EXHIBIT 10.17


May 27, 1997


Mr. John Bohan
3 St.Andrews Court
New Hope, PA 18938

Dear John:

This letter serves to review the terms of your  separation  from employment with
Exogen, Inc. (the "Company"):

     1.   Your  employment  with Exogen will  terminate  effective May 31, 1997.
          According to Exogen's  Severance Pay Plan, you are eligible to receive
          severance pay equal to one-half  month's base salary.  If you sign the
          attached General Release Of All Claims ("General  Release") within the
          period  specified  in the  General  Release and do not revoke it after
          seven (7) days,  you are eligible for enhanced  severance pay benefits
          equal to two and one- half  months.  Since you are an  officer  of the
          Company, Exogen's Compensation Committee has approved a total enhanced
          severance pay equal to six months base salary.  Exogen's Severance Pay
          Plan and Summary Plan  Description  are attached and provide  complete
          details  regarding your  separation  terms and severance.  Please read
          this document in its entirety.

     2.   On May 31,  1997  you will be paid  your  regular  semi-monthly  gross
          wages.  On June 15, 1997 you will be paid wages which  includes all of
          your accrued and unused  vacation  days, and you will also be refunded
          for your unused  contributions  under Exogen's Employee Stock Purchase
          Plan. Other than the payments  mentioned in this paragraph,  you agree
          that prior to the  execution  of this letter you were not  entitled to
          receive any further  monetary  payments or benefits  from the Company,
          and that the only  payments  and  benefits  that you are  entitled  to
          receive  from the  Company in the future are those  specified  in this
          letter.

     3.   As of May 31,  1997 you will  have  vested  10,000  options  which are
          exercisable  into  Exogen  Common  Stock  under  an  option  agreement
          previously  granted  to you by  Exogen.  You have up to  three  months
          following termination of your employment (i.e., until August 31, 1997)
          in which to exercise  the options for any or all of the option  shares
          which  are  vested as of May 31,  1997.  Except  as so  modified,  the
          agreements evidencing your options remain in full force and effect. In
          addition, pursuant to the Stock Purchase Agreement between you and the
          Company  dated  February  5,  1994,  the  Company  currently  has  the
          Repurchase  Rights for 25,000  shares.  The  Repurchase  Rights do not
          lapse on those shares until February 5, 1998,  however,  the Company's
          Board of Directors has chosen not to exercise its rights to repurchase
          those  shares.  The  certificates  held in escrow  will be sent to you
          within the next ten days.

     4.   It is our expectation  that all Company owned property,  including but
          not limited to  marketing  materials,  computer  equipment  and credit
          cards, given to you in support of executing your responsibilities will
          be returned to Exogen by May 31, 1997.
<PAGE>

     5.   Your  health  care  benefits  which  include  health  insurance,  life
          insurance and LTD  insurance,  as it currently  exists,  will continue
          until May 31, 1997.  Information  regarding  COBRA will be sent to you
          under separate cover.  Exogen's Severance Pay Plan includes payment of
          your COBRA  premiums  for the period  covered by your  severance  pay,
          subject to the conditions  discussed in #1 above regarding the signing
          of the General Release.

     6.   At all  times  in the  future,  you  will  remain  bound  by  Exogen's
          Proprietary   Information   and   Inventions,   Non-Solicitation   and
          Non-Competition Agreement signed by you on February 5, 1994, a copy of
          which is attached.

Please review the attached documents as soon as possible.  If you decide to sign
the  General  Release,  do so by the  required  date and return it  directly  to
Exogen's Human Resources Department.



Sincerely,


/s/Patrick A. McBrayer
----------------------
Patrick A. McBrayer
President & CEO



Please sign below in acknowledgment of this separation agreement.

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John Bohan                          Date