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                                                                    EXHIBIT 10.3

                              CONSULTING AGREEMENT
                              --------------------

     THIS CONSULTING AGREEMENT is entered into effective as of June 27, 1997 ,
by and between INNOVASIVE DEVICES, INC. (the "Company") and  Richard B. Caspari,
M.D. (the "Consultant").

     WHEREAS,  Consultant has extensive experience and national recognition in
the field of orthopedics; and

     WHEREAS, the Company has contracted to purchase certain of the assets and
to assume certain of the liabilities of  MedicineLodge, Inc., a Delaware
corporation, (the "Purchase") pursuant to the terms and conditions of that
certain Asset Purchase Agreement by and among the Company, MedicineLodge, Inc.,
and certain shareholders of MedicineLodge, Inc. dated February 4, 1997 (the
"Asset Purchase Agreement"); and

     WHEREAS, the Company wishes to engage the services of Consultant from and
after the Closing Date, as that term is defined in the Asset Purchase Agreement,
and Consultant is desirous of providing such services to the Company, upon the
terms and conditions set forth herein:

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:

     1.        Consultant is hereby retained by the Company to render consulting
          services to the Company in the field of arthroscopic and sports
          medicine surgical devices and the Consultant agrees to render such
          consulting services to the Company for a period of four years from the
          date first set forth above subject to the terms and conditions
          hereinafter contained.

     2.        In consideration of the services to be rendered by Consultant
          hereunder, the Company agrees to grant to Consultant an option to
          acquire 40,000 shares of common stock of Company (the "Option")
          pursuant to the Company's 1996 Omnibus Stock Plan and shall be
          evidenced by, and subject to the terms and conditions of, the Stock
          Option Agreement which is set forth as Exhibit 8.1(e) to the Asset
          Purchase Agreement. If this Agreement is terminated pursuant to
          Section 9 below or due to the death or disability of the Consultant
          during any of the option vesting periods set forth above, then that
          portion of the number of option shares as would have vested on the
          next vesting date after such termination as is proportional to the pro
          rata portion of the vesting period occurring prior to the date of
          termination, death or disability, as the case may be, shall vest and
          become immediately exercisable.

     3.        Consultant shall be reimbursed for his reasonable business
          expenses incurred at the Company's request and agreed to by Consultant
          upon presentation of vouchers for such expenses. Major travel and
          expenditure items shall be pre-approved and incurred in accordance
          with normal Company travel and expense policies.

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     4.        It is understood that Consultant shall be an independent
          contractor who shall render consulting services to the Company, and
          shall not be considered nor treated as an employee of the Company.

     5.        Consultant shall consult for and on behalf of the Company in
          areas of arthroscopic and sports medicine surgical devices, including
          but not limited to surgeon workshop training, conduct of required
          training symposia and customer visitations from time to time as
          requested by the Company, but at such times as to not interfere
          unreasonably with his other activities set forth on Schedule 4.13(c)
          of the Asset Purchase Agreement. Consultant shall not be obligated to
          render any services in a given month if not requested to do so by the
          Company. It is anticipated that Consultant will, at a minimum, render
          50 hours per quarter in consulting services to the Company.

     6.   (a)  Consultant agrees that all data, reports, equipment and other
          property furnished to Consultant by the Company or produced by
          Consultant in the course of and as part of his performance of
          consulting services hereunder shall remain, during the term of this
          Consulting Agreement or any time thereafter, the property of the
          Company.

          (b) Consultant agrees not to disclose to any person, entity, firm or
corporation, either during the term of this Consulting Agreement or at any time
thereafter, any confidential or proprietary information concerning the conduct,
affairs, research, development, inventions, processes, techniques, technical
information, products, plans, employees, business prospects or assets of the
Company, nor shall Consultant use any such information for his own benefit or
for the benefit of a third party; provided, however, that the Consultant may
                                  --------  -------                         
disclose any proprietary or confidential information to third parties that
affects the safety or efficacy of any product and may also disclose any such
information in the context of academic writings and presentations so long as he
does not disclose trade secrets of the Company or patentable information of the
Company that is not yet the subject of a filed patent application.

          (c) Consultant agrees that during the term of this Consulting
Agreement:  (i) he will promptly disclose to the Company or any persons
designated by the Company, all inventions, improvements, formulas, processes,
techniques, know-how, data, analysis or other proprietary information, whether
or not patentable, related to the consulting services to be performed hereunder,
and made, conceived, first reduced to practice, or learned by Consultant, either
alone or jointly with others, in the course of and as part of the performance of
consulting services hereunder (hereinafter referred to as "Inventions"); (ii)
all Inventions  shall be works made for hire and, therefore, the property of the
Company and its assigns; (iii) the Consultant will execute and deliver to the
Company assignments, in form satisfactory to the Company, and take all other
lawful action requested by the Company to vest title to all said Inventions in
the Company and its assigns; (iv) the Consultant will do or cause to be done all
other reasonable acts requested by the Company, at 

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Company's expense, for the preparation of applications for, and the procurement,
issuance, and maintenance of patents and/or copyrights related to said
Inventions, or any of them, under the applicable laws of the United States and
any foreign countries; and (v) except as noted on Schedule 4.13(c) to the Asset
Purchase Agreement, and in accordance with the procedure set forth in the
immediately following sentence, Consultant will not, without the prior written
consent of the Company, directly or indirectly, in any capacity, engage in any
aspect of the sale, distribution, invention, manufacture or development of
arthroscopic and sports medicine surgical devices for or on behalf of any person
or entity other than the Company or solicit or encourage, or assist other
persons or entities to solicit or encourage, any employees, agents,
representatives or customers of the Company, or any of its affiliates, to
terminate or materially alter their relationship with the Company or any of its
affiliates, to become employed by any other person or entity. If the Consultant
seeks the consent of the Company in order to engage in the activities set forth
in Section 6(c)(v), the Consultant will notify the Chief Financial Officer of
the Company in writing of the Consultant's desire to engage in such activity and
request the consent of the Company as such, and the Company will have up to 90
days in which to give its written consent or state in writing its intention to
retain the technology to which the Consultant's request applies and thus decline
to consent to such request; provided, however, that if the Company fails to
respond within 90 days of the Consultant's initial written request, the Company
will be deemed to have declined its consent, in which case the Consultant may
submit a second written request to the Company's Chief Financial Officer, and
the Company will have an additional 30 days after such second request in which
to respond in writing as to its consent or demurral; provided, further, that if
the Company fails to respond in writing within such 30 days, the Company will be
deemed to have given its consent to such second request.

          (d) Notwithstanding anything to the contrary herein contained, this
Agreement shall not be applicable to any technology, inventions, improvements,
machines, appliances, processes, products, techniques, data, discoveries,
analyses, or proprietary information to which any Pre-existing Agreement is
applicable.  "Pre-existing Agreement" means any agreement entered into by
Consultant prior to the date hereof and set forth on Schedule 4.13(c) of the
Asset Purchase Agreement.

     7.        Consultant understands and agrees that his obligations hereunder
          will be enforced to the fullest extent possible under the laws of any
          jurisdiction in which enforcement is sought. In the event there is a
          breach or threatened breach of the provisions of this Consulting
          Agreement, the Company shall be entitled to injunctive relief
          restraining Consultant from such breach or threatened breach.

     8.        (a) Consultant's performance of consulting services hereunder
          shall terminate on the death of Consultant. This Consulting Agreement
          may be terminated by the Company at any time upon:

               (i) the disability of Consultant (as hereinafter defined); or

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              (ii) justifiable cause (as hereinafter defined).

          (b) For the purpose of the foregoing, the term "disability" shall mean
the inability of Consultant, due to illness, accident, or any other physical or
m ental incapacity, to perform substantially all of his consulting duties
pursuant to this Agreement in a normal manner for a period of ten (10)
consecutive weeks or for a total of twenty (20) weeks (whether or not
consecutive) in any twelve-month period during the term of this Consulting
Agreement.

          (c) For the purpose of the foregoing, the term "justifiable cause"
shall include any willful breach by Consultant of his obligations under this
Consulting Agreement or disclosure by Consultant to any person, firm or
corporation other than the Company and its directors, officers or employees of
any confidential information or trade secret of the Company or any attempt by
Consultant to secure wrongfully any personal profit in connection with the
business of the Company.

     9.       This Consulting Agreement may be terminated by the Consultant at
          any time after he receives notice that the Company will be or has been
          acquired in a merger or other transaction whereby the Company ceases
          to exist, that substantially all of the assets of the Company will be
          or have been acquired by an unaffiliated entity or that there will be
          or has been a change in control of the Company which shall be defined
          as a change in the ownership or voting control of at least 50% of its
          issued and outstanding Common Stock. The Company shall give the
          Consultant written notice of any such transaction promptly following
          the first public disclosure that it has occurred or will occur.

     10.      Consultant represents and warrants that: (i) he is able to perform
          the Consulting Services and he does not have any understanding or
          agreement with anyone else which restricts his ability to perform such
          services other than under the Preexisting Agreements; (ii) any
          services he provides and information or materials he develops for or
          discloses to the Company shall not in any way be based upon any
          information derived from any source other than the Company that he
          knew to be confidential or proprietary at the time of the services,
          development or disclosure, as the case may be, unless the Consultant
          is specifically authorized in writing by such source to use such
          proprietary information; and (iii) if the Company is held to be liable
          as a result of or arising from any breach by the Consultant of (i) or
          (ii) above, the Consultant shall indemnify the Company and hold it
          harmless from and against all liability and expense, including
          reasonable attorney's fees, provided that the Company notifies the
          Consultant of any such claim of liability promptly after the Company
          receives notice of it and cooperates with the Consultant in defendant
          against the claim. The Consultant shall notify the Company promptly if
          he ever becomes aware of such claim.

     11.      This Consulting Agreement shall inure to the benefit of and be
          binding upon the successors and assigns of the Company. This
          Consulting Agreement shall not be

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          assignable by Consultant. This Consulting Agreement may be terminated
          by the Consultant in his sole discretion at any time during the term
          hereof for any reason in which case there shall be no further vesting
          of his stock options under the Stock Option Agreement entered into
          concurrently herewith and the Consultant shall, for the remainder of
          the original four-year term of this Agreement, continue to be bound to
          the terms of Section 6(b) and (c) above which provisions shall, for
          such purpose, survive any such termination by the Consultant.

     12.      In case any one or more of the provisions contained in the
          Consulting Agreement shall for any reason be held to be invalid,
          illegal or unenforceable in any respect, such invalidity, illegality
          or unenforceability shall not affect any other provision of this
          Consulting Agreement, but such provision shall be deemed deleted (or
          limited in accordance with the following sentence), and such deletion
          or limitation s hall not affect the validity of the other provisions
          of this Consulting Agreement. If any one or more of the provisions
          contained in this Consulting Agreement shall for any reason be held to
          be excessively broad as to duration, activity or subject, any such
          provision shall be construed by limiting and reducing it so as to be
          enforceable to the extent compatible with the applicable law as it
          shall then appear.

     13.      This Consulting Agreement together with the Stock Option Agreement
          entered into concurrently herewith (the "Related Agreements") contains
          the entire agreement of the parties and may not be changed orally, but
          only upon a writing signed by the party against whom enforcement of
          any such changes are sought. It is agreed that a waiver by either
          party or a breach of any provision of this Consulting Agreement shall
          not operate or be construed as a waiver of any subsequent breach by
          that same party. This Consulting Agreement shall be governed by the
          laws of the State of Massachusetts.

     14.      This Consulting Agreement may be executed in counterparts by the
          parties hereto which shall together constitute a single document.

     15.      Any notice which is required or permitted to be given to either
          party to this Agreement shall be deemed to have been given only if
          such notice is reduced to writing and delivered, either personally or
          by United States mail, with postage prepaid and return receipt
          requested, to the Company at the address set forth below and to the
          Consultant at the address set forth below.

          The Company:   Innovasive Devices, Inc.
                         734 Forest Street
                         Marlboro, MA  01752
                         Fax: (508) 460-8997

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          The Consultant:     Richard B. Caspari, M.D.
                              4405 Cox Road, #120
                              Glen Allen, VA 23060
                              Fax:  (804) 556-6865

     Either party may change his or its address by giving notice of such change
in the manner set forth above.  Delivery of notice by mail shall be deemed
complete two days after the deposit of such notice in the United States mail.

     16.      The Company shall indemnify, defend, and hold the Consultant
          harmless from and against any and all claims, demands, suits or
          actions presented or brought by third parties (including reasonable
          attorneys' fees incurred in connection with the investigation or
          defense of any of the foregoing) for injuries or deaths to persons
          caused by or arising out of, or alleged to have been caused by or to
          have arisen out of, the design manufacture, sale or use of the
          Company's products.

     17.      In the event there is a dispute between the parties, the aggrieved
          party shall give the other party written notice of the existence of a
          dispute, including the basis of the dispute. Such notice shall be
          given within 30 days of the initiation of the dispute. The parties
          shall, in good faith, negotiate to resolve the dispute amongst
          themselves for a period of 60 days from the notice date. If, following
          the 60-day period, the parties have been unable to resolve the
          dispute, then such dispute shall be resolved through binding
          arbitration in accordance with the Commercial Arbitration Rules of the
          American Arbitration Association before a single arbitrator who has
          experience in intellectual property law and medical devices. Such
          arbitration shall be held in Boston, Massachusetts. The arbitrator
          shall have the right to grant such relief as he or she deems
          appropriate, including awarding legal and other costs of the
          proceeding. The award of the arbitrator shall be final and binding
          upon all the parties, and may be enforced in any court having
          jurisdiction over the parties.

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



CONSULTANT:                                INNOVASIVE DEVICES, INC.



/s/ Richard B. Caspari                     By: /s/ Richard D. Randall
------------------------                      ---------------------------
Richard B. Caspari, M.D.



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