Exhibit 10.34

THIRD AMENDMENT AND
WAIVER TO REVOLVING CREDITAND SECURITY AGREEMENT

THIS
THIRD AMENDMENT AND WAIVER TO REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of
March 12, 2007 (the Amendment), is entered into by and between
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
(Lender), and DERMA SCIENCES, INC. a Pennsylvania Corporation
(Derma), and SUNSHINE PRODUCTS, INC., a Missouri Corporation
(Sunshine and together with Derma, individually and collectively,
Borrower). Capitalized terms used and not otherwise defined herein are
used as defined in the Agreement (as defined below).

WHEREAS,
the parties hereto entered into that certain Revolving Credit and Security Agreement dated
as of January 31, 2005 (as amended, supplemented, or otherwise modified from time to time,
the Loan Agreement);

WHEREAS,
the parties hereto desire to amend the Agreement to amend certain financial covenants and
to waive certain Events of Default;

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

SECTION
1.   Amendments.

(a)       
          Section 2.3 of the Loan Agreement is hereby amended by (i) deleting
          2.5% and replacing it with 2.0% and (ii) deleting
          5% and replacing it with 5.5%".

(b)       
          Section 1 of Annex I of the Agreement is hereby amended in its entirety to read
          as follows:

| | 1)        Minimum EBITDA
             At
no time shall Borrower permit its EBITDA for the Test Period ending on each date set forth
below to be less than the amount set forth opposite each such date:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           |          
|------------------------------------------ | ---------
|Date                                       | EBITDA   
|January 31, 2007                           | $900,000 
|February 28, 2007                          | $600,000 
|March 31, 2007                             | $600,000 
|April 30, 2007                             | $500,000 
|May 31, 2007                               | $225,000 
|June 30, 2007                              | $225,000 
|July 31, 2007                              | $300,000 
|August 31, 2007                            | $475,000 
|September 30, 2007                         | $575,000 
|October 31, 2007                           | $650,000 
|November 30, 2007                          | $750,000 
|as of the last day of eachmonth thereafter | $900,000

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(c)
Section 2 of Annex I of the Agreement is hereby amended in its entirety to read as
follows:

| | 2)        Fixed Charge Coverage Ration (EBITDA/Fixed Charges)
             At
no time shall Borrower permit Fixed Charge Coverage Ratio for the Test Period ending on
each date set forth below to be less than the ratio set forth opposite each such date:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           |                           
|------------------------------------------ | --------------------------
|Date                                       | Fixed ChargeCoverage Ratio
|January 31, 2007                           | 1.25 to 1                 
|February 28, 2007                          | 1.25 to 1                 
|March 31, 2007                             | 1.25 to 1                 
|April 30, 2007                             | 1.25 to 1                 
|May 31, 2007                               | .4 to 1                   
|June 30, 2007                              | .5 to 1                   
|July 31, 2007                              | .65 to 1                  
|as of the last day of eachmonth thereafter | 1.25 to 1                

SECTION
2.   Waivers.

(a)        Reference
is made to the Minimum EBITDA and Fixed Charge Coverage Ratio (FCCR)
financial covenants in Annex I of the Agreement. Borrower has informed Lender of
the following Events of Default: (a) for the Test Period ending December 31, 2006,
Borrower is not in compliance with the Minimum EBITDA financial covenant and (b) for the
Test Periods ending October 31, 2006, December 31, 2006, January 31, 2007 and February
28, 2007, Borrower is not in compliance with the FCCR financial covenant (the Events of
Default described in (a) and (b) collectively the Specified Events of Default),
and Borrower hereby requests that Lender waive such Specified Events of Default. Subject
to the terms hereof, Lender hereby waives the Specified Events of Default.

(b)        The
waivers provided in this Amendment shall not be deemed to be a waiver of any provisions
of the Agreement or any other Loan Document and shall not preclude the future exercise of
any right, power, or privilege available to Lender whether under the Agreement, the other
Loan Documents or otherwise.

SECTION
3.   Conditions to Effectiveness.

The
effectiveness of the amendments and waiver set forth herein are conditioned upon the
satisfaction, in Lenders determination, of following conditions precedent:

(a)       
          Borrower shall have delivered to Lender three duly executed counterparts of this
          Amendment.

(b)       
          No Default or Event of Default, other than the Specified Events of Default,
          shall have occurred and be continuing on such date or after giving effect to the
          amendments effected hereby and the consents granted pursuant to Section 3
          hereof.

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(c)       
          Borrower shall have paid Lender all fees, costs and expenses incurred by Lender
          in preparation and execution of this Amendment, and Borrower hereby authorizes
          Lender to immediately charge such amounts as an Advance under the Revolving
          Facility.

SECTION
4.   Representations. Borrower represents and warrants that after
giving effect to this Amendment and the transactions contemplated hereby, all of the
representations and warranties set forth in Article V of the Loan Agreement are true and
correct in all material respects and no Default or Event of Default has occurred and is
continuing as of the date hereof.

SECTION
5.   Miscellaneous.

(a)        Except
as expressly provided herein, the Agreement shall continue in full force and effect, and
the unamended terms and conditions of the Agreement are expressly incorporated herein and
ratified and confirmed in all respects. This Amendment is not intended to be or to
create, nor shall it be construed as, a novation or an accord and satisfaction. From and
after the date hereof, references to the Agreement shall be references to the Agreement
as amended hereby.

(b)        This
Amendment constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof. Neither this Amendment nor any provision hereof may be changed,
waived, discharged, modified or terminated orally, but only by an instrument in writing
signed by the parties required to be a party thereto pursuant to the Agreement.

(c)        This
Amendment may be executed in any number of counterparts (including by
          facsimile), and by the different parties hereto on the same or separate
          counterparts, each of which shall be deemed to be an original instrument but
all           of which together shall constitute one and the same agreement.

(d)        Each
Borrower jointly and severally acknowledges and agrees that such Borrower has
no claims, counterclaims, offsets, credits or defenses to the Loan Documents
          and the performance of its obligations thereunder; and (b) to the extent that
          Borrower may have any such claims, counterclaims, offsets, credits or defenses,
          each Borrower and each of their respective successors, assigns, parents,
          subsidiaries, affiliates, predecessors, employees, agents, heirs, executors, as
          applicable, jointly and severally, knowingly, voluntarily and intentionally
          release and forever discharge Lender, its subsidiaries, affiliates, officers,
          directors, shareholders, employees, agents, attorneys, predecessors, successors
          and assigns, both present and former (collectively the Lenders
          Affiliates) of and from any and all manner of action and actions,
          cause and causes of action, suits, debts, controversies, damages, judgments,
          executions, claims and demands whatsoever, asserted or unasserted, in law or in
          equity which against Lender and/or Lenders Affiliates they ever had, now
          have or which any of any Borrowers successors, assigns, parents,
          subsidiaries, affiliates, predecessors, employees, agents, heirs, executors, as
          applicable, both present and former ever had or now has, upon or by reason of
          any manner, cause, causes or thing whatsoever, including, without limitation,
          any presently existing claim or defense whether or not presently suspected,
          contemplated or anticipated.

(e)        THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS
SET FORTH IN THE AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE
PROVISIONS OF THE AGREEMENT.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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IN
WITNESS WHEREOF, the parties have caused this Third Amendment to Revolving Credit and
Security Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

| |                                  |             | 
| | -------------------------------- | ----------- | 
| | LENDER:CAPITALSOURCE FINANCE LLC |            
| | By:                              |             | 
| |                                  | Name:Title: | 

| |                               |             | 
| | ----------------------------- | ----------- | 
| | BORROWER:DERMA SCIENCES, INC. |            
| | By:                           |             | 
| |                               | Name:Title: | 

| |                         |             | 
| | ----------------------- | ----------- | 
| | SUNSHINE PRODUCTS, INC. |            
| | By:                     |             | 
| |                         | Name:Title: | 

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