SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 29, 1997
Derma Sciences, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-31070 23-2328753
(State or other jurisdiction (Commission (IRS employer
of incorporation) File Number) identification number)
121 West Grace Street
Old Forge, PA 18518
(717) 457-1232
(Address including zip code and telephone
number, of principal executive offices)
<PAGE>
Item 5. Other Events
Incorporated by reference is the press release issued May 30, 1997
concerning the Registrant's announcement of the resignation of its Vice
President for Finance and Operations and Chief Financial Officer, Gary L.
Borthwick. This release, which provides information the Registrant deems of
importance to security holders, is attached hereto as Exhibit 99.
Mr. Borthwick's resignation is effective July 1, 1997. Incorporated by
reference is an Agreement and Release ("Release") relative to Mr. Borthwick's
severance package. The Release is attached hereto as Exhibit 10. The Release
provides that Mr. Borthwick will receive a cash severance payment of $135,000 in
1998. Mr. Borthwick's indebtedness to the Registrant of $74,248 has been
forgiven. Mr. Borthwick will provide consulting services to the Registrant for
which he will be compensated as follows: $67,000 on July 1, 1997; $33,000 on
October 1, 1997 and $35,000 on January 1, 1998. Stock options in which he was
vested at the time of his resignation have been accorded an extended expiration
date of July 1, 2002.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits:
10 - Agreement and Release between the Registrant and
Gary L. Borthwick dated May 29, 1997.
99 - Press release issued May 30, 1997.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DERMA SCIENCES, INC.
Date: July , 1997 By: /s/ Edward J. Quilty
--------------------
Edward J. Quilty
Chairman
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE, made this 29 day of May, 1997, by and between
Derma Sciences, Inc. ("DSI") and Gary L. Borthwick ("Borthwick").
WHEREAS, Borthwick is presently employed as Vice President for Finance and
Operations and Chief Financial Officer for DSI,
WHEREAS, Borthwick has indicated his intent to tender his resignation as
Vice President for Finance and Operations and Chief Financial Officer for DSI,
and DSI has indicated its intention to accept the same with regret,
NOW, THEREFORE, the parties hereto, in consideration of the promises and
covenants herein contained, and intending to be legally bound, hereby agree as
follows:
1. Resignation Effective Date. Borthwick hereby tenders his resignation and
DSI accepts the same effective July 1, 1997, under and subject to the conditions
set forth in this Agreement.
2. Severance Payment. DSI shall pay to Borthwick a cash severance payment
in the total amount of One Hundred Thirty-Five Thousand Dollars ($135,000), to
be paid in twenty-four (24) equal installments of $5,625 each beginning January
1, 1998 and biweekly thereafter until paid in full.
3. Forgiveness of Promissory Note. The entire remaining principal balance
and interest owed to DSI by Borthwick in the amount of $74,247.68 relative to
that certain promissory note dated January 17, 1995 by Borthwick, maker, and
DSI, payee is hereby forgiven.
4. Character of Severance Payment. The severance payment provided in
paragraph 2 hereof constitutes, in its entirety, taxable compensation to
Borthwick and DSI shall withhold Federal, state and local tax obligations of
Borthwick incident thereto as required by applicable law.
5. Consulting. Borthwick shall render consulting services to DSI as an
"independent contractor" and not as an employee. Such consulting services may
include, but will not necessarily be limited to, services related to the
transfer of accounting/financial functions to New Jersey, training personnel and
installing securities reporting systems during the period from July 1, 1997
through December 31, 1997. Borthwick shall be compensated for said consulting
services as follows: $67,000.00 on July 1, 1997; $33,000.00 on October 1, 1997
and $35,000.00 on January 1, 1998. It is understood that Borthwick will pursue
educational opportunities during the period the foregoing consulting services
are rendered. Accordingly, said consulting services shall be scheduled so as not
to interfere with Borthwick's educational commitments.
6. Stock Options. Stock options heretofore provided to Borthwick pursuant
to his Employment Agreement dated December 29, 1995 and his Senior Management
Stock Option Agreement dated March 5, 1997, of which 20,000 shares and 10,000
shares, respectively, are vested shall expire on July 1, 2002.
7. Health Benefits. Health benefits heretofore provided to Borthwick
pursuant to his Employment Agreement dated December 29, 1995 by DSI shall
continue until the earlier of December 31, 1998, or the date Borthwick secures
employment and becomes eligible for employer provided health benefits.
8. Performance References. DSI shall provide positive references relative
to Borthwick's performance while employed by DSI in response to all inquiries
made in respect of same.
9. Maintenance of Confidentiality. Borthwick hereby undertakes and agrees
to maintain, in perpetuity, the strict confidentiality of all customer lists,
trade secrets, technology, formulas, research, product information, studies and
all other knowledge of DSI regardless of whether same is, or may be,
proprietary.
10. Covenant Not-to-Compete. Borthwick hereby agrees that he shall not,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, render advice with respect to, or be connected in any manner
with the ownership, management, operation or control of any business that
manufactures, develops or sells "wound care products" within the United States
for a period of One (1) year from the date of this Agreement.
11. Further Assurances. Borthwick hereby agrees, without additional
consideration, to cooperate with DSI relative to DSI's prosecution or defense of
any and all litigation, whether same is pending or instituted in the future, as
to which Borthwick has, or may have, material factual information. Such
cooperation shall include, but shall not necessarily be limited to, consultation
with personnel of DSI and its counsel, giving of depositions and rendering of
testimony.
12. Release by Borthwick. Borthwick hereby releases DSI, its officers,
directors, shareholders and agents from any and all causes of action, claims,
rights or obligations which he may have, of whatsoever nature, which have arisen
from the beginning of the world to the date of these presents, other than claims
arising under this Agreement.
13. Release by DSI. DSI hereby releases Borthwick from any and all causes
of action, claims, rights or obligations which it may have, of whatsoever
nature, which have arisen from the beginning of the world to the date of these
presents.
14. Representation. The undersigned Chairman of DSI is authorized by the
Board of Directors of DSI to execute this Agreement.
15. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements, representations and undertakings of the parties whether oral
or written. No supplement, modification or waiver of this Agreement shall be
binding unless contained in a writing executed by the party against whom such
supplement, modification or waiver is sought to be enforced.
16. Governing Law. This Agreement shall be construed under and governed by
the laws of the Commonwealth of Pennsylvania.
WHEREFORE, the parties have hereunder set their set their hands and seals
as of the date first hereinabove written.
DERMA SCIENCES, INC.
By:/s/ Edward J. Quilty
----------------------
Edward J. Quilty, Chairman
/s/ Gary L. Borthwick
----------------------
Gary L. Borthwick
For Release:IMMEDIATELY Contact: Edward J. Quilty, Chairman (DSCI)(800)825-4325
Mark Alvino(PR - Allen & Caron, Inc.)(212) 698-1360
DERMA SCIENCES, INC. ANNOUNCES RESIGNATION OF
CHIEF FINANCIAL OFFICER
Prinston, NJ (May 30, 1996)..... DERMA SCIENCES, INC.
(NASDAQ:DSCI)(BSE/PSE:DMS) today announced that its Vice President and Chief
Financial Officer, Gary L. Borthwick, has resigned and will leave the Company,
effective July 1, 1997, to pursue other opportunities. Borthwick will serve the
Company in a consultative capacity through December 1997 to assure the smooth
transition of his successor.
Edward J. Quilty, Chairman of the Board of Directors, stated, "The Board
appreciates Gary Borthwick's contribution over his twelve year tenure with Derma
Sciences, Inc. We will immediately initiate our search for a chief financial
officer and we anticipate a smooth transition of responsibilities to Mr.
Borthwick's successor."
DERMA SCIENCES, INC. is engaged in the research, development, marketing and sale
of primarily proprietary sprays, ointments and dressings for the management of
certain non-healing chronic non-healing skin ulcerations such as pressure and
venous ulcers, surgical incisions and burns.
Statements that are not historical facts, including statements about the
Company's intention to bring on board new personnel, are forward-looking
statements that involve risks and uncertainties that include, but are not
limited to, the availability of qualified candidates and the Company's ability
to attract them.
