EMPLOYMENT AGREEMENT

          THIS  AGREEMENT  ("Agreement"),  made as of the 15th day of  November,
1997,  by  and  between  BIONX  IMPLANTS,  INC.,  a  Delaware  corporation  (the
"Employer"),  and  MICHAEL J.  O'BRIEN,  an  individual  residing  at 5733 Point
Pleasant Pike, Doylestown, PA 18901 (the "Employee"),

                               W-I-T-N-E-S-S-E-T-H

          WHEREAS,  Employer desires to employ Employee, and Employee desires to
accept such  employment,  all in accordance  with the terms and  conditions  set
forth herein,

          NOW THEREFORE, it is agreed as follows:

          1.  Employment.  Commencing on the date hereof,  Employer shall employ
Employee,  and Employee  shall serve as an employee of Employer,  upon the terms
and conditions set forth herein.

          2. Scope of Employment.  During the term of this  Agreement,  Employee
shall devote his entire business time, attention and energy to the business, and
to seeking improvement in the profitability, of Employer. He shall serve as Vice
President,  Finance and Administration,  and Chief Financial Officer of Employer
and its  subsidiaries  and shall have the authority to perform and shall perform
all of the  duties  that are  customary  for the  office of the Chief  Financial
Officer,  subject  at all  times  to the  control  and  direction  of the  Chief
Executive Officer and Board of Directors of the Employer, and shall perform such
services  as  typically  are  provided  by  the  Chief  Financial  Officer  of a
corporation and such other services consistent therewith as shall be assigned to
him from time to time by the Chief Executive  Officer and the Board of Directors
of Employer. During the term of this Agreement, Employee shall not engage in any
other business activity which, in the reasonable judgment of Employer's Board of
Directors,  conflicts with the duties of Employee hereunder, whether or not such
activity is pursued for gain,  profit or other  pecuniary  advantage;  provided.
however,  that it is understood that this Section 2 shall not preclude  Employee
from making passive investments in other companies.

          3. Term.

          3.1 The term of this  Agreement  shall commence on the date hereof and
continue until two years from the date hereof (the "Initial  Term") and shall be
automatically renewable thereafter for consecutive terms of one year each (each,
a "Renewal Term") unless and until  terminated as of the end of the Initial Term
or any such Renewal  Term by either party giving  notice in writing to the other
party not less than  ninety  (90) days  before the end of the period in question
and subject, however, to earlier termination pursuant to this Article 3.

          3.2  Notwithstanding  the term of  employment  provided for in Section
3.1,  this  Agreement  shall  immediately  terminate  upon  Employee's  death or
Permanent  Disability.  For purposes of this Agreement,  "Permanent  Disability"
shall mean any physical or mental condition which materially interferes with the
performance  of  Employee's  customary  duties in  Employee's  capacity  as Vice
President,  Finance and Administration,  and Chief Financial Officer of Employer
where such disability has continued for a period of ninety (90) consecutive days
or for a total of one  hundred  and  eighty  (180)  days in any  period of three
hundred and sixty-five (365) consecutive days.

          3.3 Notwithstanding the term of employment provided for in Section 3.1
hereof,  Employer  shall have the right to terminate  Employee's  employment for
Cause, upon written notice to Employee. For purposes of this Agreement,  "Cause"
shall mean (i) the  conviction of Employee by a court of competent  jurisdiction
of a felony or a misdemeanor which, in the reasonable  judgment of Employer,  is
likely to have a material  adverse  effect on the  business  of  Employer,  (ii)
Employee's  material  breach  of this  Agreement,  or (iii)  Employee's  willful
disregard  of  lawful  and  proper  written  instructions  of  Employer's  Chief
Executive Officer and/or Employer's Board of Directors.

          3.4 Notwithstanding the term of employment provided for in Section 3.1
hereof, Employer shall have the right to terminate Employee's employment without
Cause, in the sole judgment of Employer, upon written notice to Employee.

          3.5 Employee shall have the right to terminate this Agreement for Good
Reason, upon written notice to Employer.  For purposes of this Agreement,  "Good
Reason" shall mean Employer's  material breach of this Agreement,  provided that
Employee  first  provides  Employer  with  written  notice of such  conduct  and
Employer  fails to make  substantial  efforts to  correct  such  conduct  within
fifteen (15) business days of its receipt of such notice.  A termination of this
Agreement by Employer  without Cause prior to the  expiration of the term hereof
shall be treated for all purposes  hereunder as if Employee had terminated  this
Agreement for Good Reason.

          3.6 In the event of Employee's  termination pursuant to Section 3.2 or
Section 3.3 hereof,  Employer shall only be obligated to pay Employee any unpaid
salary  and bonus and  benefits  accrued to the date of  termination,  except as
otherwise expressly provided in any of Employer's written benefit plans.

          3.7 In the event that  Employee  terminates  this  Agreement  for Good
Reason,  or Employer  terminates  this Agreement  without Cause,  in either case
prior to the expiration of the Initial Term, the Employer shall, until the first
anniversary of the date of Employee's termination of employment, (i) continue to
be obligated to make the salary payments  described in Section 4 hereof and (ii)
continue to be obligated to provide  benefits  substantially  comparable  to the
benefits  described in Section 7 hereof.  In the event that Employee  terminates
this Agreement for Good Reason,  or Employer  terminates this Agreement  without
Cause, in either case during any Renewal Term, the Employer shall, until the six
month  anniversary  of the date of Employee's  termination  of  employment,  (i)
continue to be  obligated  to make the salary  payments  described  in Section 4
hereof and (ii)  continue  to be  obligated  to provide  benefits  substantially
comparable to the benefits  described in Section 7 hereof.  While Employee shall
have no obligation to mitigate  damages,  any salary or other benefits  actually
received  by  Employee  from  another   employer  (or,  if  Employee   shall  be
self-employed,  75% of the  gross  compensation  received  by  Employee  in such
capacity  after   exclusion  of  the  first  $10,000  so  received)  after  such
termination  shall be applied  against  amounts  payable by Employer to Employee
pursuant to this Section 3.7.

          3.8 The payments  provided for in Sections 3.6 and 3.7,  respectively,
above shall be Employee's sole and exclusive  relief and shall be in lieu of any
other  termination  benefits or payments of any kind whatsoever which are hereby
expressly waived,  for or in connection with such  termination.  Appropriate and
required  withholding for Social Security and federal and state income taxes (or
comparable withholdings which may be applicable for employees outside the United
States),  together with any other deductions  authorized by Employee or required
by law or court order, shall be made and will reduce the gross amount to be paid
under this Agreement.

          4. Salary. In consideration for Employee's services  hereunder,  until
December  31, 1997,  Employer  shall pay Employee a salary at a rate of $110,000
per year.  Thereafter,  Employee's  annual  salary  rate  shall be  reviewed  by
Employer's  Board of  Directors  on an  annual  basis and shall not be less than
$110,000 per year.

          5. Executive  Bonus. In addition to the salary  described in Section 4
above,  Employee may receive bonuses  pursuant to any executive bonus plan to be
developed by Employer.

          6.  Automobile  Allowance.  Employer  will pay Employee an  automobile
allowance of $500 per month.

          7.  Health  Insurance.  Employer  will enroll  Employee in  Employer's
health  insurance plan as is from time to time generally made available to other
employees of Employer.

          8. Intentionally Omitted.

          9. Other Benefits.

          (a)  Employee  shall be entitled  to three (3) weeks of paid  vacation
each year to be taken at such times as are mutually  convenient  to Employee and
Employer.

          (b) Employee  shall receive from Employer such other benefits as shall
be comparable to benefits  generally  made  available from time to time to other
employees of Employer.

          10. Business Expenses. Employer will reimburse Employee, in accordance
with  any  Employer-established  policies  or  guidelines,  for  all  reasonable
business  expenses  actually  incurred by Employee in promoting  the business of
Employer,  upon  presentation  by  Employee,  from time to time,  of an itemized
account of such expenses.

          11. Trade Secrets and Covenant Against Competition.

          11.1 The trade secrets of Employer are hereby defined as including (i)
the  processes  utilized  and to be utilized in  Employer's  business;  (ii) the
methods and results of Employer's research; (iii) the Employer's business plans,
market analyses and other non-public financial  information regarding Employer's
business;  and (iv) any other  confidential  information or data relating to the
business of Employer and its affiliates which is not publicly known.

          11.2 Employee agrees that he will not, either during his employment or
at any time after cessation of such  employment,  impart or disclose any of such
trade  secrets to any person,  firm or  corporation  other than  Employer or its
affiliates,  or use any of such trade secrets,  directly or indirectly,  for his
own  benefit or for the benefit of any person,  firm or  corporation  other than
Employer or its affiliates. Employee's obligations under this Section 11.2 shall
cease with respect to any such trade secret if such trade secret (i) was already
known to Employee at the time of  disclosure,  free of any obligation to keep it
confidential,  (ii) was at the time of disclosure  or thereafter  became part of
the public  domain  through no fault of wrongful act of  Employee,  or (iii) was
subsequently  disclosed to Employee  without breach of this Agreement by a third
person  who  rightfully   received  and  disclosed  it  without   breaching  any
confidentiality  obligation  to Employer.  It is also  understood by the parties
that Employee may be required to disclose trade secret  information (a) pursuant
to subpoena or other court  process,  (b) at the express  direction of any other
authorized  government agency or (c) otherwise as required by law or regulation.
Disclosure of trade secret information or any part thereof in such circumstances
will not constitute a breach of the confidentiality provisions set forth in this
Agreement,  provided  that  Employer  notifies  Employee  in advance of any such
disclosure and cooperates with Employer in any efforts that Employer may make to
seek a protective order with respect to such disclosure.

          11.3 In addition to the  foregoing  agreements  relating to Employer's
trade  secrets,  during  the  term of this  Agreement  (including  any  renewals
thereof)  and  during  the  term of the  "Post-Employment  Period"  (as  defined
herein),  Employee  will not,  without  Employer's  prior written  consent,  (i)
solicit  any of the  employees  of  Employer or  Employer's  affiliates  for the
purpose of hiring or retaining any such employees,  (ii) hire or retain or cause
to be  hired  or  retained  any of  the  employees  of  Employer  or  Employer's
affiliates or (iii) become involved in any manner,  including without limitation
as an officer, director, employee, consultant, representative, partner, owner or
shareholder (except as a holder of less than a five (5%) percent equity interest
in a public entity) in any business located in the United States which is in the
business  of  inventing,  developing,  manufacturing,  marketing.  providing  or
selling products competitive with the products that Employer or its subsidiaries
have developed, manufactured,  marketed, produced or sold, or are in the process
of  developing  (and  reasonably  expect to bring to market  within one (1) year
after the expiration of the Post-Employment  Period or longer if required by the
F.D.A clearance or approval  process),  manufacturing,  marketing,  producing or
selling as of the date that Employee's  employment  terminates.  For purposes of
this  Agreement,  the  term  "Post-Employment  Period"  shall  mean  the  period
commencing  on the date that this  Agreement  is  terminated  for any reason and
ending either (x) two years from the date of  termination  of this  Agreement or
(y) if this  Agreement is  terminated  by the Employee for Good Reason or by the
Employer  without  Cause,  on the later of (a) two  years  from the date of such
termination  or (b) the last date on which  Employer  makes  salary  payments to
Employee pursuant to Section 3.7 above.

          11.4 Employee agrees that all memoranda,  lab books,  notes,  records,
charts,  formulae,  specifications,  lists business plans,  analyses,  financial
reports and other documents made, compiled,  received,  held or used by Employee
while employed by Employer,  concerning any phase of Employer's  business or its
trade secrets,  shall be Employer's  property and shall be delivered by Employee
to Employer upon termination of Employee's  employment or at any earlier time on
the request of Employer.

          11.5 Any invention or improvement made or conceived by Employee during
the term of Employee's  employment by Employer  (whether during or after working
hours)  relating in any manner to the  business of  Employer,  shall be promptly
disclosed in writing by Employee to Employer  and shall be the sole  property of
Employer.  Upon Employer's  request (whenever made),  Employee shall execute and
assign to Employer  all related  applications  for letters  patent to the United
States and such foreign  countries as Employer may  designate  and shall execute
and deliver to Employer such other instruments as Employer deems necessary.  Any
invention or  improvement  made or conceived by Employee prior to termination of
Employee's  employment  shall be deemed to have  been made or  conceived  during
Employee's  employment  hereunder,  provided that such  invention or improvement
relates to an aspect of  Employer's  business as of the date of  termination  of
Employee's employment.

          11.6  Employee  acknowledges  that  given his  access  to  information
regarding  Employer,  the  provisions  of this  Section  11 are  reasonable  and
necessary to protect Employer's business.  Employee further acknowledges that he
has carefully  reviewed the provisions of this Section 11, he fully  understands
the economic consequences thereof, he has assessed the respective advantages and
disadvantages  to him of entering into this Agreement and he has concluded that,
in light of his education,  skills and abilities,  the restrictions set forth in
this Section 11 will not prevent him from earning a living after the termination
of this  Agreement.  Employee agrees that each of the provisions of this Section
11, including,  without  limitation,  the period of time,  geographical area and
types and scope of the restrictions on Employee's  activities  specified herein,
are intended to be and shall be divisible.  Employee  further  acknowledges  the
reasonableness  of these  provisions  as an  integral  part of the  terms of his
employment.  If any provision of this Section 11 (including any sentence. clause
or part  thereof)  shall be  adjudicated  to be invalid or  unenforceable,  such
provision  shall  be  deemed  amended  to  delete  therefrom  the  portion  thus
adjudicated  to be invalid or  unenforceable,  such  deletion to apply only with
respect to the operation of such  provision in the  particular  jurisdiction  in
which such  adjudication  is made.  In  addition,  if any  particular  provision
contained in this Agreement shall for any reason be held to be excessively broad
as to duration,  geographical scope,  activity or subject, it shall be construed
by limiting and reducing such  provision as to such  characteristic  so that the
provision is enforceable to the fullest  extent  compatible  with the applicable
law as it shall then appear.

          11.7 As it would be very  difficult to measure the damages which would
result to  Employer  from a breach  of any of the  covenants  contained  in this
Section 11, in the event of such a breach  Employer shall have the right to have
such  covenants  specifically  enforced  by a court of  competent  jurisdiction.
Employee hereby  recognizes and acknowledges  that irreparable  injury or damage
shall result to the business of Employer in the event of a breach or  threatened
breach by Employee of the terms and  provisions  of this Section 11.  Therefore,
Employee  agrees that Employer  shall be entitled to an  injunction  restraining
Employee  from engaging in any activity  constituting  such breach or threatened
breach. Nothing contained herein shall be construed as prohibiting Employer from
pursuing any other  remedies  available to Employer at law or in equity for such
breach or threatened breach,  including, but not limited to, recovery of damages
from Employee and, if Employee is still  employed by Employer,  terminating  the
employment of Employee in accordance with the terms and provisions hereof.

          12. Miscellaneous.

          12.1 Entire Agreement.  This instrument  contains the entire agreement
of the parties with respect to the  employment  of Employee and  supersedes  all
prior  agreements  or  arrangements  between the parties  concerning  Employee's
employment by Employer and  specifically  supersedes  and  terminates  any prior
agreement  concerning  severance  to be paid to the  Employee  in the event of a
termination of his employment.  This Agreement cannot be changed orally but only
by an agreement in writing  signed by the party against whom  enforcement of any
waiver, change, modification, extension or discharge is sought.

          12.2  Severability.  If any  provision  of this  Agreement is declared
invalid by any legal tribunal, then such provision shall be deemed automatically
modified to conform to the  requirements  for validity as declared at such time,
and, as so  modified,  shall be deemed a provision  of this  Agreement as though
originally  included herein.  In the event that the provision  invalidated is of
such a nature  that it  cannot be so  modified,  the  provision  shall be deemed
deleted from this  Agreement  as though the  provision  had never been  included
herein. In either case, the remaining  provisions of this Agreement shall remain
in effect.

          12.3 Construction. The parties intend that this Agreement shall not be
construed  against  the  party  that  has  drafted  all or any  portion  of this
Agreement.

          12.4 Notice. Any notice or other  communication  required or permitted
under this Agreement shall be sufficient if in writing and delivered personally,
sent by facsimile, or by certified or express mail, or by overnight courier, and
shall be deemed given when so delivered except if mailed, in which case then two
days after mailing) to the parties as set forth below, unless changed n writing:

          (a) to Employee at his residence address indicated above, or:

          (b) to the  Employer  by  notice  sent to its  principal  headquarters
address in the United States,  to the attention of the Chief Executive  Officer,
with a copy to:

                                            Peter H. Ehrenberg, Esq.
                                            Lowenstein, Sandler PC
                                            65 Livingston Avenue
                                            Roseland, New Jersey 07068

          12.5  Successors.  The rights and  obligations  of Employee under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer,  including any  successors by merger or purchase or
otherwise.

          12.6 Governing Law. This Agreement  shall be interpreted in accordance
with and be governed by the laws of the State of Delaware.

          12.7 Paragraph Headings. The paragraph headings used in this Agreement
are  included  solely  for  convenience  and  shall  not  affect  or be  used in
connection with the interpretation of this Agreement.

          12.8 Arbitration. Any controversy,  claim or dispute arising out of or
relating to this Agreement or its  construction and  interpretation  may, at the
election of either the Employee or the Employer,  be settled by  arbitration  in
New Jersey in accordance with the then-current rules of the American Arbitration
Association,  and judgment upon the award  rendered in such  arbitration  may be
entered in any court having jurisdiction thereof. In addition,  any controversy,
claim or dispute  concerning the scope of this  arbitration  clause or whether a
particular  dispute falls within this arbitration  clause may also be settled by
arbitration   in  accordance   with  the  rules  of  the  American   Arbitration
Association.

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

                                               BIONX IMPLANTS, INC.


                                               By:/s/David W. Anderson
                                                  ____________________________
                                                  David W. Anderson, President

                                                  /s/Michael J. O'Brien
                                                  ______________________________
                                                  Michael J. O'Brien