This Default Notice Forbearance Agreement involves
Title: FORBEARANCE AGREEMENT
Governing Law: New Jersey Date: 4/6/2009
Industry: Biotechnology and Drugs Sector: Healthcare
THIS AGREEMENT is made and entered into as of March 31, 2009, by and between:
DERMA SCIENCES, INC., with offices located at 214 Carnegie Center, Suite 300, Princeton, New Jersey 08540 (hereinafter sometimes referred to as “DERMA SCIENCES” or “Maker”), and
WESTERN MEDICAL, LTD., with offices located at 64 North Summit Street, Tenafly, New Jersey 07670 (hereinafter sometimes referred to as “WESTERN MEDICAL” or “Payee”).
WHEREAS, WESTERN MEDICAL and DERMA SCIENCES entered into a certain Asset Purchase Agreement dated as of January 26, 2006, whereby DERMA SCIENCES acquired certain assets of WESTERN MEDICAL; and
WHEREAS, in connection with the Asset Purchase Agreement, DERMA SCIENCES executed a Promissory Note dated April 18, 2006, in favor of WESTERN MEDICAL, which required DERMA SCIENCES to pay a portion of the purchase price in a final payment of accrued interest and the principal balance thereunder in the amount of $515,000.00 on April 18, 2009. A copy of said Promissory Note is attached hereto and made a part hereof as Exhibit “A”; and
WHEREAS, DERMA SCIENCES has advised WESTERN MEDICAL that it is unable to make the final payment of accrued interest and the principal balance in the amount of $515,000.00 by April 18, 2009, pursuant to the terms of the Promissory Note, and has requested that WESTERN MEDICAL forbear for a period of one (1) year from making efforts to collect said payment after it becomes due; and
WHEREAS, WESTERN MEDICAL has agreed to forbear from commencing litigation to collect the payment due from DERMA SCIENCES on April 18, 2009, provided that DERMA SCIENCES makes timely payments of interest and a balloon payment, all in accordance with the Payment Schedule attached hereto as Exhibit “B”; and
WHEREAS, DERMA SCIENCES has reaffirmed its obligations under the aforementioned Promissory Note dated April 18, 2006; and
WHEREAS, WESTERN MEDICAL has preserved all of its rights and remedies as provided in the Promissory Note dated April 18, 2006.
NOW, THEREFORE, in reliance upon the aforesaid recitals, and in consideration of the mutual agreements contained herein, it is agreed by and between WESTERN MEDICAL and DERMA SCIENCES as set forth herein.
WESTERN MEDICAL shall forbear from commencing litigation to collect the payment due under the Promissory Note on April 18, 2009, and will accept revised payments of interest and the balloon payment, all as more particularly described in the Payment Schedule attached hereto as Exhibit “B”, provided DERMA SCIENCES makes all of said payments in a timely manner. Should any payment under the Payment Schedule attached hereto as Exhibit “B” not be made, or should any payment not be made so as to be received by WESTERN MEDICAL on the dates set forth on said Payment Schedule, WESTERN MEDICAL shall have the right to pursue all of its remedies under the Promissory Note, and at law.
Time is of the essence with respect to all payments due under the Payment Schedule attached hereto as Exhibit “B”. Each and every installment due under the Payment Schedule shall be delivered to WESTERN MEDICAL by check in good and sufficient funds made payable
to “WESTERN MEDICAL, LTD” at 64 North Summit Street, Tenafly, New Jersey 07670, or at such other place as WESTERN MEDICAL may designate, from time to time, in writing.
Should DERMA SCIENCES fail to make any installment when due, WESTERN MEDICAL may, at its sole option, take any and all action to enforce payment of the full amounts due and owing under the Promissory Note dated April 18, 2006, less credit for any payments made by DERMA SCIENCES hereunder.
3. ADDITIONAL CONSIDERATION AND REPRESENTATIONS
As additional consideration for WESTERN MEDICAL’S willingness to enter into this Forbearance Agreement, DERMA SCIENCES shall immediately deliver to WESTERN MEDICAL 50,000 warrants of DERMA SCIENCES, at the market price applicable on the date of execution of this Forbearance Agreement.
DERMA SCIENCES also agrees to forthwith use its best efforts to refinance its existing loan obligations with GE Commercial Finance, as successor in interest to Merrill Lynch Capital. In the event of such refinance, the balance of all interest and principal due and owing under this Forbearance Agreement, and underlying Promissory Note, shall be paid in full from the proceeds of said refinance.
4. COSTS AND ATTORNEYS’ FEES
Should WESTERN MEDICAL be required to take steps for the purpose of enforcing or interpreting any provision of this Agreement, or the Promissory Note dated April 18, 2006, including, but not limited to, instituting any action for declaration of rights or obligations hereunder, or for any other judicial remedy, including any proceeding in any bankruptcy court, then WESTERN MEDICAL shall be entitled in said action or proceeding to reimbursement from
DERMA SCIENCES for all costs and expenses incu