FORBEARANCE AGREEMENT

Exhibit 10.1

FORBEARANCE AGREEMENT

        This FORBEARANCE AGREEMENT (this “Agreement”) is entered into as of March 22, 2005 (the “Closing Date”), between and among Bradley Pharmaceuticals, Inc., as Borrower (the “Borrower”), certain subsidiaries of the Borrower, as Guarantors (the “Guarantors”) and Wachovia Bank, National Association, as Administrative Agent (in such capacity, the “Agent”) for and on behalf of the various financial institutions from time to time party to the Credit Agreement referenced below (the “Lenders”). Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Credit Agreement (as defined below).

RECITALS

        A. The Borrower, the Guarantors, the Agent and the Lenders are parties to that certain Credit Agreement dated as of September 28, 2004 (as amended and otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have made and may hereafter make loans and advances and other extensions of credit to the Borrower.

        B. Events of Default exist under the Credit Agreement arising from (i) the Borrower’s failure to furnish the financial statements required under Section 5.1(a) of the Credit Agreement as and when required, (ii) the Borrower’s failure to file the Form 10-K with the SEC within the time period prescribed by the SEC in violation of Section 5.11 of the Credit Agreement and (iii) the cross-default to the Convertible Bonds under Sections 7.1(d) and (e) of the Credit Agreement triggered by the default under the Convertible Bonds resulting from the Borrower’s failure to file the Form 10-K with the SEC within the time period prescribed by the SEC and to delivery a copy of such Form 10-K to the trustee with respect to the Convertible Bonds (the “Acknowledged Events of Default”).

        C. The Borrower has requested that the Lenders forbear from exercising certain rights and remedies arising from the Acknowledged Events of Default through and until April 22, 2005.

        D. The Required Lenders have agreed to do so pursuant to the terms and conditions set forth herein and have directed the Agent to execute this Agreement on their behalf.

        NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

        1. Estoppel, Acknowledgement and Reaffirmation. As of March 18, 2005, the total outstanding principal amount of the Term Loan was $71,250,000, which amount constitutes a valid and subsisting obligation of the Borrower to the Lenders that is not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind. The Borrower and the Guarantors hereby acknowledge their respective obligations under the Credit Documents, reaffirm that each of the liens and security interests created and granted in or pursuant to the Credit Documents are valid and subsisting and agree that this Agreement shall in no manner impair or otherwise adversely affect such obligations or such liens and security interests.

        2. Forbearance. Subject to the terms and conditions set forth herein, the Agent and the Lenders shall, until the occurrence of a Forbearance Termination Event (as defined below), forbear from exercising any rights or remedies (including without limitation the right to institute the default rate of interest pursuant to Section 2.10 of the Credit Agreement) to the extent such rights arise exclusively as a result of the Acknowledged Events of Default; provided, however, that the Agent and the Lenders shall be

free to exercise any or all of their rights and remedies arising on account of the Acknowledged Events of Default at any time upon or after the occurrence of a Forbearance Termination Event (defined below).

        3. Forbearance Termination Events. Nothing set forth herein or contemplated hereby is intended to constitute an agreement by the Agent or the Lenders to forbear from exercising any of the rights available to them under the Credit Agreement, the other Credit Documents, or applicable law (all of which rights and remedies are hereby expressly reserved by the Agent and the Lenders) upon or after the occurrence of a Forbearance Termination Event (as defined below). As used herein, a “Forbearance Termination Event” shall mean the earliest to occur of: (a) any Default or Event of Default under any of the Credit Documents other than the Acknowledged Events of Default; (b) any breach of this Agreement by the Borrower or any of the Guarantors; (c) the Company’s receipt of a notice of a default under the Convertible Bonds and the expiration of any applicable grace periods before such default is cured; and (d) April 22, 2005. The period from the Closing Date to (but excluding) the date that a Forbearance Termination Event occurs shall be referred to as the “Forbearance Period.”

        4. Limitation on Advances. During the Forbearance Period, the Borrower shall not request, and the Lenders shall have no obligation to make, any additional Extensions of Credit under the Credit Agreement, whether in the form of Revolving Loans, Swingline Loans, Letters of Credit or otherwise. In addition, the Borrower shall continue to be permitted to convert Alternate Base Rate Loans into LIBOR Rate Loans, or extend or continue existing LIBOR Rate Loans, so long as any such LIBOR Rate Loans have Interest Periods of no longer than two months.

        5. Cooperation with Consultants. The Agent reserves the right to engage, through counsel or otherwise, a consultant (the ”Consultant”) to analyze and examine the Borrower’s operating and financial condition. If the Agent engages a Consultant, the Borrower shall (i) provide the Consultant reasonable access to all business records and appropriate personnel to facilitate the Consultant’s review and analysis, and (ii) reimburse the Agent for the fees and expenses of the Consultant upon demand.

        6. Reporting. In addition to any financial statements, reports or other information required under the Credit Agreement during the Forbearance Period, the Borrower shall deliver, or cause to be delivered any information the Administrative Agent may reasonably request.

        7. Expenses. Upon demand therefor, the Borrower shall pay all reasonable out-of-pocket expenses incurred by the Agent (including without limitation the reasonable fees and out-of-pocket expenses of counsel) in connection with the Credit Agreement and this Agreement.

        8. Conditions Precedent. As conditions precedent to the effectiveness of this Agreement, (a) the Agent shall have received (i) counterparts to this Agreement, duly executed by the Borrower and the Guarantors and (ii) written direction from the Required Lenders for the Agent to execute this Agreement on their behalf and (b) the Borrower shall have paid all fees and expenses of the Agent’s counsel incurred through the Closing Date; and

        9. Representations and Warranties. The Borrower and the Guarantors each hereby represents and warrants to the Agent and Lenders that:

(c) (i) the execution, delivery and performance by the Borrower and the Guarantors of this Agreement are within the Borrower and the Guarantors’ respective corporate powers and have been duly authorized by all necessary corporate action