AGREEMENT


     THIS AGREEMENT, made as of the 1st day of June, 2001 by and between Derma
Sciences, Inc., a business corporation organized under the laws of the
Commonwealth of Pennsylvania ("Employer"), and Edward J. Quilty ("Employee").

     WHEREAS, Employee is currently employed by Employer as its President,
Chairman and Chief Executive Officer, and

     WHEREAS, the parties desire to memorialize the terms and conditions of
Employee's employment by Employer,

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

     1. EMPLOYMENT. Employer hereby employs Employee, and Employee agrees to be
employed by Employer, as Employer's President, Chairman and Chief Executive
Officer upon the terms and conditions hereinbelow set forth.

     2. TIME AND EFFORTS. Employee will devote substantially all of his business
time and efforts to his duties hereunder.

     3. COMPENSATION. During the Term hereof Employer shall pay compensation to
Employee as follows:

          (a) Base compensation at the rate of Two Hundred Thousand Dollars
     ($200,000) per year;

          (b) Bonus, stock options and/or such other incentive compensation as
     may be determined by Employer's board of directors upon recommendation of
     its compensation committee.

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     Reviews by the compensation committee of Employee's base compensation and
incentive compensation shall be undertaken not less often than annually. The
principal criteria utilized by the compensation committee in the conduct of its
reviews shall be the extent to which Employer attains its performance objectives
and the extent of Employee's contributions thereto.

     4. TERM. This Agreement shall be effective as of June 1, 2001 and shall
expire on May 31, 2002 unless renewed or extended by mutual agreement of the
parties hereto.

     5. SEVERANCE. Upon the failure by Employer, on or prior to each anniversary
hereof, to extend to Employee its offer to renew this Agreement for the
succeeding twelve month period, and provided only that Employer's failure to
renew this Agreement is "without cause," Employer shall pay to Employee
severance compensation in the amount of one year's base compensation at the rate
most recently in effect pursuant to paragraph 3(a) hereof.

     6. CHANGE IN CONTROL. Within six months of the occurrence of a "change in
control" of Employer (defined below), Employee may, but shall have no obligation
to, tender his resignation from Employer and receive severance compensation as
provided in paragraph 5 above to the same extent as if Employer failed to renew
this Agreement "without cause." For purposes of this paragraph, a "change in
control" shall mean a change in ownership of stock possessing greater than fifty
percent (50%) of the total combined voting power of all classes of stock
entitled to vote of Employer.

     7. OPTION EXERCISE EXTENSION. In the event either that Employer fails to
renew this Agreement "without cause" or Employee tenders his resignation upon a
"change in control," then the period to exercise any option to purchase the
securities of Employer of

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which Employee may be possessed shall be extended to the expiration thereof as
set forth in the option instrument.

     IN WITNESS WHEREOF, this Agreement has been executed by Employee and
Employer by a member of its board of directors and its compensation committee
thereunto duly authorized.


                                 EMPLOYER:

                                 DERMA SCIENCES, INC.



                                 By:
                                    -------------------------------------------
                                       Stephen T. Wills, CPA, MST
                                       Chairman - Compensation Committee


                                 EMPLOYEE:



                                 ----------------------------------------------
                                 Edward J. Quilty



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