ADDENDUM TO EMPLOYMENT AGREEMENT


     THIS ADDENDUM made this 5th day of March,  1997 to that certain  Employment
Agreement made December 29, 1995  ("Agreement")  by and between Derma  Sciences,
Inc., ("Employer") and Gary L. Borthwick ("Employee").
     WHEREAS, Employer and Employee are parties to the aforesaid Agreement,
     WHEREAS, Employer and Employee desire to amend and modify certain terms and
provisions of the Agreement,         
     NOW THEREFORE,  the parties hereto, in consideration of the mutual promises
and covenants herein contained, and intending to be legally bound, hereby agree 
as follows:

     1. Stock  Options.  There is hereby added to paragraph 4 of the Agreement a
subparagraph  4.(g)  entitled  Adjustments  which  subparagraph  reads,  in  its
entirety, as follows:

          (g)  Adjustments.  The number of Option  Shares  and the Option  Price
     shall be adjusted as set forth herein:

               (i) In the event that a stock  dividend  shall be declared on the
          Common Stock payable in shares of the Common Stock,  the Option Shares
          shall be adjusted by adding to each Option  Share the number of shares
          which would be  distributable  thereon if such  Option  Share had been
          outstanding  on  the  date  fixed  for  determining  the  shareholders
          entitled to receive such stock dividend.
               (ii) In the event that the outstanding shares of the Common Stock
          shall be changed into or exchanged  for a different  number or kind of
          shares  of stock or  other  securities  of  Employer  whether  through
          recapitalization,  stock split,  combination of shares,  or otherwise,
          then there shall be  substituted  for each Option Share the number and
          kind of shares of stock or the securities into which each  outstanding
          share of the Common  Stock  shall be so changed or for which each such
          share shall be exchanged.
               (iii) In the event  that the  outstanding  shares  of the  Common
          Stock shall be changed into or exchanged  for shares of stock or other
          securities of another  corporation,  whether  through  reorganization,
          sale of  assets,  merger or  consolidation  in which  Employer  is the
          surviving corporation, then there shall be substituted for each Option
          Share the  number and kind of shares of stock or the  securities  into
          which each  outstanding  share of the Common Stock shall be so changed
          or for which each such share shall be exchanged.
               (iv) In the event that any sale of shares of Common Stock (except
          any  such  sale  made  pursuant  to  any  right,  option,  warrant  or
          convertible security outstanding prior to the date of this Agreement),
          or the issuance of any rights,  options,  or warrants to subscribe for
          or  purchase   Common  Stock  (or  securities   convertible   into  or
          exchangeable   for  Common  Stock)  occurs  after  the  date  of  this
          Agreement,  which sale or issuance  will increase the number of shares
          of Common Stock  outstanding  during the Term by Forty percent  (40%),
          then,  upon  each  such  sale or  issuance,  Employee  shall be issued
          additional  Option Shares such that, when the additional Option Shares
          are aggregated  with the Option Shares  heretofore  owned by Employee,
          Employee  has the right to  purchase,  at the same  times set forth in
          paragraph  4(c), the same percentage of Common Stock at the same price
          per share as Employee maintained prior to such sale or issuance.

     2. Sale or Merger of Employer.  There is hereby  added to paragraph  12. of
the Agreement a subparagraph 12.(c) entitled Note Forgiveness which subparagraph
reads, in its entirety, as follows:
          
          (c) Note  Forgiveness.  In the event Employee  exercises his option to
     receive severance  compensation under subparagraph 12.(a) hereof,  Employer
     shall,  in addition  to, and not in lieu of, the payment of such  severance
     compensation,  forgive the balance due, if any, relative to Employee's debt
     obligation to Employer represented by the promissory note of Employee dated
     January 17, 1995 in the original principal amount of $84,436.11.
<PAGE>

     3. Savings Clause. Save as expressly modified herein, the Agreement and all
provisions thereof remain in full force and effect.
        
     IN WITNESS  WHEREOF,  the parties  hereto have hereunder set their hands on
the date first hereinabove written.
                                        
                               EMPLOYER
                               DERMA SCIENCES, INC.  


                                By:  /s/  John T. Borthwick  
                                          -----------------
                                          John T. Borthwick
                                          President and Chief Executive Officer

                               EMPLOYEE

                                                                    
                                By:  /s/ Gary L. Borthwick
                                         -----------------
                                         Gary L. Borthwick