Exhibit # 3.e

                              EMPLOYMENT AGREEMENT



           This Agreement is made as of the 1st day of February, 1997

BETWEEN


                      VASOGEN INC.
                      a corporation incorporated under the laws of
                      the Province of Ontario

                     (hereinafter called the "Corporation")

                                                               OF THE FIRST PART


                                     - and -


                      DAVID ELSLEY

                     (hereinafter called the "Executive")

                                                              OF THE SECOND PART


         WHEREAS the  Corporation  employs the  Executive as President and Chief
Executive Officer;

         AND WHEREAS the  Executive's  employment by the Corporation is governed
by the terms of an employment agreement made as of the 1st day of January,  1995
(the"January 1, 1995 Agreement");

         AND WHEREAS the  Corporation and the Executive have agreed to amend the
terms of the January 1, 1995 Agreement such that this Agreement  shall supersede
and replace the January 1, 1995 Agrement;


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     NOW THEREFORE in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by each of the parties hereto, the parties hereby agree as
follows:

PART I - EMPLOYMENT SERVICES

1.  Engagement and Acceptance of Duties

(a) During the period of the Executive's employment hereunder, the Executive
shall assist the Corporation in carrying on the business of the Corporation and
shall serve the Corporation in the capacity of President and Chief Executive
Officer.

(b) The Executive shall devote such time and attention to the affairs and
business of the Corporation as is reasonably required to perform his obligations
hereunder and to well and faithfully serve the Corporation and exercise the
powers and authorities and fulfil the duties conferred upon the Executive
honestly, diligently, in good faith and in the best interests of the
Corporation. The Executive shall use his best efforts to promote the interests
of the Corporation.

2.  Fixed Term Contract

    Subject to paragraph 5, the period of employment of the Executive hereunder
shall commence on February 1, 1997 and shall continue in full force and effect
until the close of business on January 31, 2002 (the "Termination Date"). The
obligations of the Executive set forth in Part II of this Agreement shall
survive the termination of this Agreement and the employment of the Executive
hereunder.


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3.  Remuneration

(a) For his services hereunder the Executive shall be paid remuneration at the
rate of $160,000 per annum (the "Salary"), which Salary shall be reviewed
annually and which may be adjusted upward at the discretion of the Corporation
based on the Executive's performance and the performance of the Corporation.
Such remuneration shall be paid in bi-weekly instalments in arrears.

(b) The Executive shall be entitled to participate in the Corporation's stock
option plan under the Share Option Plan attached hereto as Schedule B. Stock
options may be granted to the Executive at the discretion of the Corporation.

(c) The Corporation  shall provide the Executive with a car allowance during the
term of his employment at the rate of $600.00 per month.

4.  Benefits

    During the period of employment of the Executive hereunder the Executive
shall be reimbursed for all reasonable travelling and other expenses incurred by
him in connection with the performance of his duties hereunder upon provision of
appropriate receipts or other vouchers. The Executive shall be entitled to four
(4) weeks vacation per year. The Executive shall be reimbursed by the
Corporation, upon provision of appropriate receipts or documentation, up to $300
per month, for the premium cost of any policy of long-term disability insurance
obtained by the Executive. The Executive shall be entitled to participate in any
group, health and welfare


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plans adopted by the Corporation for its employees during the term of this
Agreement on the terms of such plans.

5.  Termination

(a) The Corporation shall be entitled in its sole discretion to forthwith
terminate at any time the employment of the Executive hereunder for any reason
whatsoever prior to the Termination Date. Unless such termination is for cause,
the Corporation shall pay to the Executive a lump sum payment equal to two years
then present Salary. In addition to the foregoing, if the Corporation declines
to renew this Agreement for a further five (5) year term on substantially the
same terms and conditions set forth herein (other than a requirement to further
renew the Agreement), the Executive shall be entitled to receive and the
Corporation shall pay to the Executive on the day after the Termination Date a
lump sum payment equal to two years then present Salary. Upon termination of the
Executive's employment pursuant to the foregoing, this Agreement (except for
Part II hereof) and the employment of the Executive hereunder shall be
terminated.

(b) The Corporation shall be entitled to terminate the employment of the
Executive hereunder at any time by so advising the Executive in writing if the
Executive is, on the determination of a physician mutually acceptable to and
chosen by the Executive's personal physician and a physician designated by the
Corporation, prevented by illness or physical or mental disability from
performing his duties hereunder for a period of six (6) consecutive months or
365 days in any twenty-four (24) month period. The Corporation shall continue to
pay the Executive pursuant to this Agreement during such six (6) month period or
365 day period, as the case may


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be, provided that it may deduct from such pay amounts received by the Executive
pursuant to any long term disability plan. If the Executive's employment is
terminated pursuant to this subparagraph (b), the Corporation shall pay to the
Executive, on the date of such termination, a lump sum payment equal to one
year's then present Salary, provided that it may deduct from such lump sum
payment the aggregate amount of pay paid to the Executive during the six (6)
month or 365 day period, as the case may be, referred to in this subparagraph.

(c) If the Executive's employment is terminated without cause, or upon
expiration of this Agreement or any renewal hereof or as a result of disability
pursuant to subparagraph 5(b), any options and warrants held by the Executive to
purchase shares in the Corporation shall remain in full force and effect until
expiry thereof in accordance with the terms of the certificates or agreements
under which such options or warrants were granted, notwithstanding paragraph 10
of the Share Option Plan.

(d) The Executive, in his sole discretion, may terminate his employment
hereunder on 90 days notice in writing to the Corporation. In such event the
Corporation shall have no further obligation to the Executive after such
termination. Any stock options held by the Executive at the date of such
termination shall expire on the expiry of such 90 day notice period.
Notwithstanding such termination, the Executive shall continue to be bound by
the provisions of Part II hereof.


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PART II - CONFIDENTIALITY, INTELLECTUAL PROPERTY,
          SOLICITATION AND NON-COMPETITION


1. Definitions Applicable to this Part II

(i) "Confidential Information" shall mean all information, including but not
limited to trade secrets, disclosed to the Executive or known by the Executive
as a consequence of or through his being retained by the Corporation, concerning
the Corporation's products, processes or services and including, but not limited
to: computer programs; unpatented inventions, discoveries or improvements;
marketing, manufacturing, or organizational research and development, or
business plans; sales forecasts; personnel information, including the identity
of other consultants of the Corporation, their responsibilities, competence,
abilities, and compensation; pricing and financial information; customer lists;
information concerning planned or pending acquisitions or divestitures; and
information concerning purchases of major equipment or property; and which:

               (a)      has not been made generally available to the public by
                        the Corporation;

               (b)      is useful or of value to the Corporation's current or
                        anticipated business, research or development
                        activities; or

               (c)      has been identified by the Corporation as confidential,
                        either orally or in writing.

Confidential Information shall not include information which:

               (a)      is in, or hereafter enters, the public domain through no
                        fault of the Executive;


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               (b)      is obtained by the Executive from a third party having
                        the legal right to use and disclose the same; or

               (c)      is in the possession of the Executive prior to receipt
                        from the Corporation.

(ii) An "unauthorized person or corporation or other entity" means any
individual or entity who or which has not executed an appropriate secrecy
agreement with the Corporation.

(iii) "Intellectual Property" shall mean all discoveries, inventions,
improvements, formulas, ideas, devices, writings or other intellectual property
including but not limited to the notes, records, reports, sketches, plans,
memoranda and other tangible information relating to such Intellectual Property,
whether or not subject to protection under Patent or Copyright laws, which the
Executive shall conceive solely or jointly with others, in the course of or
within the scope of his employment hereunder and which relates directly to the
business of the Corporation or the Corporation's actual or anticipated research
and development, of which was conceived or created using the Corporation's
materials or facilities, whether during or after working hours.

(iv) "Research and Development" shall mean the scientific and engineering
activities related to the investigation, analysis, development or production of
Corporation's existing or planned products, processes or services.

2. Executive's Obligations Not to Use or Disclose Confidential Information


(a) The Executive acknowledges that the Corporation has heretofore carried on
and will hereafter carry on the business of, among other things, research,
development and commercialisation with respect to the Vasocare technology, and
that in the course of carrying


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out, performing and fulfilling his responsibilities to the Corporation hereunder
he will have access to and will be entrusted with Confidential Information, the
disclosure of any of which Confidential Information to competitors of the
Corporation or to the general public may be detrimental to the best interests of
the Corporation. The Executive acknowledges and agrees that the right to
maintain the confidentiality of such Confidential Information, and the right to
preserve the goodwill of the Corporation, constitute proprietary rights which
the Corporation is entitled to protect.

(b) The Executive shall maintain in confidence at all times and shall not
divulge to any unauthorized person or corporation or other entity, or use in any
manner, or knowingly allow another to use, without the Corporation's prior
written consent, either during the term of his retainer hereunder or thereafter,
the Corporation's Confidential Information. The Executive agrees, therefore,
that the Corporation is entitled to protection from any unauthorized disclosure
or use, or threatened disclosure or use of any Confidential Information,
including protection by injunctive relief, in addition to other remedies
available under the law.

(c) The Executive further acknowledges that the Corporation operates and
competes internationally, and that the Corporation will be harmed by
unauthorized disclosure or use of its Confidential Information regardless of
where such disclosure or use occurs, and that therefore this Confidential
Information is not limited geographically in any way.


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3. Corporation's Property

     All notes, reports, sketches, plans, unpublished memoranda or other
documents created, developed, generated or held by the Executive during the term
of this Agreement, concerning or related to the Corporation's business, and
whether containing or relating to Confidential Information or not, are the
property of the Corporation and will be promptly delivered to the Corporation
upon termination or expiry of this Agreement for any reason whatsoever.

4. Corporation's Right to Inventions and Discoveries

(a) All Intellectual Property developed during the term of this Agreement shall
be the sole and exclusive property of the Corporation without further
compensation. Any Intellectual Property based upon the Corporation's
Confidential Information and developed at any time either during or after the
term of the Executive's retainer shall be the property of the Corporation. The
Executive's development of Intellectual Property occurring within one (1) year
after the termination of this Agreement and related to the Corporation's
business, products or research shall be presumed to be the property of the
Corporation. The Executive agrees to promptly notify and fully disclose to the
Corporation all such Intellectual Property. The Executive shall take such steps
as are deemed necessary to maintain complete and current records thereof.

(b) The Executive shall assign to the Corporation or its designates, the
Executive's entire right, title and interest in said Intellectual Property. The
Executive shall, at the Corporation's request and expense, execute all documents
necessary to enable the Corporation to make applications for domestic or foreign
patents, and assist in securing, defending or enforcing any


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such title and right thereto, and assist in any other claims or litigation
concerning the Corporation, its subsidiaries or affiliates.


5. Inconsistent Obligations

     The Executive agrees that, during the term of this Agreement, the Executive
will not accept or assume any obligation that may be inconsistent with any
obligation in this Agreement without the written consent of the Corporation.

6. Non-Competition(a) The Executive acknowledges that, in addition to his
knowledge of Confidential Information, he is an important member of the
Corporation's management team with executive responsibilities and that the
Corporation is relying on the foregoing covenants as an inducement to entering
into this Agreement. Therefore, for two (2) years following termination of this
Agreement, the Employee will not accept a position or render advice or
assistance, directly or indirectly, where the performance of his normal duties
in that position will involve (a) the research or development of products,
processes or services in which use or disclosure of the Corporation's
Confidential Information would be of assistance or advantage or would be
reasonably likely to occur; or (b) overall responsibility for the research or
development of products, processes or services competitive with those of the
Corporation in a capacity comparable to that which the Employee held with the
Corporation, or (c) research or development activities for a competitor of the
Corporation in project areas substantially similar to those in which the
Employee worked for the Corporation. This paragraph shall not prevent the
Employee from using general skills and experience developed in positions with
the Corporation or other employers, or from accepting a position of employment
with or rendering advice or

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assistance to a company, form, or other organization which does not compete with
the Corporation as set forth above, provided that such a position does not
involve the divulgence or use of the Corporation's Confidential Information.

(b) The Executive also agrees that he will not, during the continuance of this
Agreement nor, at any time within a period of two (2) years following the
termination of this Agreement, either individually or in partnership or jointly
or in conjunction with any person or persons, firm, association, syndicate,
company or corporation, as principal, agent, shareholder or in any other manner
whatsoever whether directly or indirectly, carry on or be employed in or
concerned with or interested in, or advise, lend money to, guarantee the debts
or obligations of, or permit his name or any part thereof to be used or employed
by or associated with, any person or persons, firm, association, syndicate,
company or corporation engaged in or concerned with or interested in any
business now or at any time carried on by the Corporation during the term of
this Agreement.


7. Inducement of Executives and Solicitation of Customers

(a) The Executive hereby acknowledges that the Corporation's relationships with
its customers are extremely valuable to it and are the result of substantial
time and effort expended by the Corporation. The Executive hereby agrees with
the Corporation that he will not at any time during the continuance of this
Agreement or at any time within two (2) years after the date of the termination
of this Agreement, directly or indirectly, approach or solicit any customer or
employee of the Corporation; provided, however, if the Executive establishes a
business which is distinctly different from that which the Corporation has
heretofore carried on and will hereafter


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carry on up to date of the termination of this Agreement, the Executive shall
not be prevented from offering the services of such business to any customer or
supplier of the Corporation. As used in this clause, "customer" and "supplier"
shall extend only to those persons, firms, corporations or other entities who
are customers or suppliers of the Corporation during the period from the date
hereof to the date of termination of this Agreement.

(b) Nothing contained in this clause 7 shall be deemed to affect or impair the
otherwise lawful rights of the Corporation to enforce its legal remedies against
the Executive either during the period from the date hereof to the date of the
termination of this Agreement or at any time thereafter to prevent the Executive
from approaching or soliciting any customer, supplier or employee of the
Corporation with a view towards inducing such customer, supplier or employee
contrary to the provisions of this Agreement and to recover any damages
resulting therefrom.

8. Severability

     If any covenant or provision of paragraphs 1, 2, 3, 4, 5, 6 or 7 of this
Part II is determined to be invalid, void or unenforceable in whole or in part,
it shall not be deemed to affect or impair the validity of any other covenant or
provision contained therein or otherwise in this Agreement, and each and every
of the covenants or provisions contained in paragraphs 1, 2, 3, 4, 5, 6 and 7 of
this Part II are hereby declared to be separate and distinct covenants and
severable from each of the others for the purposes of this Agreement. The
Executive hereby agrees that he has had an opportunity to review this Agreement
with counsel of his choice.


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PART III - GENERAL

1.   Survival


     The provisions of Part II and III hereof shall survive the termination of
the employment of the Executive with the Corporation under this Agreement.

2. Entire Agreement

     This Agreement constitutes the entire agreement between the parties hereto
relative to the employment of the Executive and supersedes all prior agreements
and understandings whether written or oral relative to the employment of the
Executive. Except as otherwise specifically set forth in this Agreement, no
party hereto makes any representation or warranty express or implied statutory
or otherwise to any other party hereto. This Agreement may not be amended or
modified except by written instrument executed by all the parties hereto.

3. Governing Law

     This Agreement shall be deemed to have been made in and shall be construed
in accordance with the laws of the province of Ontario and, for the purposes of
all legal proceedings, this Agreement shall be deemed to have been performed in
such province. Each of the Executive and the Corporation hereby irrevocably
attorns to the exclusive jurisdiction of the courts of such province and the
courts of such province shall have the sole and exclusive jurisdiction to
entertain any action arising under this Agreement.


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4.   Assignment

     This Agreement shall not be assignable by either party hereto except with
the prior written consent of the other party hereto.


5.   Further Assurances

     Each of the parties hereto hereby covenants and agrees to promptly do all
such acts and execute all such further agreements, assurances and other
documents as the other party hereto may from time to time reasonably request in
writing be done and/or executed in order to better evidence and/or perfect the
respective matters and things herein provided for and/or the respective
obligations created or intended to be created hereby.

6.   Enurement

     The provisions hereof, where the context permits, shall enure to the
benefit of and be binding upon the Executive and his heirs, executors,
administrators and legal personal representatives and the Corporation and its
successors and assigns.

7.   No Liability for Directors or Others

     The Executive acknowledges and agrees that each and every of the
obligations, agreements, liabilities and covenants in this Agreement which are
not the Executive's are solely those of the Corporation and the directors,
officers, employees and shareholders of the Corporation shall not have, and are
hereby released from, any responsibility or liability of any nature whatsoever
in respect of such obligations, agreements, liabilities or covenants.


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     IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the date first above written.



SIGNED, SEALED AND DELIVERED )
      in the presence of     )
                             )
---------------------------- )-------------------------------------
     Witness                 )    David Elsley


                                  VASOGEN INC.



                                  By:
                                       -----------------------------------------

                                       Duly Authorized Officer or Director,
                                       on behalf of the Corporation and not in
                                       his personal capacity                c/s



                                  By:
                                       -----------------------------------------

                                       Duly Authorized Officer of Director,
                                       on behalf of the Corporation and not in
                                       his personal capacity                c/s