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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): June 8, 1998
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)
214 Carnegie Center, Suite 100
Princeton, NJ 08540
(609) 514-4744
(Address including zip code and telephone
number, of principal executive offices)
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ITEM 5. OTHER EVENTS
On June 8, 1998 Registrant and ABS LifeSciences, Inc. ("ABS") agreed to
a settlement of their respective claims and counter claims asserted in the civil
action ABS LIFESCIENCES, INC. V. DERMA SCIENCES, INC. (the "Action"). The
settlement provides that Registrant pay to ABS a total of $550,000 and return to
ABS all unsold Chronicure inventory. The Action will be dismissed with
prejudice.
Registrant anticipates taking a charge of approximately $750,000
(unaudited) against second quarter, 1998 earnings as a result of the settlement.
The settlement agreement dated June 8, 1998 is attached hereto as
Exhibit 10.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibit:
10 Settlement Agreement dated June 8, 1998 between
Registrant and ABS LifeSciences, Inc.
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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: June 10, 1998 By:/s/ Edward J. Quilty
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Edward J. Quilty
Chairman
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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:
ABS LIFESCIENCE, INC. :
:
Plaintiff : Civil Action No. 95-5200
:
v. : Hon. Nicholas H. Politan
: U.S.D.J.
DERMA SCIENCES, :
:
Defendant : FILED UNDER SEAL
: ----------------
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SETTLEMENT AGREEMENT (INCLUDING STIPULATION OF DISMISSAL)
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ABS LIFESCIENCE, INC. ("ABS") and DERMA SCIENCES, INC. ("Derma") agree this
8th day of June 1998 that this action is settled on the following terms.
1. ABS and Derma hereby stiputate that this action is dismissed with
prejudice and without either party being liable to the other for any costs of
this action, subject to reinstatement of this action pursuant to paragraph 6 of
this settlement agreement.
2. Within three (3) business days after this settlement agreement has
been so ordered by the above court (the "Court"), Derma will wire transfer
$250,000 to ABS's account the ("ABS Account"): CoreStates Bank, N.A.,
Philadelphia, PA., ABA $ 031000011, for credit to Integra Life Sciences, account
00105-56594.
3. Derma will wire transfer $37,500 (a total of $225,000) to the ABS
Account on each of the following dates:
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July 1, 1998
August 3, 1998
September 1, 1998
October 1, 1998
November 2, 1998
December 1, 1998
4. Derma will will transfer $75,000 to the ABS Account on December 31,
1998.
5. Within ten (10) business days after this settlement agreement has
been so ordered by the Court, Derma will deliver to ABS or its designee, at 515
South Franklin Street, West Chester, PA 19382, Derma's total inventory of
approximately 1426 cases (144 units each case) of Chronicure. Title to such
Chronicure shall pass from Derma to ABS at the time of delivery.
6. If Derma fails to make any wire transfer to the ABS Account required
under paragraphs 2, 3 and 4, in the amount and by the dates set forth in
paragraphs 2, 3 and 4 respectively, ABS may give Derma written notice of default
by registered mail or by Express Mail, Federal Express or other overnight
delivery service, addressed to Derma Science, Inc., c/o Palatin Technologies,
Inc. 214 Carnegie Center, Suite 100, Princeton, NJ 08540, attention: Edward J.
Quilty ("Quilty"), with a copy by one of the same methods to Eric J. Wallach,
Esq., Kasowitz, Benson, Torres & Friedman LLP, 1301 Avenue of the Americas, New
York, New York 10019-6002 ("Wallach"). If Derma fails to wire transfer to the
ABS Account the particular installment due within ten (10) days of actual
receipt by Derma of said written notice of default. ABS shall have the right, at
any time within sixty (60) days following such failure of delivery, to provide,
by an affidavit sworn to by an officer of ABS, written notice to the Court of
Derma's failure to make payment, with copies to Quilty and Wallach by one of the
methods listed above; whereupon, the Court shall reinstate this action and shall
enter judgment in favor of ABS and against Derma in the amount of One Million
Two Hundred Fifty Thousand Dollars ($1,250,000), which such shall constitute the
total amount of monetary payment by Derma to ABS under this
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settlement agreement. Upon the entry of such judgment, all monetary payments
previously made by Derma to ABS under this settlement agreement shall be applied
to the satisfaction of said judgment, and Derma's obligation to make any and all
remaining unpaid payments under paragraphs 2, 3 and 4 shall be eliminated. ABS
thereafter may collect the judgment by any lawful means, subject to any credit
allowable hereunder.
7. ABS and Derma, each the "Releasor," each hereby forever releases and
discharges the oother (along with the other's parents, affiliates, subsidiaries
and divisions, and the other's stockholders, predecessors, successors, assigns,
agents, officers, directors, employees, representatives, and attorneys both past
and present, collective the "Releasees"), from any and all claims, demands,
causes of action and liabilities of any kind whatsoever, known and unknown, both
past and present, including without limitation all invoices that ABS submitted
to Derma for goods sold and/or delivered, which Releasor ever had, now has or
may have against Releasees, up to and including the date of this settlement
agreement.
8. ABS and Derma each agree not to disparage, or make any disparaging
remark, or send any disparaging communication concerning the other, including
the other's parents, affiliates, subsidiaries and divisions and the other's
reputation, business, officers, directors shareholders and employees. This
provision shall not apply, however, to any statement that ABS or Derma may be
required by law to make (e.g., in testimony required in a court proceeding).
This provision also shall not apply to any statement that may be made by either
party about the other in the course of marketing or promoting the products of
the party making such statement, to the extent that such products are in
competition in the marketplace with the products marketed or promoted by the
other party.
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9. ABS and Derma each agrees to keep secret and confidential the
existence and terms of this settlement agreement. If any party is asked any
question concerning the controversy between the parties hereto, such party will
state only that "the matter has been amicably resolved." This provision shall
not apply, however, to any disclosure that ABS or Derma may be required by law
to make (e.g., in testimony required in a court proceeding). This provision also
shall not apply to any press release or SEC or other public reporting that ABS
or Derma may issue or file in good faith, to satisfy disclosure requirements
that it determines may exist under applicable law or regulations, provided that
the party shall submit any such press release or report in draft form to the
other for review and comment before it is issued or filed. In addition, this
provision shall not preclude a disclosure by ABS or Derma to its employees,
accountants or attorneys, provided that ABS or Derma shall so disclose the terms
of this settlement agreement only to the extent that such persons have a
legitimate need to known such terms to carry out their responsibilities to ABS
or Derma, and provided furhter that ABS or Derma shall secure the agreement of
such persons not to disclose further the existence or terms of this settlement
agreement except as expressly permitted hereunder.
10. This settlement agreement shall be deemed to have been made in New
Jersey, and shall be interpreted, construed, and enforced pursuant to the laws
of New Jersey.
11. This settlement agreement may be executed by the parties in
counterparts and submitted to the Court as such, with all counterparts together
constituting a single agreement.
12. This settlement agreement sets forth the entire agreement between
the parties hereto, fully supersedes any and all prior agreements or
understandings between the parties hereto pertaining to the subject matter
hereof, and may be modified only in writing duly executed by the parties hereto.
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13. This settlement agreement will be filed under seal and will not be
disclosed to anyone unless so ordered by the Court, or unless permitted under
the express terms of this settlement agreement.
AGREED: June 8, 1998
ABS LIFESCIENCES, INC. DERMA SCIENCES, INC.
/s/ Richard Caruso /s/ Edward J. Quilty
By:_________________________ By:_________________________
Richard Caruso, Chairman Edward J. Quilty, Chairman
/s/ David F. Abernethy /s/ Eric J. Wallach
By:_________________________ By:_________________________
David F. Abernethy, Esq. Eric J. Wallach, Esq.
DRINKER, BIDDLE & REATH KASOWITZ, BENSON, TORRES
47 Hulfish Street & FRIEDMAN
P. O. Box 627 1301 Avenue of the Americas
Attorneys for ABS LifeSciences, Inc. New York, NY 10019-6022
Attorneys for Derma Sciences,
Inc.
(202) 506-1750
SO ORDERED
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HON. NICHOLAS H. POLITAN
U.S.D.J.
Date: June __, 1998
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