSENTING SHARES. (a) Notwithstanding any provision
of this Agreement to the contrary, Shares that are outstanding immediately prior
to the Effective Time and which are held of record or beneficially owned by
persons who shall not have voted such Shares in favor of the Merger and who
shall have properly exercised dissenters' rights with respect to such Shares in
accordance with Sections 302A.471 and 302A.473 of the Minnesota Law
(collectively, the "DISSENTING SHARES") shall not be converted into the Merger
Consideration. Such shareholders shall be entitled to receive payment of the
fair value of such Shares held by them in accordance with the provisions of such
Section 302A.473, except that all Dissenting Shares held of record or
beneficially owned by persons who shall have failed to perfect or who
effectively shall have withdrawn or lost their dissenters' rights to such Shares
under such Section 302A.473 shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon, upon surrender, in the manner provided in Section
2.09, of the certificate or certificates that formerly evidenced such Shares.

(b) The Company shall give Parent (i) prompt notice of any notice of
intent to demand the fair value of any Shares received by the Company pursuant
to Section 302A.473 of the Minnesota Law, withdrawals of such notices, and any
other instruments served pursuant to the Minnesota Law and received by the
Company with respect to Dissenting Shares and (ii) the opportunity to direct all
negotiations and proceedings with respect to the exercise of dissenters' rights
under the Minnesota Law. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to the exercise of dissenters'
rights or offer to settle or settle any such rights.

<PAGE>
7

SECTION 2.09. SURRENDER OF SHARES; STOCK TRANSFER BOOKS. (a) Prior
to the Effective Time, Purchaser shall designate a bank or trust company located
in the United States having capital surplus and undivided profits exceeding
$500,000,000 to act as agent (the "PAYING AGENT") for the holders of Shares in
connection with the Merger to receive the funds to which holders of Shares shall
become entitled pursuant to Section 2.06(a). Such funds shall be invested by
the Paying Agent as directed by the Surviving Corporation.

(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a): (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "CERTIFICATES") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and (ii) instructions for use
in effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as reasonably may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled promptly to receive in exchange therefor the Merger Consideration for
each Share formerly evidenced by such Certificate, and such Certificate shall
then be cancelled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered on the stock transfer books of the Company, it shall be a
condition of payment that the Certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such taxes either have been
paid or are not applicable.

(c) In the event any Certificate or Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate or Certificates to have been lost, stolen or
destroyed, the amount to which such person would have been entitled under
Section 2.09(b) hereof but for failure to deliver such Certificate or
Certificates to the Paying Agent shall nevertheless be paid to such person;
PROVIDED, HOWEVER, that the Surviving Corporation may, in its sole discretion
and as a condition precedent to such payment, require such person to give the
Surviving Corporation a written indemnity agreement in form and substance
reasonably satisfactory to the Surviving Corporation and, if reasonably deemed
advisable by the Surviving Corporation, a bond in such sum as it may reasonably
direct as indemnity against any claim that may be had against the Surviving
Corporation or Parent with respect to the Certificate or Certificates alleged to
have been lost, stolen or destroyed.

<PAGE>
8

(d) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them, and
Parent and the Surviving Corporation jointly and severally agree to be liable
for payments required to be made before or after the expiration of such six
month period under Section 2.06(a) hereof or Section 302A.473 of the Minnesota
Law. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.

(e) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure schedule delivered by the
Company to Parent concurrently with the execution of this Agreement (the
"COMPANY DISCLOSURE SCHEDULE"), which shall identify exceptions by specific
Section references, or as otherwise described in the SEC Reports (as hereinafter
defined) filed prior the date of this Agreement, the Company hereby represents
and warrants to Parent and Purchaser that:

SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of
the Company and its two direct, wholly owned subsidiaries, Spine-Tech FSC Inc.,
a corporation organized under the laws of Barbados and Spine-Tech Surgical Inc.,
a Minnesota corporation (the "SUBSIDIARIES"), is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
corporate authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so incorporated, existing or in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below). Each of the Company and the Subsidiaries is duly

<PAGE>
9

qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing which would not, individually or in the aggregate, have a
Material Adverse Effect. When used in connection with the Company or the
Subsidiaries, the term "MATERIAL ADVERSE EFFECT" means any circumstance, change
in or effect on the Company or any Subsidiary that is, or is reasonably likely
to be, materially adverse to the business, financial condition, results of
operations, assets or liabilities (including, without limitation, contingent
liabilities) of the Company and the Subsidiaries, taken as a whole. Other than
the Subsidiaries, there are no corporations, partnerships, joint ventures,
associations or other entities in which the Company owns, of record or
beneficially, any direct or indirect equity or similar interest or any right
(contingent or otherwise) to acquire the same.

SECTION 3.02. ARTICLES OF INCORPORATION; BY-LAWS. The Company has
heretofore made available to Parent a complete and correct copy of the Articles
of Incorporation and the By-laws (or equivalent organizational documents), each
as amended to date, of each of the Company and the Subsidiaries. Such Articles
of Incorporation, By-laws or equivalent organizational documents are in full
force and effect. Neither the Company nor the Subsidiaries is in violation of
any of the provisions of their respective Articles of Incorporation or By-laws
(or equivalent organizational documents).

SECTION 3.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 15,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock ("COMPANY PREFERRED STOCK"), of which 300,000 shares
have been designated Series A Junior Participating Preferred Stock, $.01 par
value per share. As of the date hereof, (i) 10,323,730 Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no Shares are held in the treasury of the Company, (iii) no Shares are held by
the Subsidiaries, and (iv) 2,233,331 Shares are reserved for future issuance
pursuant to employee and other stock options (the "COMPANY OPTIONS") granted
under the Company's 1996 Omnibus Stock Plan, 1996 Employee Stock Purchase Plan,
1994 Stock Option Plan, 1993 Non-Employee Director Stock Option Plan and 1991
Stock Option Plan (collectively, the "COMPANY STOCK PLANS") and to Smith &
Nephew Richards Inc. ("S&N"). The number and exercise prices of such options
are set forth on Section 3.03 of the Company Disclosure Schedule. As of the
date hereof, no shares of Company Preferred Stock are issued and outstanding.
Except for (i) Company Options, and (ii) the preferred share purchase rights
(the "COMPANY RIGHTS") issued pursuant to the Rights Agreement, dated as of
August 21, 1996 (the "RIGHTS AGREEMENT"), between the Company and Norwest Bank
Minnesota, N.A., as rights agent, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any Subsidiary or obligating
the Company or any Subsidiary to issue or sell any shares of capital stock of,
or other equity interests in, the Company or such Subsidiary. All Shares
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the

<PAGE>
10

instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock of any Subsidiary. Each
outstanding share of capital stock of the Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and is owned by the Company free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. There are no outstanding contractual
obligations of the Company or any Subsidiary to provide funds to any person
outside the ordinary course of business consistent with past practice, or to
make any investment (in the form of a loan or capital contribution) in any other
person.

SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
all necessary corporate power and corporate authority to execute and deliver
this Agreement, to perform its obligations hereunder and, subject to approval by
the holders of the Shares at the Shareholders' Meeting (as hereinafter defined)
if so required by law with respect to its obligations to consummate the Merger,
to consummate the transactions contemplated hereby (the "TRANSACTIONS"). The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a majority of the then outstanding Shares if
and to the extent required by applicable law, and the filing and recordation of
appropriate articles of merger as required by the Minnesota Law). As an
amplification and not in limitation of the immediately preceding sentence, a
special committee of the Board formed pursuant to Section 302A.673 of the
Minnesota Law has taken all actions required to render inapplicable to the
Transactions the restrictions on business combinations contained in Section
302A.671 and Section 302A.673 of the Minnesota Law. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Purchaser, constitutes a
legal, valid and binding obligation of the Company.

SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Articles of Incorporation or By-laws of the Company or equivalent
organizational documents of the Subsidiaries, (ii) assuming that all consents,
approvals, authorizations and other actions described in Section 3.05(b) have
been made and all filings and obligations described in subsection (b) have been
made, conflict with or violate any foreign or domestic law, statute, ordinance,
rule, regulation, order, judgment or decree ("LAW") applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of

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11

termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit (as hereinafter defined) or other instrument
or agreement, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect.

(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic (local, state or federal)
or foreign ("GOVERNMENTAL AUTHORITY"), except (i) for applicable requirements,
if any, of the Exchange Act, state securities or "blue sky" laws ("BLUE SKY
LAWS"), the National Association of Securities Dealers ("NASD"), state takeover
laws, the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and filing and
recordation of appropriate articles of merger as required by the Minnesota Law,
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Offer or the Merger, or otherwise prevent the Company from
performing its obligations under this Agreement, and would not, individually or
in the aggregate, have a Material Adverse Effect.

SECTION 3.06. PERMITS; COMPANY PRODUCTS; REGULATION. (a) Each of
the Company and each Subsidiary are in possession of all franchises, grants,
authorizations, clearances, licenses, registrations, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
Governmental Authority necessary for the Company or each Subsidiary to own,
lease and operate its properties or to carry on its business as it is now being
conducted (the "PERMITS"), except where the failure to have, or the suspension
or cancellation of, any of the Permits would not, individually or in the
aggregate, have a Material Adverse Effect. As of the date hereof, no suspension
or cancellation of any of the Permits is pending or, to the knowledge of the
Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Permits would not, individually or in the aggregate,
have a Material Adverse Effect. A list of the material Permits is set forth in
Section 3.06(a) of the Company Disclosure Schedule. Neither the Company nor any
Subsidiary is in conflict with, or in default or violation of, (i) the Foreign
Corrupt Practices Act of 1977, as amended, (ii) any Law applicable to the
Company or any Subsidiary or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) any Permits, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.

(b) Except as would not have a Material Adverse Effect, since January
1, 1992, there have been no written notices, citations or decisions by any
Governmental Authority that any product produced, manufactured or marketed at
any time by the Company (the "PRODUCTS") is defective or fails to meet any
applicable standards promulgated by such

<PAGE>
12

Governmental Authority, and the Company does not know of any such defect or
failure. Except as would not have a Material Adverse Effect, the Company has
complied with the Law, policies, procedures and specifications applicable to the
Company with respect to the design, manufacture, labelling, testing and
inspection of Products in the United States and the operation of manufacturing
facilities in the United States promulgated by the Food and Drug Administration
("FDA"), and has complied with the Law, policies, procedures and specifications
applicable to the Company in any jurisdiction outside the United States with
respect to the design, manufacture, labelling, testing and inspection of
Products and the operation of manufacturing facilities outside of the United
States. Since January 1, 1992, there have been no recalls, field notifications
or seizures ordered or, to the knowledge of the Company, threatened by any
Governmental Authority with respect to any of the Products that would,
individually or in the aggregate, have a Material Adverse Effect, and the
Company has not independently engaged in such recalls or field notifications.
The Company has not received any warning letter or Section 305 notices from the
FDA.

(c) The Company has obtained, in all countries where the Company is
marketing or has marketed its Products, all applicable Permits required to be
obtained by it by Governmental Authorities (including the FDA) in such countries
regulating the safety, effectiveness and market clearance of the Products that
are currently marketed by the Company or its affiliates, except where the
failure to obtain such Permits would not, individually or in the aggregate, have
a Material Adverse Effect. Section 3.06(c)(i) of the Company Disclosure
Schedule sets forth a list of all licenses, registrations, approvals, permits
and device listings. Section 3.06(c)(ii) of the Company Disclosure Schedule
sets forth a description of all Company inspections by regulatory authorities,
recalls, product actions and audits since January 1, 1992 and a description of
ongoing clinical studies.

SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company
has filed all forms, reports and documents required to be filed by it with the
SEC since June 22, 1995 through the date of this Agreement (collectively, the
"SEC REPORTS"). The SEC Reports (i) at the time of their filing complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or the Exchange Act, as the case may be, and the
applicable rules and regulations thereunder and (ii) did not, at the time they
were filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The Subsidiaries are not required to file any form,
report or other document with the SEC.

(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the SEC Reports was prepared in accordance with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto), and each fairly presented in all material respects the
financial position, results of operations and cash flows of the Company and its
Subsidiaries, if any, as at the respective dates thereof and for the

<PAGE>
13

respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal year-end adjustments
and except that the unaudited financial statements do not contain all of the
footnote disclosures required by GAAP).

(c) Neither the Company nor any Subsidiary has any liability of any
nature (whether accrued, absolute, contingent or otherwise), except (i)
liabilities and obligations disclosed pursuant to any other representation or
warranty set forth in this Agreement, (ii) debts, liabilities and obligations
set forth in the Company Disclosure Schedule or which, because of the exceptions
set forth in the other representations and warranties contained in this
Agreement, are not required to be disclosed in the Company Disclosure Schedule
in order to avoid a breach of any other representation or warranty contained in
this Agreement, (iii) liabilities and obligations disclosed in any SEC Report
prior to the date hereof, including any Form 10-Q filed since December 31, 1996,
and (iv) other liabilities and obligations which, after giving effect to the
proceeds reasonably expected to be received from any insurance coverage, would
not, individually or in the aggregate, have a Material Adverse Effect.

(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.

SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1996, except as contemplated by or as disclosed in this Agreement or as
disclosed in any SEC Report filed since December 31, 1996, the Company and the
Subsidiary have conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there has not been
(a), after giving effect to the proceeds reasonably expected to be received from
any insurance coverage, any Material Adverse Effect, (b) any material change by
the Company in its accounting methods, principles or practices, including
without limitation, those used in the calculation of contractual adjustments or
bad debts, (c) any revaluation by the Company of any material assets (including,
without limitation, any writing down of the value of inventory or writing off of
accounts receivable), other than in the ordinary course of business consistent
with past practice, (d) any declaration, setting aside or payment of any
dividend or distribution in respect of the Shares or any redemption, purchase or
other acquisition of any of its securities or (e) any increase in, or
establishment or modification of, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or employees of the Company or any Subsidiary,
except increases in the salaries of employees who are not officers, payment of
profit sharing and bonuses, and granting of stock options to employees who are
not officers in the ordinary course of business consistent with past practice.

<PAGE>
14

SECTION 3.09. ABSENCE OF LITIGATION. There is no litigation, suit,
claim, action, proceeding or investigation (an "ACTION") pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary, or
any property or asset of the Company or any Subsidiary, before any court,
arbitrator or Governmental Authority, which (i) individually or in the
aggregate, reasonably would be expected to have a Material Adverse Effect or
(ii) as of the date of this Agreement, seeks to delay or prevent the
consummation of any Transaction. Neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of the Company, continuing investigation
by, any Governmental Authority, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority or arbitrator
having, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) Section
3.10 of the Company Disclosure Schedule contains a true and complete list of all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which the Company or
any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary (collectively, the
"PLANS"). Each Plan is in writing and the Company has previously furnished or
made available to Parent a true and complete copy of each Plan and a true and
complete copy of each material document prepared in connection with each such
Plan, including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan, and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Neither the Company nor any
Subsidiary has any express or implied commitment (i) to create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Internal Revenue Code of 1986, as amended
(the "CODE").

(b) None of the Plans is a multiemployer plan, within the meaning of
Section 3(37) or 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN"), or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"). None of the Plans is a "defined
benefit plan" within the meaning of

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15

Section 3(35) of ERISA. Except as disclosed in Section 3.10 of the Company
Disclosure Schedule, none of the Plans (i) provides for the payment of
separation, severance, termination or similar-type benefits to any person, (ii)
obligates the Company or any Subsidiary to pay separation, severance,
termination or other benefits as a result of any Transaction or (iii) obligates
the Company or any Subsidiary to make any payment or provide any benefit that
could be subject to a tax under Section 4999 of the Code. None of the Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of the Company or any
Subsidiary, except for continued healthcare coverage under COBRA.

(c) Each Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS that such
Plan is so qualified, and each trust established in connection with any Plan
which is intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such trust is
so exempt. No fact or event has occurred since the date of any such
determination letter from the IRS that could adversely affect the qualified
status of any such Plan or the exempt status of any such trust. Each trust
maintained or contributed to by the Company or any Subsidiary which is intended
to be qualified as a voluntary employees' beneficiary association exempt from
federal income taxation under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and no fact or event has occurred since the date of such
determination by the IRS that could adversely affect such qualified or exempt
status.

(d) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
Neither the Company nor any Subsidiary is currently liable or has previously
incurred any liability for any tax or penalty arising under Section 4971, 4972,
4979, 4980 or 4980B of the Code or Section 502(c) of ERISA, and no fact or event
exists which could give rise to any such liability. Neither the Company nor any
Subsidiary has incurred any liability under, or by operation of, Title IV of
ERISA and no fact or event exists which could give rise to any such liability.

(e) Each Plan is now and has been operated in all respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company and the Subsidiaries have
performed all obligations required to be performed by them under, and are not in
any respect in default under or in violation of, any Plan. The audited balance
sheet of the Company dated December 31, 1996 reflects an accrual of all amounts
of employer contributions and premiums accrued but unpaid with respect to the
Plans.

(f) Neither the Company nor any Subsidiary has incurred any liability
under, and have complied in all respects with, the Worker Adjustment Retraining

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16

Notification Act and the regulations promulgated thereunder ("WARN") and do not
reasonably expect to incur any such liability as a result of actions taken or
not taken prior to the Effective Time.

(g) (i) There are no claims or actions pending or, to the knowledge
of the Company, threatened between the Company or any Subsidiary and any of
their respective employees, which controversies have a Material Adverse Effect;
(ii) neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of the Company,
are there any activities or proceedings of any labor union to organize any such
employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract; (iv) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.

SECTION 3.11. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the respective times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to shareholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. Neither the proxy statement to be
sent to the shareholders of the Company in connection with the Shareholders'
Meeting (as hereinafter defined) nor the information statement to be sent to
such shareholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, being referred to herein as the "PROXY
STATEMENT"), shall, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to shareholders of the Company, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading or
shall, at the time of the Shareholders' Meeting or at the Effective Time, omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders'
Meeting which shall have become false or misleading. Notwithstanding the
foregoing, no representation or warranty is made by the Company with respect to
statements therein based on information supplied by Parent or Purchaser or any
of their representatives which is contained in the Schedule 14D-9, the Offer
Documents, the Proxy Statement or any amendment or supplement thereto. The
Schedule 14D-9 and the Proxy Statement shall

<PAGE>
17

comply in all material respects as to form with the requirements of the Exchange
Act and the applicable rules and regulations thereunder.

SECTION 3.12. PROPERTY. The Company and the Subsidiary have
sufficient title to, or right to use, all their tangible properties and assets
necessary to conduct their respective businesses as currently conducted or as
contemplated to be conducted, with only such exceptions as, individually or in
the aggregate, would not interfere with the current use of such property or
asset in such a manner as to have a Material Adverse Effect.

SECTION 3.13. INTELLECTUAL PROPERTY. (a) Section 3.13(a)(i) of the
Company Disclosure Schedule sets forth a true and complete list and a brief
description of all patents, registered trademarks, registered service marks and
registered copyrights, and all applications therefor, constituting Owned
Intellectual Property (including a complete identification of each patent and
patent application and each registration, certificate or application for
registration thereof, of all Owned Intellectual Property, and for all such Owned
Intellectual Property used by the Company or any Subsidiary in connection with
the development, manufacture, testing, or production of products, or otherwise
used, held or intended to be used in the business of the Company or any
Subsidiary, also lists the name and title of the person or persons responsible
for the creation thereof) and Section 3.13(a)(ii) of the Company Disclosure
Schedule sets forth a true and complete list and a brief description, including
a description of any license, franchise or sublicense thereof, of all Licensed
Intellectual Property, except customary non-negotiated licenses by the Company
as licensee of computer software. For each registration, certificate or patent
or application for registration or patent listed in Section 3.13(a)(i) of the
Company Disclosure Schedule held by assignment, the assignment has been lawfully
obtained and has been duly recorded with the state or national patent or
trademark office (or such other Governmental Authority as may be necessary under
any law) from which the original patent, certificate or registration issued or
before which the patent application or application for registration is pending.
Except as would not, individually or in the aggregate, have a Material Adverse
Effect, the rights of the Company or any Subsidiary, as the case may be, in or
to the Owned Intellectual Property set forth on Section 3.13(a)(i) of the
Company Disclosure Schedule are held exclusively by the Company or such
Subsidiary, do not conflict with the rights of any other person or entity, and
neither the Company nor any such Subsidiary has received any claim or written
notice from any person or entity to such effect.

(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) all the Owned Intellectual Property is owned by the
Company or any Subsidiary, free and clear of any encumbrance, (ii) no existing
product of the Company or any Subsidiary or any product of the Company or any
Subsidiary currently in development is being provided, manufactured, sold or
developed in violation of any patents or trademarks, or any other rights of any
person or entity, and (iii) no Actions have been made or asserted or are pending
(nor, to the knowledge of the Company, has any such Action been threatened)
against the Company or any Subsidiary either (A) based upon or challenging or
seeking to

<PAGE>
18

deny or restrict the use by the Company or any Subsidiary of any of the Owned
Intellectual Property or the Licensed Intellectual Property or (B) alleging that
any services provided, or products manufactured or sold by the Company or any
Subsidiary are being provided, manufactured or sold in violation of any patents
or trademarks, or any other rights of any person or entity. Except as would
not, individually or in the aggregate, have a Material Adverse Effect, to the
knowledge of the Company, no person or entity is using any patents, copyrights,
trademarks, service marks, trade names, trade secrets or similar property that
are confusingly similar to the Owned Intellectual Property or, except with
respect to customary non-negotiated licenses by the Company as licensee of
computer software, the Licensed Intellectual Property or that infringe upon the
Owned Intellectual Property or, except with respect to customary non-negotiated
licenses by the Company as licensee of computer software, the Licensed
Intellectual Property or upon the rights of the Company or any Subsidiary
therein. Neither the Company nor any Subsidiary has granted any license or
other right to any other person or entity with respect to the Owned Intellectual
Property or the Licensed Intellectual Property. Except as would not,
individually or in the aggregate, have a Material Adverse Effect, the
consummation of the Transactions will not result in the termination or
impairment of any of the Owned Intellectual Property or the Licensed
Intellectual Property.

(c) To the knowledge of the Company, with respect to all Licensed
Intellectual Property and Owned Intellectual Property, the registered user
provisions of all countries in which the Company or any Subsidiary has obtained
a registered trademark requiring such registrations have been or are in the
process of being complied with in all material respects.

(d) The Company has delivered or made available to Parent correct and
complete copies of all licenses, franchises and sublicenses for Licensed
Intellectual Property set forth in Section 3.13(a)(ii) of the Company Disclosure
Schedule and any and all ancillary documents pertaining thereto (including,
without limitation, all amendments, consents and evidence of commencement dates
and expiration dates). With respect to each of such licenses and sublicenses:

(i) such license, franchise or sublicense, together with all
ancillary documents delivered pursuant to the first sentence of this
Section 3.13(d), is legal, valid, binding, enforceable and in full force
and effect and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of such license or
sublicense;

(ii) such license, franchise or sublicense will not cease to be legal,
valid, binding, enforceable and in full force and effect on terms identical
to those currently in effect as a result of the consummation of the
Transactions, nor will the consummation of the Transactions constitute a
breach or default under such license, franchise or sublicense;

<PAGE>
19

(iii) with respect to each such license or sublicense, except as
would not, individually or in the aggregate, have a Material Adverse
Effect: (A) neither the Company nor any Subsidiary has received any notice
of termination or cancellation under such license or sublicense and no
licensor or sublicensor has any right of termination or cancellation under
such license or sublicense prior to the expiration of its term except in
connection with the default of the Company or any Subsidiary thereunder or
pursuant to applicable Laws relating to bankruptcy or reorganization, (B)
neither the Company nor any Subsidiary has received any notice of a breach
or default under such license or sublicense, which breach or default has
not been cured, and (C) neither the Company nor any Subsidiary has granted
to any other person or entity any rights, adverse or otherwise, under such
license or sublicense; and

(iv) except as would not, individually or in the aggregate, have a
Material Adverse Effect, none of the Company, any Subsidiary and, to the
knowledge of the Company, any other party to such license or sublicense is
in breach or default of such license or sublicense; and, to the knowledge
of the Company, no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense by any party
thereto (other than the Company or any Subsidiary).

(e) The Owned Intellectual Property and the Licensed Intellectual
Property constitutes all Intellectual Property necessary in the conduct of the
business of the Company and the Subsidiaries, and there are no other items of
Intellectual Property that are material to the Company, the Subsidiaries or
their businesses.

SECTION 3.14. TAXES. (a) The Company and the Subsidiaries have
timely filed all Tax Returns required to be filed by them, or extensions of time
for such filings have been filed, other than Tax Returns where the failure to
file would not have a Material Adverse Effect, and, except as would not,
individually or in the aggregate, have a Material Adverse Effect, such returns
and reports are true, complete and correct. Except as would not have a Material
Adverse Effect, the Company and the Subsidiaries have paid and discharged within
the time and in the manner prescribed by the law all Taxes that are due and
payable, other than such payments as are being contested in good faith by
appropriate proceedings. The accruals and reserves for Taxes reflected in the
Company's audited consolidated balance sheet for the fiscal year ended December
31, 1996 are in accordance with GAAP. Neither the IRS nor any other taxing
authority or agency, domestic or foreign, is now asserting or, to the knowledge
of the Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for additional Taxes or interest thereon or penalties in
connection therewith. Except as would not have a Material Adverse Effect, no
adjustment relating to such returns has been proposed in writing by any Tax
authority (insofar as either relates to the activities or income of the Company
or any Subsidiary or could result in liability of the Company or any Subsidiary
on the basis of joint and/or several liability) and, to the knowledge of the
Company and the Subsidiaries, no basis exists for any

<PAGE>
20

such adjustment, other than adjustments which would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received a written ruling from, or entered into a written and
legally binding agreement with, a taxing authority relating to Taxes of the
Company or any Subsidiary. Neither the Company nor any Subsidiary has granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any income Tax. The statute of limitations for
the assessment of any federal income Taxes has expired for all income Tax
Returns of the Company, or such income Tax Returns of the Company and the
Subsidiaries have been examined by the IRS for all periods. There are no Tax
liens upon the assets of the Company or any Subsidiary except for Tax liens that
would not, individually or in the aggregate, have a Material Adverse Effect. No
audits or other administrative proceeding or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or any
Subsidiary. Neither the Company nor any Subsidiary is a party to any agreement
relating to allocating or sharing of Taxes which has not been disclosed on its
Tax Returns. No consent under Section 341(f) of the Code has been filed with
respect to the Company or any Subsidiary. Except as would not have a Material
Adverse Effect, neither the Company nor any of its Subsidiaries has a permanent
establishment or office or fixed place of business through which the business of
the Company or any of its Subsidiaries is wholly or partly carried on outside
the United States. Neither the Company nor any of its Subsidiaries has
participated in or cooperated with an international boycott within the meaning
of Section 999 of the Code.

(b) "TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and similar
charges.

(c) "TAX RETURN" means any report, return, information statement,
payee statement declaration or other information required to be provided to any
federal, state, local or foreign government or taxing authority, or otherwise
retained, with respect to Taxes.

SECTION 3.15. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"HAZARDOUS SUBSTANCES" means (A) those substances defined in or regulated under
the following federal statutes and their state counterparts, as each may be
amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy

<PAGE>
21

Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air
Act; (B) petroleum and petroleum products including crude oil and any fractions
thereof; (C) natural gas, synthetic gas, and any mixtures thereof; (D) radon;
(E) any other contaminant; and (F) any substance with respect to which a
federal, state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "ENVIRONMENTAL LAWS" means any federal, state
or local law relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.

(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect: (i) the Company and the Subsidiaries have not violated
and are not in violation of any Environmental Law; (ii) none of the properties
owned or leased by the Company or any Subsidiary (including, without limitation,
soils and surface and ground waters) are contaminated with any Hazardous
Substance at levels which exceed standards established by applicable
Governmental Authorities; (iii) the Company and the Subsidiaries have no
liability for any off-site contamination; and (iv) the Company and the
Subsidiaries have no liability under any Environmental Law.

SECTION 3.16. MATERIAL CONTRACTS. (a) Subsections (i) through (ix)
of Section 3.16 of the Company Disclosure Schedule contain a list of the
following types of contracts and agreements to which the Company or any
Subsidiary is a party (such contracts, agreements and arrangements as are
required to be set forth in Section 3.16(a) of the Company Disclosure Schedule,
together with all agreements relating to Intellectual Property set forth in
Section 3.13(a) of the Company Disclosure Schedule, being the "MATERIAL
CONTRACTS"):

(i) each contract and agreement (excluding individual purchase and
sales orders) which (A) is likely to involve consideration of more than
$100,000 in the aggregate during the calendar year ending December 31,
1997, (B) is likely to involve consideration of more than $100,000 in the
aggregate over the remaining term of such contract, and which, in either
case, cannot be cancelled by the Company or any Subsidiary upon 90 days' or
less notice without penalty or further payment;

(ii) all broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing consulting
and advertising contracts and agreements to which the Company or any
Subsidiary is a party (true and complete copies of such contracts and
agreements have been provided to Parent);

(iii) all management contracts (excluding contracts for employment)
and contracts with physicians or other consultants, including any contracts
involving the payment of royalties or other amounts calculated based upon
the revenues or income

<PAGE>
22

of the Company or any Subsidiary or income or revenues related to any
product of the Company or any Subsidiary to which the Company or any
Subsidiary is a party;

(iv) all contracts and agreements relating to indebtedness;

(v) all contracts and agreements with any Governmental Authority to
which the Company or any Subsidiary is a party other than for purchases or
sales of inventory to a Governmental Authority in the ordinary course of
business consistent with past practice;

(vi) all contracts and agreements that limit the ability of the
Company or any Subsidiary to compete in any line of business or with any
person or entity or in any geographic area or during any period of time;

(vii) all contracts and agreements providing for benefits under any
Plan;

(viii) all material contracts or arrangements that result in any
person or entity holding a power of attorney from the Company or any
Subsidiary that relates to the Company, such Subsidiary or their
businesses; and

(ix) all contracts for employment required to be listed in Section
3.10 of the Company Disclosure Schedule.

(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, each contract referred to in paragraphs (i) through
(ix) above is a legal, valid and binding agreement, neither the Company nor any
Subsidiary is in default under any Material Contract, and neither the Company
nor any Subsidiary is in receipt of any claim of default under any Material
Contract. The Company has furnished or made available to Parent true and
complete copies of all Material Contracts in effect as of the date hereof that
are not included as exhibits to the SEC Reports filed prior to the date hereof.

SECTION 3.17. EMPLOYEE CONFIDENTIALITY. All directors, officers,
management employees and technical and professional employees of the Company and
the Subsidiaries are under written obligation to the Company or a Subsidiary (or
bound by applicable Law) to maintain in confidence all confidential or
proprietary information acquired in the course of their employment and to assign
to the Company all inventions made in connection with the scope of their
employment during the tenure of their employment and for a reasonable time
period thereafter.

SECTION 3.18. INSURANCE. (a) Section 3.18(a) of the Company
Disclosure Schedule sets forth the following information with respect to each
insurance policy under which the Company or any Subsidiary has been an insured,
a named insured or otherwise the principal beneficiary of coverage at any time
within the past year:

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23

(i) the name of the insurer and the names of the principal insured,
each named insured and each additional insured;

(ii) the policy number, the period of coverage, description and scope
(including an indication of whether the coverage was on a claims-made,
occurrence or other basis) and amount (including a description of how
deductibles, retentions and aggregates are calculated and operate) of
coverage;

(iii) if coverage is written on a claims-made basis, the retro date
and details concerning endorsements or terms which further restrict
coverage (E.G., "laser beam" endorsements);

(iv) summary of loss amounts paid to date, reserves for open claims,
and, if applicable, the remaining unexhausted coverage limits available to
the insured under each policy; and

(v) the premium charged for the policy, including, without
limitation, a description of any premium financing, retroactive premium
adjustments or other loss-sharing arrangements.

(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; (ii) neither the Company nor any Subsidiary is in
material breach or default (including any such breach or default with respect to
the payment of premiums or the giving of notice), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default or permit termination or modification, under the policy; and (iii) to
the knowledge of the Company, no insurer on the policy has been declared
insolvent or placed in receivership, conservatorship or liquidation.

(c) At no time has the Company or any Subsidiary (i) subsequent to
January 1, 1992, been denied any insurance or indemnity bond coverage which it
has requested or (ii) subsequent to January 1, 1992, made any material
reduction in the scope or amount of its insurance coverage, or subsequent to
January 1, 1992, received notice from any of its insurance carriers that any
insurance coverage listed in Section 3.18(a) of the Company Disclosure Schedule
will not be available in the future substantially on the same terms as are now
in effect.

SECTION 3.19. FRAUD AND ABUSE. Neither the Company nor any
Subsidiary have engaged knowingly and willfully in any activities which are
prohibited under federal Medicare and Medicaid statutes, including, without
limitation, 42 U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn or related
state or local statutes or regulations or which otherwise constitutes fraud,
including, without limitation, the following: (a) knowingly and willfully

<PAGE>
24

making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment; (c) knowingly and
willfully failing to disclose knowledge of the occurrence of any event affecting
the initial or continued right to any benefit or payment on its behalf or on
behalf of another, with intent to secure such benefit or payment fraudulently;
(d) knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind or offering to pay such remuneration (i) in return for referring
an individual to a person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole or in part by
Medicare or Medicaid or (ii) in return for purchasing, leasing, or ordering or
arranging for or recommending purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in whole or in part by
Medicare or Medicaid.

SECTION 3.20. AMENDMENT TO RIGHTS AGREEMENT. The Board has taken all
necessary action to approve the amendment of the Rights Agreement so that (a)
none of the execution or delivery of this Agreement, the making of the Offer,
the acceptance for payment or payment for Shares by Purchaser pursuant to the
Offer or the consummation of the Merger or any other Transaction will result in
(i) the occurrence of the "flip-in event" described under Section 11 of the
Rights Agreement, (ii) the occurrence of the "flip-over event" described in
Section 13 of the Rights Agreement, or (iii) the Company Rights becoming
evidenced by, and transferable pursuant to, certificates separate from the
certificates representing Company Common Stock, and (b) the Company Rights will
expire pursuant to the terms of the Rights Agreement at the Effective Time.

SECTION 3.21. BROKERS. No broker, finder or investment banker (other
than Piper Jaffray) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore made available to
Parent a complete and correct copy of all agreements between the Company and
Piper Jaffray pursuant to which such firm would be entitled to any payment
relating to the Transactions.

SECTION 3.22. NO IMPLIED REPRESENTATION. It is the explicit intent
of each party hereto that the Company is making no representation or warranty
whatsoever, not express or implied, beyond those given in this Agreement,
including but not limited to any implied warranty or representation as to
condition, merchantability or suitability. It is understood that any estimates,
projections or other predictions contained herein or referred to in the Company
Disclosure Schedule or in any material that has been provided to Purchaser or
Parent are not and shall not be deemed to be representations or warranties of
the Company.

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25

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

Parent and Purchaser hereby jointly and severally represent and
warrant to Company that:

SECTION 4.01. CORPORATE ORGANIZATION. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the requisite corporate
power and corporate authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such governmental approvals would
not delay consummation of the Transactions, or otherwise prevent Parent or
Purchaser from performing its obligations under this Agreement.

SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Purchaser has all necessary corporate power and corporate authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Purchaser
(including any action by the sole shareholder of Purchaser) are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate articles of
merger as required by the Minnesota Law). This Agreement has been duly and
validly executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.

SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Articles of Incorporation or By-laws (or equivalent
organizational documents) of either Parent or Purchaser, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section
4.03(b) have been obtained and all filings and obligations described in
subsection (b) have been made, conflict with or violate any Law applicable to
Parent or Purchaser or by which any property or asset of either of them is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts,

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26

violations, breaches, defaults, or other occurrences which would not prevent or
delay consummation of the Transactions, or otherwise prevent Parent or Purchaser
from performing its obligations under this Agreement.

(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws, the NASD, state
takeover laws, the pre-merger notification requirements of the HSR Act and
filing and recordation of appropriate articles of merger as required by the
Minnesota Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
Parent or Purchaser from performing their respective obligations under this
Agreement.

SECTION 4.04. OFFER DOCUMENTS; PROXY STATEMENT. Neither the Offer
Documents nor any information supplied by Parent or Purchaser for inclusion in
the Schedule 14D-9 will, at the time the Offer Documents, the Schedule 14D-9, or
any amendments or supplements thereto, are filed with the SEC or are first
published, sent or given to shareholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to shareholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, or at the
time of the Shareholders' Meeting or at the Effective Time, omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meeting which
shall have become false or misleading. Notwithstanding the foregoing, Parent
and Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the Offer Documents, the Proxy Statement or any amendment or supplement
thereto. The Offer Documents shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.

SECTION 4.05. FINANCING. Parent and Purchaser have, or will have,
available all of the funds necessary for the acquisition of all the outstanding
Shares pursuant to the Offer and the Merger, as the case may be, and to perform
their respective obligations under this Agreement.

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27

SECTION 4.06. INTERIM OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the Transactions and has not engaged in
any business activities or conducted any operations other than in connection
with the Transactions.

SECTION 4.07. ABSENCE OF LITIGATION. There is no Action pending or,
to the knowledge of the Parent and Purchaser, threatened against Parent or
Purchaser, or any property or asset of Parent or Purchaser, before any court,
arbitrator or Governmental Authority, which individually or in the aggregate,
reasonably would be expected to delay consummation of the Transactions or
otherwise prevent Parent or Purchaser from performing its obligations under this
Agreement. Neither Parent nor Purchaser nor any property or asset of Parent or
Purchaser is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of
Parent and Purchaser, continuing investigation by, any Governmental Authority,
or any order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority or arbitrator which, individually or in the aggregate,
would delay consummation of the Transactions or otherwise prevent Parent or
Purchaser from performing its obligations under this Agreement.

SECTION 4.08. OWNERSHIP OF COMPANY CAPITAL STOCK. As of the date of
this Agreement, neither Parent, Purchaser nor any of their affiliates is the
beneficial owner of any shares of capital stock of the Company.

SECTION 4.09. BROKERS. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation ("CSFB")) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or
Purchaser. Parent agrees to pay all such fees and commissions of CSFB.

SECTION 4.10. NO IMPLIED REPRESENTATION. It is the explicit intent
of each party hereto that neither Parent nor Purchaser is making any
representation or warranty whatsoever, express or implied, beyond those given in
this Agreement, including but not limited to any implied warranty or
representation as to condition, merchantability or suitability.

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 5.01. CONDUCT OF BUSINESS PENDING THE MERGER. The Company
agrees that, between the date of this Agreement and the Effective Time, except
as set forth in Section 5.01 of the Company Disclosure Schedule or as expressly
contemplated by any other provision of this Agreement, unless Parent or
Purchaser shall otherwise agree in writing, the businesses of the Company and
the Subsidiaries shall be conducted only in, and the Company

<PAGE>
28

and the Subsidiaries shall not take any action with respect to their businesses
except in, the ordinary course of business; and each of the Company and the
Subsidiaries shall use its reasonable efforts to preserve substantially intact
the business organization of the Company and the Subsidiaries, to keep available
the services of the current officers, employees and consultants of the Company
and the Subsidiaries, and to preserve the current relationships of the Company
and the Subsidiaries with physicians, customers, suppliers and other persons
with which the Company or any Subsidiary has significant business relations. By
way of amplification and not limitation, except as contemplated by this
Agreement, neither the Company nor any Subsidiary shall, between the date of
this Agreement and the Effective Time, directly or indirectly do any of the
following without the prior written consent of Parent or Purchaser:

(a) amend or otherwise change its Articles of Incorporation or
By-laws or equivalent organizational documents;

(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Subsidiary
(except for the issuance of Shares issuable pursuant to Company Options
outstanding on the date hereof, 6,500 Shares to be issued pursuant to the
1996 Employee Stock Purchase Plan and any Shares required to be issued
under the Rights Agreement) or (ii) any assets of the Company or any
Subsidiary, except in the ordinary course of the business consistent with
past practice;

(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock except that any Subsidiary may declare and pay
a dividend to the Company;

(d) reclassify, combine, split, subdivide or redeem any of its
capital stock, or purchase or otherwise acquire, directly or indirectly,
any of its capital stock;

(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof; (ii)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or
advances, except in the ordinary course of business; (iii) enter into any
material contract or agreement other than in the ordinary course of
business; (iv) authorize any single capital expenditure which is in excess
of $100,000 or capital expenditures which are, in the aggregate, in excess
of $250,000 for the Company and the Subsidiaries taken as a whole; or (v)
enter into or amend any contract, agreement,

<PAGE>
29

commitment or arrangement with respect to any matter set forth in this
Section 5.01(e);

(f) increase the compensation payable or to become payable or the
benefits provided to its officers or key employees, or grant any severance
or termination pay to, or enter into any employment or severance agreement
with any director or officer or other key employee of the Company or any
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or similar plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except to
the extent such endorsement or termination is required by law;

(g) hire or retain any single employee or consultant at an annual
rate of compensation in excess of $50,000, or employees or consultants with
annual rates of compensation in excess of $250,000 in the aggregate;

(i) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;

(j) commence or settle any Action;

(k) amend, modify or consent to the termination of any Material
Contract or amend, modify or consent to the termination of the Company's or
any Subsidiary's rights thereunder, in a manner materially adverse to the
Company or any Subsidiary, other than in the ordinary course of business
consistent with past practice;

(l) enter into any contract or agreement that would have been a
Material Contract if entered into prior to the date hereof, other than in
the ordinary course of business; or

(m) enter into any contract or agreement that contemplates the
transfer by the Company of any interest in Owned Intellectual Property or
Licensed Intellectual Property.

<PAGE>
30

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01. SHAREHOLDERS' MEETING . (a) If required by applicable
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Articles of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold a
special meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the Transactions (the "SHAREHOLDERS' MEETING") and (ii)
unless the Board determines in good faith that an alternative action is
necessary in accordance with its fiduciary duties to the Company and its
shareholders under applicable law after consultation with its outside legal
counsel, (A) include in the Proxy Statement the unanimous recommendation of the
Board that the holders of the Shares approve and adopt this Agreement and the
Merger and (B) use its reasonable efforts to obtain such approval and adoption
of the holders of Shares. At the Shareholders' Meeting, Parent and Purchaser
shall cause all Shares then owned by them and their subsidiaries to be voted in
favor of the approval and adoption of this Agreement and the Merger.

(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90 percent of the then outstanding Shares, the parties hereto
agree, subject to Article VII, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 302A.621 of the
Minnesota Law, as soon as reasonably practicable after such acquisition, without
a meeting of the shareholders of the Company.

SECTION 6.02. PROXY STATEMENT. If required by applicable law, as
promptly as reasonably practicable following consummation of the Offer, the
Company shall file the Proxy Statement with the SEC under the Exchange Act, and
shall use its reasonable efforts to have the Proxy Statement cleared by the SEC.
Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the reasonable opportunity
to review the Proxy Statement prior to its being filed with the SEC and shall
give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company, Parent and Purchaser agrees to use its reasonable
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of, and requests by, the SEC and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to
the holders of Shares entitled to vote at the Shareholders' Meeting at the
earliest practicable time.

<PAGE>
31

SECTION 6.03. COMPANY BOARD REPRESENTATION; SECTION 14(F). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer
(provided that the Minimum Condition has been satisfied), and from time to time
thereafter, Purchaser shall be entitled, subject to compliance with Section
14(f) of the Exchange Act, to designate up to such number of directors, rounded
down to the next whole number (except where such rounding down would cause
Purchaser to not be entitled to designate at least a majority of directors on
the Board, in which case such number shall be rounded up), on the Board as shall
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected or appointed as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors or both. At such times, the Company shall, upon the
written request of Purchaser, use its reasonable efforts to cause persons
designated by Purchaser to constitute the same percentage as persons designated
by Purchaser shall constitute of the Board of (i) each committee of the Board,
(ii) the board of directors of each Subsidiary and (iii) each committee of each
such board, in each case only to the extent permitted by applicable law.
Notwithstanding anything stated herein, if Shares are purchased pursuant to the
Offer, Parent and Purchaser shall use reasonable efforts to assure that until
the Effective Time, the Board shall have at least one director who is a director
on the date hereof and is not an employee of the Company.

(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.

(c) Following the election of designees of Purchaser pursuant to
this Section 6.03, prior to the Effective Time, any amendment of this
Agreement or the Articles of Incorporation or By-laws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of
Parent or Purchaser or waiver of any of the Company's rights hereunder shall
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by Purchaser nor are employees of the
Company.

SECTION 6.04. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the
date hereof to the Effective Time, upon reasonable notice, the Company shall,
and shall cause the

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32

Subsidiary and the officers, directors, employees, auditors and agents of the
Company and the Subsidiary to, afford the officers, employees and agents of
Parent and Purchaser reasonable access during normal business hours and upon
reasonable notice to the officers, employees, agents, properties, offices and
other facilities, books and records of the Company and each Subsidiary, and
shall furnish Parent and Purchaser with all financial, operating and other data
and information as Parent or Purchaser, through its officers, employees or
agents, may reasonably request. Parent and Purchaser shall make all reasonable
efforts to minimize any disruption to the businesses of the Company and the
Subsidiaries which may result from the requests for data and information
hereunder.

(b) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential in accordance with the confidentiality
agreement, dated September 25, 1997 (the "CONFIDENTIALITY AGREEMENT"), between
Parent and the Company.

(c) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.

SECTION 6.05. NO SOLICITATION. (a) The Company shall, and shall
direct and use all reasonable efforts to cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to any
"acquisition proposal" (as defined in this Section 6.05(a)). The Company shall
not, nor shall it permit any Subsidiary to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, accountant, attorney
or other advisor or representative of, the Company or the Subsidiary to,
directly or indirectly, (i) solicit or initiate, or knowingly encourage the
submission of, any acquisition proposal or (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, an acquisition proposal;
PROVIDED, HOWEVER, that, if and to the extent that, prior to the acceptance for
payment of Shares pursuant to the Offer, the Board determines in good faith that
it is necessary to do so in accordance with its fiduciary duties to the Company
and its shareholders under applicable law after consultation with its outside
legal counsel, the Company may, in response to a bona fide unsolicited
acquisition proposal, and subject to compliance with Section 6.05(c), (x)
furnish information with respect to the Company and provide access to the person
making such acquisition proposal pursuant to a customary confidentiality
agreement on terms no less favorable to the Company than those contained in the
Confidentiality Agreement and (y) participate in discussions and negotiations
regarding such acquisition proposal. For purposes of this Agreement,
"ACQUISITION PROPOSAL" means any bona fide proposal or offer from any person
relating to any direct or indirect acquisition of over 20% of any class of
equity securities of the Company or any Subsidiary, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 20% or
more of any class of

<PAGE>
33

equity securities of the Company or any Subsidiary, or any merger,
consolidation, business combination, sale of all or a substantial part of the
assets other than in the ordinary course of business, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Subsidiary, other than the Transactions.

(b) Except as set forth in this Section 6.05, neither the Board nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by the
Board or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any acquisition
proposal or (iii) enter into any agreement with respect to any acquisition
proposal. Notwithstanding the foregoing, in the event that, prior to the time
of acceptance for payment of Shares pursuant to the Offer, the Board determines
in good faith that it is necessary in accordance with its fiduciary duties to
the Company and its shareholders under applicable law after consultation with
its outside legal counsel to enter into a definitive agreement with respect to a
Superior Proposal, the Board may terminate this Agreement in accordance with
Section 8.01(d)(ii) and concurrently with, or immediately after, such
termination cause the Company to enter into such agreement with respect to such
Superior Proposal and withdraw or modify its approval or recommendation of the
Offer, the Merger or this Agreement. For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any bona fide unsolicited proposal made by a third
party to acquire, directly or indirectly, more than 50% of the outstanding
Shares or the shares of capital stock of any surviving corporation in a merger
with the Company on a fully diluted basis or all or substantially all the assets
of the Company and otherwise on terms which the Board determines in its good
faith judgment (after consultation with its financial advisor) to be more
favorable to the Company's shareholders than the Offer and the Merger.

(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.05, the Company shall promptly advise
Parent orally and in writing of any request for information or of any
acquisition proposal and the material terms and conditions of such request or
acquisition proposal but need not identify the person making such request or
acquisition proposal.

(d) Nothing contained in this Section 6.05 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if the Board determines in good faith that it is
necessary to do so in accordance with its fiduciary duties to the Company and
its shareholders under applicable law after consultation with its outside legal
counsel, PROVIDED, HOWEVER, neither the Company nor the Board nor any committee
thereof shall, except as permitted by Section 6.05(b) or required pursuant to
Rule 14e-2(a) promulgated under the Exchange Act, withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to the Offer, this
Agreement or the Merger or to approve or recommend, or propose publicly to
approve or recommend, an acquisition proposal.

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34

(e) The Company agrees not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which the
Company is a party.

SECTION 6.06. EMPLOYEE STOCK OPTIONS AND OTHER EMPLOYEE BENEFITS.
(a) The Company shall take all such actions as shall be necessary to cause all
Company Options (including any related alternative rights) granted under the
Company Stock Plans (including those granted to current or former employees,
consultants and directors of the Company or any of its Subsidiaries) (the
"EMPLOYEE STOCK OPTIONS") to become exercisable either prior to the purchase of
the Shares pursuant to the Offer or immediately prior to the Effective Time, as
permitted pursuant to the terms and conditions of the applicable Company Stock
Plan. The Company shall take all such actions as shall be necessary to cause
all Employee Stock Options that are outstanding immediately prior to the
Effective Time (whether or not then presently exercisable or vested), to be
cancelled. In exchange for the cancellation of each such Employee Stock Option
(whether or not presently exercisable or vested), the holder thereof shall be
entitled to receive from the Company an amount in cash equal to the product of
the difference between the Per Share Amount and the per share exercise price of
such Employee Stock Option, and the number of shares of Company Common Stock
covered by such Employee Stock Option. All payments in respect of such Employee
Stock Options shall be made after the Effective Time and not later than five
business days following such time, subject to the Company's collection of all
applicable withholding taxes required by law to be collected by the Company.
The Company Stock Plans shall be terminated as of the Effective Time and
thereafter the only rights of participants therein shall be the right to receive
the consideration set forth in the previous sentence. Prior to the Effective
Time, the Company shall take action as may be necessary to carry out the terms
of this Section 6.06(a).

(b) Section 6.06(b) of the Company Disclosure Schedule contains a
list of each employee of the Company and the Subsidiary who has a written
employment agreement that provides for the payment of severance or similar-type
payments or benefits to such employee following such employee's termination of
employment with the Company and Subsidiary (the "EMPLOYMENT CONTRACTS").

(c) For the period through and including December 31, 1998, Parent
shall, or shall cause the Surviving Corporation to, maintain employee benefit
plans, programs and arrangements which are, in the aggregate, for the employees
as a whole who were active full-time employees of the Company or any Subsidiary
immediately prior to the Effective Time and continue to be active full-time
employees of Purchaser, the Surviving Corporation, any Subsidiary or any other
affiliate of Purchaser, no less favorable than those provided by the Company and
the Subsidiary immediately prior to the Effective Time. From and after the
Effective Time, for purposes of determining eligibility, vesting and entitlement
to vacation and severance and other benefits for employees actively employed
full-time by the Company or any Subsidiary immediately prior to the Effective
Time under any compensation, severance, welfare, pension, benefit, savings or
other plan of Purchaser or any of its affiliates in which active full-time
employees of the Company and any Subsidiary

<PAGE>
35

become eligible to participate (whether pursuant to this Section 6.06(c) or
otherwise), service with the Company or any Subsidiary (whether before or after
the Effective Time) shall be credited as if such service had been rendered to
Purchaser or such affiliate.

SECTION 6.07. S&N OPTIONS. (a) All Company Options (including any
related alternative rights) issued to S&N by the Company (the "S&N OPTIONS")
shall vest, terminate, become exercisable and be cancelled in accordance with
their terms and conditions. The Company shall take all such actions as shall be
necessary to cause all S&N Options that are outstanding immediately prior to the
Effective Time (whether or not then presently exercisable or vested) to be
cancelled. In exchange for the cancellation of each S&N Option, the holder of
the S&N Options (whether or not then presently exercisable or vested) shall be
entitled to receive from the Company an amount in cash equal to the product of
the difference between the Per Share Amount and the per share exercise price of
such S&N Option, and the number of shares of Company Common Stock covered by
such S&N Option. Prior to the Effective Time, the Company shall take action as
may be necessary to carry out the terms of this Section 6.07(a).

(b) The Company has provided Parent true and complete copies of the
S&N Options. Section 6.07(b) of the Company Disclosure Schedule sets forth a
true and complete list of the S&N Options, together with information as to each
S&N Option with respect to date of grant, vesting date, and amount of Company
Common Stock underlying such S&N Option.

SECTION 6.08. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The By-laws or Articles of Incorporation of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification, expense
advancement and exculpation than are set forth in Section 4.01 of the By-laws or
in the Articles of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time (or, in the event any claim is asserted within such six year
period, until final disposition of that claim) in any manner that would affect
adversely the rights thereunder of individuals who at the Effective Time or at
any time prior thereto were directors, officers, employees, fiduciaries or
agents of the Company, unless such modification shall be required by Minnesota
Law. To the extent that the obligations under such provisions are not fully
performed by the Surviving Corporation, Parent agrees to perform fully the
obligations thereunder for the remaining period.

(b) Parent or the Surviving Corporation shall use its best efforts to
maintain in effect for a period of not less than six years from the Effective
Time the current directors' and officers' liability insurance policies
maintained by the Company (provided that Parent or the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less favorable to such directors and officers) with
respect to matters occurring prior to the Effective Time. Notwithstanding the
foregoing, in no event shall Parent or the Surviving Corporation be required to
expend

<PAGE>
36

pursuant to this Section 6.08(b) more than an amount per year equal to 150% of
current annual premiums (the "CURRENT PREMIUMS") paid by the Company for such
insurance (which premiums the Company represents and warrants to be $120,000 in
the aggregate); and, PROVIDED, FURTHER, that if the Parent or the Surviving
Corporation is not able to obtain the amount of insurance required by this
Section 6.08(b) for such aggregate premium, Parent or the Surviving Corporation
shall obtain as much insurance as can be obtained for an annual premium of 150%
of the Current Premiums.

SECTION 6.09. RIGHTS PLAN. The Company shall not redeem the Company
Rights prior to the Effective Time unless this Agreement shall have been
terminated pursuant to Article VIII or unless required to do so by order of a
court of competent jurisdiction. The Board shall take, or cause to be taken,
such action as is necessary to effect the amendments to the Rights Plan as
approved by the Board and described in Section 3.20.

SECTION 6.10. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, to the extent the Company has
knowledge thereof, of any event the occurrence, or non-occurrence, of which
would cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect when made provided that no breach
of this covenant shall be deemed to have occurred if the occurrence or
non-occurrence did not result in a breach that had a Material Adverse Effect,
and (ii) any material failure of the Company, Parent or Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 6.10 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.

SECTION 6.11. FURTHER ACTION; REASONABLE EFFORTS. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall (i)
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use all
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and each Subsidiary as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall use their reasonable efforts to
take all such action.

(b) Each of the parties hereto agrees to cooperate and use its
reasonable efforts vigorously to contest and resist any action, including
administrative or judicial action,

<PAGE>
37

and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (an
"ORDER") that is in effect and that restricts, prevents or prohibits the
consummation of the Transactions, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial appeal.

(c) Each of the parties hereto agrees that the provisions of this
Section shall not interfere with Board's exercise of its fiduciary duties to the
Company and its shareholders as specified in Sections 1.02, 6.01, 6.05 and 8.01.

SECTION 6.12. PUBLIC ANNOUNCEMENTS. Unless otherwise required by
applicable law or stock exchange or NASD requirements applicable to any party
hereto, neither Parent nor the Company shall issue any such press release or
make any such public statement shall with respect to this Agreement or any
Transaction without the consent of the other. In the event that Parent or the
Company shall be required by applicable law or stock exchange or NASD
requirements to make any such release or statement, it shall first consult the
other.

SECTION 6.13. CONFIDENTIALITY AGREEMENT. The Company hereby waives
the provisions of the Confidentiality Agreement as and to the extent necessary
to permit the consummation of each Transaction. Upon the acceptance for payment
of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed
to have terminated without further action by the parties thereto.

ARTICLE VII

CONDITIONS TO THE MERGER

SECTION 7.01. CONDITIONS TO THE MERGER. The respective obligations
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:

(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the shareholders of
the Company to the extent required by the Minnesota Law and the Articles of
Incorporation of the Company;

(b) HSR ACT. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;

<PAGE>
38

(c) NO ORDER. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the Offer
or Merger; and

(d) OFFER. Purchaser or its permitted assignee shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer;
PROVIDED, HOWEVER, that the obligation of Parent and Purchaser to effect
the Merger shall not be conditioned upon this Section 7.01(d) if the
failure of Purchaser to purchase the Shares pursuant to the Offer shall
have constituted a breach of the Offer or this Agreement.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. TERMINATION. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the shareholders of the
Company:

(a) By mutual written consent of Parent, Purchaser and the Company
duly authorized by the Boards of Directors of Parent, Purchaser and the
Company; or

(b) By Parent, Purchaser or the Company if (i) the Shares shall not
have been accepted for payment pursuant to the Offer on or before March 31,
1998; PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 8.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Shares to have been accepted for payment on
or before such date nor be available to Parent or Purchaser unless the
failure to accept Shares for payment pursuant to the Offer resulted from
the failure of any one of the conditions set forth in Annex A to have been
satisfied; or (ii) any court of competent jurisdiction or other
governmental authority shall have issued an order, decree, ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final and
nonappealable or, if a temporary order, shall not have been lifted within
20 days of being issued; or

<PAGE>
39

(c) By Parent if due to an occurrence or circumstance, other than as
a result of a breach by Parent or Purchaser of their obligations hereunder,
resulting in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (i) failed to commence the Offer within 30
days following the date of this Agreement or (ii) terminated the Offer
without having accepted any Shares for payment thereunder; or

(d) By the Company, upon approval of the Board, if (i) due to an
occurrence or circumstance that would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Purchaser shall have terminated
the Offer without having accepted any Shares for payment thereunder or (ii)
prior to the purchase of Shares pursuant to the Offer, if the Board
determines in good faith, after giving effect to any concessions that may
be offered by Parent, that it is necessary to do so in accordance with its
fiduciary duties to the Company and its shareholders under applicable law
after consultation with its outside legal counsel in order to enter into a
definitive agreement with respect to a Superior Proposal, upon five days'
prior written notice to Parent, setting forth in reasonable detail the
final terms and conditions of the Superior Proposal (but the Company shall
not be required to disclose the identity of the person making the Superior
Proposal); PROVIDED, HOWEVER, that any termination of this Agreement
pursuant to this Section 8.01(d)(ii) shall not be effective until the
Company has made full payment of all amounts provided under Section 8.03.

SECTION 8.02. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except (i) as set forth in Sections 8.03 and 9.01 and (ii) nothing herein shall
relieve any party from liability for any willful and material breach hereof.

SECTION 8.03. FEES AND EXPENSES. (a) In the event that

(i) any person (including, without limitation, the Company or any
affiliate thereof), other than Parent or any affiliate of Parent, shall
have become the beneficial owner of more than 20% of the then outstanding
Shares; and this Agreement shall have been terminated pursuant to Section
8.01; or

(ii) any person shall have publicly made or communicated to the
Company an acquisition proposal that is publicly disclosed and the Board
shall have either (A) withdrawn, amended or modified its recommendation of
the Offer in a manner adverse to Parent and Purchaser, (B) recommended such
acquisition proposal or (C) taken any action with respect to the Rights
Agreement to facilitate such acquisition proposal, and (x) the Offer shall
have remained open for at least 20 business days, (y)

<PAGE>
40

the Minimum Condition shall not have been satisfied and (z) this Agreement
shall have been terminated pursuant to Section 8.01; or

(iii) this Agreement is terminated pursuant to Section 8.01(d)(ii);
or

(iv) the Company enters into an agreement with respect to an
acquisition proposal or an acquisition proposal is consummated, in each
case within 18 months after the termination of this Agreement pursuant to
Section 8.01(b)(i), 8.01(c), or 8.01(d)(i), which termination resulted from
a breach by the Company of its obligations hereunder, resulting in a
failure to satisfy any condition set forth on Annex A hereto, and the
Company shall not theretofore have been required to pay the Fee to Parent
pursuant to Section 8.03(a)(i), 8.03(a)(ii) or 8.03(a)(iii);

then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $15,000,000 (the "FEE"), which amount shall be payable in immediately
available funds, plus all Expenses (as hereinafter defined). In no event shall
more than one Fee be payable under this Section 8.03(a).

(b) The Company shall, at such time as a Fee is required to be paid,
reimburse each of Parent, Purchaser and their respective stockholders and
affiliates (not later than one business day after submission of statements
therefor) for up to $5,000,000 of actual and documented out-of-pocket expenses
(including, without limitation, fees and expenses payable to all banks,
investment banking firms, other financial institutions and other persons and
their respective agents and counsel, for arranging, committing to provide or
providing any financing for the Transactions or structuring the Transactions and
all fees of counsel, accountants, experts and consultants to Parent, Purchaser
and their respective shareholders and affiliates, and all printing and
advertising expenses) actually incurred or accrued by either of them or on their
behalf in connection with the Transactions, including, without limitation, the
financing thereof, and actually incurred by banks, investment banking firms,
other financial institutions and other persons and assumed by Parent or
Purchaser in connection with the negotiation, preparation, execution and
performance of this Agreement, the structuring and financing of the Transactions
and any financing commitments or agreements relating thereto (all of the
foregoing being referred to herein collectively as the "EXPENSES").

(c) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.

(d) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the
out-of-pocket costs and expenses actually incurred by Parent and Purchaser
(including, without limitation, fees and

<PAGE>
41

out-of-pocket expenses of counsel) in connection with the collection under and
enforcement of this Section 8.03, together with interest on such unpaid Fee and
Expenses, commencing on the date that the Fee or such Expenses became due, at a
rate equal to the rate of interest publicly announced by Citibank, N.A., from
time to time, in The City of New York, as such bank's Prime Rate plus 2.00%.

SECTION 8.04. AMENDMENT. Subject to Section 6.03 and applicable law,
this Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective Boards of Directors at any time prior to the
Effective Time; PROVIDED, HOWEVER, that, after the approval and adoption of this
Agreement and the transactions contemplated hereby by the shareholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.

SECTION 8.05. WAIVER. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.

ARTICLE IX

GENERAL PROVISIONS

SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Sections 6.06(a) and 6.08 shall survive the
Effective Time indefinitely and those set forth in Sections 6.04(b), 8.03 and
9.01 shall survive termination indefinitely.

SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) or overnight courier, to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):

<PAGE>
42

if to Parent or Purchaser:

Sulzer Medica Ltd
CH - 8401
Winterthur, Switzerland
Telecopier: 41-52-262-0059
Attention: Andre P. Buchel

and

Sulzer Medica Orthopedics Acquisition Corp.
c/o Sulzer Medica USA Inc.
Angleton, Texas 77515
Telecopier: (409) 849-1940
Attention: Lawrence H. Panitz, Esq.

with a copy to:

Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier: (212) 848-7179
Attention: Peter D. Lyons, Esq.

if to the Company:

Spine-Tech, Inc.
7375 Bush Lake Road
Minneapolis, Minnesota 55439-2029
Telecopier: (612) 830-6388
Attention: David W. Stassen

with a copy to:

Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Telecopier: (612) 336-3026
Attention: W. Smith Sharpe, Esq.

<PAGE>
43

SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:

(a) "AFFILIATE" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;

(b) "BENEFICIAL OWNER" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;

(c) "BUSINESS DAY" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in The City of New York or the State of
Minnesota;

(d) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;

(e) "INTELLECTUAL PROPERTY" means (a) inventions, whether or not
patentable, whether or not reduced to practice, or whether or not yet made
the subject of a pending patent application or applications, (b)
potentially patentable subject matter, including, without limitation, any
patent disclosures, whether or not reduced to practice and whether or not
yet made the subject of a pending patent application or applications, (c)
national and multinational statutory invention registrations, patents,
patent registrations, inventor's certificates, renewals, substitutions and
patent applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights
therein provided by multinational treaties or conventions and all
improvements to the inventions disclosed in each such registration, patent,
certificate or application, (d) trademarks, service marks, trade

<PAGE>
44

dress, logos, trade names and corporate names, whether or not registered,
including all common-law rights, and registrations and applications for
registration thereof (for purposes of this subpart (d), collectively,
"MARKS"), including, but not limited to, all Marks registered in the United
States Patent and Trademark Office, the Trademark Offices of the States and
Territories of the United States of America, and the Trademark Offices of
other nations throughout the world, and all rights therein provided by
multinational treaties or conventions, (e) copyrights (registered or
otherwise) and registrations and applications for registration thereof, and
all rights therein provided by multinational treaties or conventions, (f)
moral rights (including, without limitation, rights of paternity and
integrity), and waivers of such rights by others, (g) computer software
specifically designed or custom created, including, without limitation,
source code, operating systems and specifications, Company data, Company
data bases, Company files, Company documentation and other materials
related thereto, (h) trade secrets and confidential, technical or business
information (including ideas, formulas, compositions, inventions, and
conceptions of inventions whether patentable or unpatentable and whether or
not reduced to practice), (i) whether or not confidential, technology
(including know-how and show-how), manufacturing and production processes
and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data and copyrightable
works, (j) copies and tangible embodiments of all of the foregoing, in
whatever form or medium, (k) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights, and (l) all rights to
sue and recover and retain damages and costs and attorneys' fees for
present and past infringement of any of the Intellectual Property rights
hereinabove set out;

(f) "KNOWLEDGE OF THE COMPANY" means the actual knowledge of the
executive officers of the Company;

(g) "LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property
licensed, sublicensed or franchised to the Company or any Subsidiary from a
third party and which the Company or such Subsidiary has a right to use in
its business, is necessary to operate either such business, is used by the
Company or any Subsidiary in connection with the development, manufacture
or production of products or is otherwise used, held or intended to be used
by either the Company or any Subsidiary in its business;

(h) "OWNED INTELLECTUAL PROPERTY" means all Intellectual Property in
and to which the Company or any Subsidiary holds, or has a right to hold,
right, title and interest and which the Company or such Subsidiary has a
right to use in its business, is necessary to operate either such business,
is used by the Company or any Subsidiary in connection with the
development, manufacture or production of products or is otherwise used,
held or intended to be used by either the Company or any Subsidiary in its
business;

<PAGE>
45

(i) "PERSON" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government; and

(j) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means an entity, a majority of the
voting power which is controlled by such person, directly or indirectly,
through one or more intermediaries.

SECTION 9.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.

SECTION 9.05. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 6.04(b) and 6.13,
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned by operation of law or otherwise, except that Parent and
Purchaser may assign all or any of their rights and obligations hereunder to any
affiliate of Parent, PROVIDED that no such assignment shall relieve the
assigning party of its obligations hereunder. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.

SECTION 9.06. PARTIES IN INTEREST. Except as set forth in Section
6.07, this Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.

<PAGE>
46

SECTION 9.08. GOVERNING LAW. Except to the extent that the laws of
Minnesota are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any U.S. federal court located in the Borough of
Manhattan, The City of New York. The parties hereto hereby (i) submit to the
exclusive jurisdiction of any U.S. federal court located in the Borough of
Manhattan, The City of New York for the purpose of any Action arising out of or
based upon this Agreement or the Transactions brought by any party hereto, and
(ii) waive, and agree not to assert by way of motion, as a defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.

SECTION 9.09. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

SECTION 9.10. INTERPRETATION. As used in this Agreement, unless
otherwise expressly defined herein, (i) the term "including" shall mean
"including without limitation"; and (ii) all dollar amounts are expressed in
United States funds.

SECTION 9.11. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

SECTION 9.12. COMPANY DISCLOSURE SCHEDULE. Matters reflected in the
Company Disclosure Schedule are not necessarily limited to matters required by
this Agreement to be reflected in the Company Disclosure Schedule. Such
additional matters are set forth for informational purposes and do not
necessarily include other matters of a similar nature.

<PAGE>
47

IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

SULZER MEDICA LTD

By /s/ A. Buchel
--------------------------------
Name: Andre P. Buchel
Title: CEO

SULZER MEDICA ORTHOPEDICS ACQUISITION
CORP.

By /s/ A. Buchel
--------------------------------
Name: Andre P. Buchel
Title: CEO

SPINE-TECH, INC.

By /s/ David W. Stassen
--------------------------------
Name: David W. Stassen
Title: CEO

<PAGE>

ANNEX A

CONDITIONS TO THE OFFER

Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied after the Offer has remained open for at least 20
business days, (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer, or (iii)
at any time on or after the date of this Agreement, and prior to the acceptance
for payment of Shares, any of the following conditions shall exist:

(a) there shall have been threatened or instituted by any
Governmental Authority any action or proceeding before any court or
governmental, administrative or regulatory authority or agency of competent
jurisdiction, domestic or foreign, (i) challenging or seeking to make
illegal, materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Purchaser
or any other affiliate of Parent, or the consummation of any other
Transaction, or seeking to obtain material damages in connection with any
Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any portion of the
business or assets of the Company, Parent or any of their subsidiaries, as
a result of the Transactions; (iii) seeking to impose or confirm
limitations on the ability of Parent, Purchaser or any other affiliate of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Company's shareholders, including, without limitation, the
approval and adoption of this Agreement and the Transactions; (iv) seeking
to require divestiture by Parent, Purchaser or any other affiliate of
Parent of any Shares; or (v) which otherwise has a Material Adverse Effect;

(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is

<PAGE>
2

reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above,
except that the Offer may not be terminated or amended solely because of a
temporary order or injunction unless it is not lifted within 20 days after
being issued;

(c) there shall have occurred any changes, conditions, events or
developments that have, individually or in the aggregate, a Material
Adverse Effect;

(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Switzerland or (iii)
any limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency of the
United States or Switzerland on the extension of credit by banks or other
lending institutions;

(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the then outstanding Shares has been acquired by
any person, other than Parent or any of its affiliates or (ii) (A) the
Board or any committee thereof shall have withdrawn or modified in a manner
adverse to Parent or Purchaser the approval or recommendation of the Offer,
the Merger or the Agreement, or approved or recommended any acquisition
proposal or any other acquisition of Shares other than the Offer or the
Merger or (B) the Board or any committee thereof shall have resolved to do
any of the foregoing;

(f) the representations or warranties of the Company in the Agreement
shall not be true and correct, ignoring for this purpose any qualification
as to materiality or Material Adverse Effect, as if such representations or
warranties were made as of such time on or after the date of this
Agreement, except where the failure to be so true and correct, individually
and in the aggregate, would not have a Material Adverse Effect;

(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Agreement;

(h) the Agreement shall have been terminated in accordance with its
terms; or

<PAGE>
3

(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;

The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.

<PAGE>

EXHIBIT I

ARTICLES OF INCORPORATION

<PAGE>

STATE OF MINNESOTA

[SEAL OF THE STATE OF MINNESOTA]

SECRETARY OF STATE

This is to acknowledge that the items desribed below have been accepted by the
Secretary of State of Minnesota on the date noted. Those documents will be
microfilmed and the original will be returned to the submitter within ten days.
The microfilm will be available for public inspection at the office of the
Secretary of State.

- --------------------------------------------------------------------------------
Description of Item Date Accepted

Articles 12/12/97
- --------------------------------------------------------------------------------
Company Name

Pike Acquisition Corp.
- --------------------------------------------------------------------------------

Secretary of State
Business Service Division by: /s/ Linda J. Crawley
180 State Office Bldg., 100 Constitution Ave. ---------------------------
St. Paul, MN 55155-1299, (612)296-2803 Evidence of Filing

<PAGE>

ARTICLES OF INCORPORATION

PIKE ACQUISITION CORP.

The undersigned incorprator, being a natural person 18 years of age or
older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following Articles of Incorporation:

ARTICLE I

The name of the corporation is Pike Acquisition Corp. (the
"Corporation").

ARTICLE II

The address of the registered office of the Corporation in the State
of Minnesota is C T Corporation System, Inc., 405 Second Avenue, South,
Minneapolis, MN 55041.

ARTICLE III

The Corporation is authorized to issue an aggreagte total of 1,000
shares, all of which shall be designated Common Stock, having a par value of
$.01 per share.

ARTICLE IV

The name and address of the incorporator of this Corporation is as
follows:

James Silk
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022

<PAGE>
2

ARTICLE V

No shareholder of this Corporation shall have any cumulative voting
rights.

ARTICLE VI

No shareholder of this Corporation shall have any preemptive rights by
virtue of Section 302A.413 of the Minnesota Statutes (or any similar provisions
of future law) to subscribe for, purchase or acquire (i) any shares of the
Corporation of any class or series, whether unissued or now or hereafter
authorized, or (ii) any obligations or other securities convertible into or
exchangeable for (or that carry any other right to acquire) any such shares,
securities or obligations, or (iii) any other rights to purchase any such
shares, securities or obligations. The Corporation shall have the power,
however, in its discretion to grant such rights by agreement or other instrument
to any person or persons (whether or not they are shareholders).

ARTICLE VII

Any action required or permitted to be taken at a meeting of the Board
of Directors of this Corporation not needing approval by the shareholders under
Minnesota Statutes, Chapter 302A, may be taken by written action signed by the
number of directors that would be required to take such action at a meeting of
the Board of Directors at which all directors are present.

ARTICLE VIII

No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary dameges for breach of fiuciary duty
by such director as a director; provided, however, that this Article shall not
eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its shareholders, (ii) for act or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction
from which the director derived an improper personal benefit or (v) for any act
or omission occuring prior to the effective date of this Article. No amendment
to or repeal of this Article shall apply to or have any effect on the liability
or alleged liability of any director of the Corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment or
repeal.

<PAGE>
3

IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of
December, 1997.

/s/ James G. Silk
------------------------------
James G. Silk, Incorporator

[Stamped by
Minnesota
Secretary of
State]

<PAGE>

[SEAL OF THE STATE OF MINNESOTA]

MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
---------------------------------------

READ INSTRUCTIONS LISTED BELOW, BEFORE COMPLETING THIS FORM.

1. Only complete the "Amendment of Articles of Incorporation" form if you are
making changes to items 2-4 of the "Annual Registration" form (reverse side).
2. Type or print in black ink.
3. There is a $35.00 fee payable to the Secretary of State for filing this
"Amendment of Articles of Incorporation".
4. Return Completed Amendment Form and Fee to the address listed on the bottom
of the form.

- --------------------------------------------------------------------------------
CORPORATE NAME:(List the name of the company prior to any desired name change)

Pike Acquisition Corp.
- --------------------------------------------------------------------------------

This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.

----------------------------

The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form ____.)

ARTICLE 1

The name of the corporation is Sulzer Medica Orthopedics Acquisition Corp. (the
"Corporation").

This amendment has been approved pursuant to MINNESOTA STATUTES CHAPTER 302A OR
317A. I certify that I am authorized to execute this amendment and further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I has signed this
amendment under oath.

/s/ Illegible

--------------------------------
(Signature of Authorized Person)

- ---------------------------------------------- --------------------------------
If you have any questions please contact the FOR OFFICE USE ONLY
Secretary of State's office at (612) 296-2803.

RETURN TO:

Secretary of State/Records Processing Station
180 State Office Bldg., 100 Constitution Ave.
St. Paul, MN 55155-1299