Document:

PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT ("Agreement") is made as of the 18th day of
July, 2000, by and among Derma Sciences, Inc., a Pennsylvania corporation with
offices located at 214 Carnegie Center, Suite 100, Princeton, New Jersey, 08540
("Derma Sciences" or "the Company"), Kensington Management Group, LLC, 200 Park
Avenue, New York, New York, 10016, Dolphin Offshore Partners, 129 East 17th
Street, New York, New York, 10003, Redwood Asset Management, Ovre Ullorn
Terrasse No. 32, 0358, Oslo, Norway and Edward J. Quilty, 214 Carnegie Center,
Suite 100, Princeton, New Jersey, 08540 (these latter individually, "Purchaser"
and collectively, "Purchasers").

         IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and each of the Purchasers agree as follows:

         1. Designation and Authorization of Sale of the Units. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale of
$500,000 in dollar amount of the Company's series E units (the "Unit(s)") at the
price of $0.75 per Unit. The Units shall provide, and shall be in the form,
described below:

         1.1. Units. Each Unit consists of one share of common stock, par value
$.01 per share, ("Common Stock ") and one and one tenth (1.1) warrants to
purchase one share of Common Stock at a price of $0.85 per whole share
("Warrant(s)"). The provisions governing the Warrants are set forth in the Form
of Warrant Agreement attached hereto as Exhibit 1.

         1.2. Registration Rights. The Common Stock comprising the Units and the
Common Stock issuable upon exercise of the Warrants ("Underlying Common Stock")
will be registered by the Company for public sale. Terms and conditions
governing registration of the Underlying Common Stock are set forth in the
Registration Rights Agreement attached hereto as Exhibit 2.

         2. Agreement to Sell and Purchase the Units. At the Closing (as defined
in Section 3), the Company will sell and deliver to each Purchaser, and each
Purchaser will buy from the Company and accept delivery of, the Units at the
price of $0.75 per Unit and upon the terms and conditions hereinafter set forth:

         2.1. Dollar Amounts of the Units. The dollar amounts of the Units to be
purchased by each Purchaser are as follows:

        Purchaser                                                 Amount

        Kensington Management Group, LLC                           $300,000
        Dolphin Offshore Partners                                  $100,000
        Redwood Asset Management                                    $50,000
        Edward J. Quilty                                            $50,000

         2.2. Documents. This Agreement and the agreements executed by the
Company and the Purchasers relative to the Units are hereinafter sometimes
collectively referred to as the

                                        1
<PAGE>

"Documents." The term Documents shall mean this Agreement, the Form of Warrant
Agreement and the Registration Rights Agreement together with any schedules or
exhibits thereto.

         3. Delivery of the Units at the Closing. The completion of the purchase
and sale of the Units (the "Closing") shall occur at a place and time (the
"Closing Date") to be determined by the Company and of which the Purchasers will
be notified by facsimile transmission or otherwise; provided, however, that the
Closing shall not occur later than July 28, 2000. At the Closing, the Company
shall deliver to each Purchaser one or more certificates registered in the name
of the Purchaser, or in such nominee name(s) as designated by the Purchaser,
representing the Common Stock and Warrants comprising the Units purchased by
such Purchaser as set forth in section 2.1 hereof. Fractional shares of
Underlying Common Stock shall be rounded to the next higher number of whole
shares. The Company's obligation to complete the purchase and sale of the Units
at the Closing shall be subject to receipt of Federal Reserve (same-day) funds
in the full amount of the purchase price for the Units being purchased hereunder
by such Purchaser. Each Purchaser's obligation to accept and to pay for the
Units shall be subject to the condition that the Company shall have (a) entered
into a Registration Rights Agreement in the form of Exhibit 2 hereto (the
"Registration Rights Agreement") and (b) the accuracy in all material respects
of the representations and warranties made by the Company herein and the
fulfillment in all material respects of those undertakings of the Company to be
fulfilled prior to Closing. The parties agree that there may be more than one
Closing; provided, that all Closings for the sale of Units must be held not
later than July 28, 2000.

         4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, each Purchaser as
follows:

         4.1. Organization and Qualification. Each of the Company and its
subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to conduct its business as currently
conducted and to own its assets wherever located. Each of the Company and its
subsidiary is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the operations of the Company and its subsidiary,
taken as a whole.

         4.2. Due Execution, Delivery and Performance of the Agreement. The
Company has full power and authority to enter into this Agreement and each of
the Documents. This Agreement has been, and each Document and the Units will be,
duly authorized, executed and delivered by the Company. The Company's execution,
delivery and performance of this Agreement and each Document will not violate
(i) any law, rule or regulation applicable to the Company or its subsidiary or
(ii) the Certificate of Incorporation or Bylaws of the Company or its subsidiary
or (iii) any provision of any indenture, mortgage, agreement, contract or other
instrument to which the Company or its subsidiary is a party or by which the
Company or its subsidiary or any of their properties or assets is bound as of
the date hereof, or result in a breach of or constitute (upon notice or lapse of
time or both) a default under any such indenture, mortgage, agreement, contract
or other instrument or result in the creation or imposition of any lien,
security interest, mortgage, pledge, charge or other encumbrance upon any
properties or assets of the Company or its subsidiary, except, in the case of
such clause (iii), where such violation, breach or default would not have a

                                        2
<PAGE>

material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
its subsidiary taken as a whole (a "Material Adverse Effect"). Upon their
execution and delivery (assuming the valid execution thereof by the respective
parties thereto other than the Company), this Agreement and the Documents will
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

         4.3. Issuance of the Common Stock and Warrants. Upon issuance, the
Warrants and Underlying Common Stock will be duly authorized and validly issued
and, upon payment therefor, will be non-assessable.

         4.4. Litigation. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company, threatened against or affecting the Company or
its subsidiary which might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiary, taken as a whole, or which
might materially and adversely affect their property or assets or which might
materially and adversely affect the consummation of this Agreement and the other
Documents. All pending legal or governmental proceedings to which the Company or
its subsidiary is a party or of which any of their property or assets is the
subject, including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material to the business of the Company and its
subsidiary.

         4.5. Exchange Act Reports; No Material Misstatement or Omission. The
Company has timely filed all periodic reports required to be filed under the
Securities Exchange Act of 1934 ("Exchange Act Reports"). As of their respective
dates, the Company's Exchange Act Reports do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

         4.6. No Material Change. Save as disclosed in the Company's Exchange
Act Reports, the Company has not incurred any material liabilities or
obligations, direct or contingent, nor has the Company or its subsidiary
purchased any of their outstanding capital stock, nor paid or declared any
dividends or other distributions on their capital stock; and there has been no
change in the capital stock or consolidated long-term debt or any increase in
the consolidated short-term borrowings (other than in the ordinary course of
business) of the Company or any material adverse change to the business,
properties, assets, net worth, condition (financial or other), results of
operations or prospects of the Company and its subsidiary, taken as a whole.

         4.7. Legal Opinion. Prior to closing, Hedger & Hedger, counsel to the
Company, will deliver its legal opinion to the Company in the form of Appendix
II hereto and stating that each of the Purchasers may rely thereon as though
such opinion were addressed directly to such Purchaser.

                                       3

<PAGE>

         4.8. Issuance of Common Stock Upon Warrant Exercise. The Company shall
issue its Common Stock upon exercise of the Warrants in accordance with the
terms of the Warrant Agreement, which shall be legended as provided therein.
After the Registration Statement (as defined in the Registration Rights
Agreement) is declared effective by the Securities and Exchange Commission, if
any holder of Underlying Common Stock shall deliver to the Company 's transfer
agent (i) the certificate representing such Underlying Common Stock and (ii) a
letter of representations to the effect of Sections 5(b) and (c) herein, then
the Company's transfer agent shall within 3 business days after receipt of the
foregoing issue new Underlying Common Stock in exchange for the aforementioned
legended Underlying Common Stock which new Underlying Common Stock shall be
legended as follows:

                THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
                UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES MAY BE
                SOLD PURSUANT TO THE REGISTRATION STATEMENT PROVIDED THAT THE
                HOLDER COMPLIES WITH THE PROSPECTUS DELIVERY REQUIREMENTS UNDER
                THE SECURITIES ACT OF 1933, AS AMENDED, AND THE SALE IS IN
                COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET FORTH IN THE
                PROSPECTUS.

         4.9. Certificate. The Company shall deliver a certificate of the
Company executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, to be dated the Closing Date, in
form and substance satisfactory to the Purchasers to the effect that the
representations and warranties of the Company set forth in this Section 4 are
true and correct as of the date of this Agreement and as of the Closing Date and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied on or prior to such Closing
Date.

         5. Representations, Warranties and Covenants of the Purchaser. (a) Each
Purchaser represents and warrants to, and covenants with, the Company that: (i)
the Purchaser is know-ledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments presenting an
investment decision like that involved in the purchase of the Units, including
investments in securities issued by the Company, and has requested, received,
reviewed and considered all information it deems relevant in making an informed
decision to purchase the Units; (ii) the Purchaser is acquiring the Units set
forth in Section 2 above in the ordinary course of its business and for its own
account for investment (as defined for purposes of the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 and the regulations thereunder) only and with
no present intention of distributing any of such Units, Warrants or Underlying
Common Stock or any arrangement or understanding with any other persons
regarding the distribution or purchase of such Units, Warrants or Underlying
Common Stock; (iii) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Units, Warrants or
Underlying Common Stock except in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder and the Exchange Act, and the rules and regulations promulgated
thereunder, and the terms and conditions of this Agreement; (iv) the Purchaser
has, in connection with its decision to purchase the principal amount of Units
set forth in Section 2 above,

                                        4
<PAGE>

relied solely upon the representations and warranties of the Company contained
in writing herein, and has not relied upon any other statements,
representations, warranties, covenants or assurances of the Company, (v) the
Purchaser is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act ("Regulation D"); and (vi) the
Purchaser understands that the Units and, except as provided in Section 4.8
hereof, the Warrants and the Underlying Common Stock will contain a legend to
the following effect (provided that certificates for the Warrants shall omit the
last sentence thereof):

                THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
                SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
                SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN
                EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
                SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
                THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THESE
                SECURITIES ARE SUBJECT TO CERTAIN REGISTRATION RIGHTS AS SET
                FORTH IN A REGISTRATION RIGHTS AGREEMENT A COPY OF WHICH MAY BE
                OBTAINED FROM THE COMPANY.

         (b) Each Purchaser hereby covenants with the Company that it will not
directly or indirectly make any offer, sale, pledge, transfer or other
disposition of the Units, the Warrants or the Underlying Common Stock other than
in accordance with all applicable federal and state securities laws and the
terms and conditions of this Agreement, including, but not limited to, the other
representations, warranties and covenants of the Purchaser in this Section 5.

         (c) Each Purchaser hereby covenants with the Company not to make any
public sale of the Underlying Common Stock without effectively causing any
applicable prospectus delivery requirement under the Securities Act to be
satisfied, and the Purchaser acknowledges and agrees that the Underlying Common
Stock is not transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Underlying Common Stock is
accompanied by a separate officer's certificate: (i) in the form of Appendix I
hereto, (ii) executed by an officer of, or other authorized person designated
by, the Purchaser, and (iii) to the effect that (A) the Underlying Common Stock
has been sold in accordance with a Registration Statement and (B) the
requirement of delivering a current prospectus has been satisfied or does not
apply.

         (d) Each Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

                                        5
<PAGE>

         (e) Each Purchaser acknowledges that it has had such access to
financial and other information concerning the Company, the Units, and the
Warrants as it deemed necessary in connection with its decision to purchase
same, including an opportunity to ask questions and request information from the
Company and its management, and all such questions have been answered and all
information requested has been provided to the satisfaction of the Purchaser.

         (f) If a Purchaser proposes to sell, pledge, assign or otherwise
transfer or convey, directly or indirectly, any of the Underlying Common Stock
prior to the date that the Registration Statement becomes effective, then the
Purchaser shall provide the Company, prior to the sale of any such Underlying
Common Stock, with a legal opinion in form and substance satisfactory to the
Company that such sale, pledge, assignment, transfer or conveyance is exempt
from the registration requirements under the Securities Act and any applicable
state securities and blue sky laws.

         6. Nomination to Board of Directors. In the event the Company is
delisted from the Nasdaq SmallCap Market, Kensington Management Group, LLC
("Kensington") shall have the option of nominating one individual for election
to the board of directors of the Company. Upon any such nomination, the Company
shall cause its board of directors to (i) expand the board of directors by one
member and (ii) elect the nominee of Kensington to fill the vacancy on the board
of directors thereby created. Thereafter, during the pendency of the Company's
delisting from the Nasdaq SamllCap Market, the Company shall cause its board of
directors to nominate the nominee of Kensington for election to the Company's
board of directors upon the occasion of each of the Company's annual meetings of
shareholders.

         7. Survival of Representations, Warranties and Agreements.
Notwithstanding any representation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchasers in writing herein and in the closing certificates delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchasers of the Units being purchased and the payment therefor.

         8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be by telecopier with the original being
forwarded by a nationally recognized overnight express courier, shall be deemed
given when receipt is acknowledged by transmit confirmation report and shall be
addressed as set forth at the head of this Agreement or to such other address as
may hereafter be furnished in writing.

         9. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and each Purchaser.

         10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

         11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

                                        6
<PAGE>

         12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (without reference
to its rules as to conflicts of law) and the federal law of the United States of
America.

         13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Facsimile signatures are considered to be
originals and shall have the same effect.

         14. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                            [Signatures on next page]

                                       7

<PAGE>

         IN WITNESS WHEREOF, the Purchasers and the Company have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

             COMPANY:

                              DERMA SCIENCES, INC.

                              By:
                                 -----------------------------------------------
                                   Edward J. Quilty, President and CEO

             PURCHASERS:

                              KEINSINGTON MANAGEMENT GROUP, LLC

                              By:
                                   ---------------------------------------------

                              DOLPHIN OFFSHORE PARTNERS

                              By:
                                   ---------------------------------------------

                              REDWOOD ASSET MANAGEMENT

                              By:
                                 -----------------------------------------------
                                   Morten Hornness, Analyst

                              EDWARD J. QUILTY

                              --------------------------------------------------

                                       8

<PAGE>

                                                                     APPPENDIX I

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

         The below named institution, by the undersigned duly authorized, hereby
certifies that:

1. It is the purchaser of the shares evidenced by the attached certificate;

2. It sold such shares on _____________________________ in accordance with the
registration statement dated ________________________________ and numbered
____________________________ ; and

3. The requirement of delivering a current prospectus and current annual and
quarterly reports of the Company has been complied with in connection with such
sale.

                                Name of Institution:

                                Name of Individual representing Institution:

                                Title of Individual representing Institution:

                                Signature:
                                          --------------------------------------

<PAGE>

                                                                     APPENDIX II

                          [HEDGER & HEDGER LETTERHEAD]

July 18, 2000

Board of Directors
Derma Sciences, Inc.
214 Carnegie Center, Suite 100
Princeton, NJ 08540

Re:  Offer and Sale of Series E Units

Members of the Board:

We are counsel to Derma Sciences, Inc. (the "Company") in connection with the
offer and sale of those certain series E units ("Unit(s)") consisting of one
share of common stock, par value $.01 per share ("Common Stock") and one and one
tenth (1.1) warrants to purchase one share of Common Stock at $0.85 per whole
share ("Warrant(s)"). We have examined the originals, or certified, conformed or
reproduction copies, of all records, agreements, instruments and documents
relative to the Units as we have deemed relevant or necessary as the basis for
the opinion hereinafter expressed. Our examination included review of the
purchase agreement, form of warrant agreement, registration rights agreement and
certificate of compliance ("Document(s)"). In all such examinations, we have
assumed the genuineness of all signatures on original or certified copies and
the conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of fact relevant to
our opinion, we have relied upon, and assumed the accuracy of, certificates and
oral or written statements and other information of or from public officials,
officers or representatives of the Company and others.

Based upon the foregoing, we are of opinion as follows:

         1. The Company and its subsidiary are corporations duly organized,
validly existing and in good standing under the laws of their jurisdictions of
incorporation and have all requisite corporate power and authority to conduct
their business as currently conducted.

         2. As of the date hereof, the authorized capital stock of the Company
consists of: (a) 30,000,000 shares of Common Stock of which 1,325,938 shares are
outstanding, (b) 1,750,000 shares of Series A Convertible Preferred Stock of
which 272,500 shares are outstanding, (c) 3,333,340 shares of Series B
Convertible Preferred Stock of which 666,668 shares are outstanding, (d) 795,457
shares of Series C Convertible Preferred Stock of which 431,818 shares are

<PAGE>

Board of Directors
July 18, 2000
Page 2

outstanding, (e) 592,597 shares of Series D Convertible Preferred Stock of which
148,149 are outstanding, (f) 5,278,606 shares of undesignated preferred stock of
which none are outstanding, and, (g) $850,000 aggregate principal amount of
convertible bonds due January 7, 2001.

         3. Each of the Documents, upon their execution and delivery (assuming
the valid execution thereof by the respective parties thereto other than the
Company), will constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Upon payment therefor, the Common Stock, together with all Common Stock issuable
upon exercise of the Warrants, will be validly issued and nonassessable.

         4. The Company has full corporate power and authority to enter into
each Document. Each Document has been duly authorized, executed and delivered by
the Company. The Company's execution, delivery and performance under each
Document will not violate (i) any statute, rule or regulation applicable to the
Company or its subsidiary, (ii) to the best of our knowledge, any order,
judgment, ruling or decree of any court or any governmental, regulatory or
administrative body applicable to the Company or its subsidiary, (iii) the
Articles of Incorporation or Bylaws of the Company, or (iv) to our knowledge,
any provision of any indenture, mortgage, agreement, contract or other
instrument to which the Company or its subsidiary is bound or constitute (upon
notice or lapse of time or both) a default under any thereof, or result in the
creation or imposition of any lien, security interest, mortgage, pledge, charge
or other encumbrance upon any properties or assets of the Company or its
subsidiary, except in the case of the foregoing clauses (i), (ii) and (iv) for
those violations, breaches or defaults which would not, singly or in the
aggregate, have a material adverse effect upon the Company's operations,
prospects or financial condition ("Material Adverse Effect").

         5. To our knowledge (without independent investigation), there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending, or threatened, against or affecting the
Company or its subsidiary which might, singly or in the aggregate, have a
Material Adverse Effect, or which might materially and adversely affect the
consummation of the Documents; to our knowledge (without independent
investigation) all pending legal or governmental proceedings to which the
Company or its subsidiary is a party or of which any of their property or assets
is the subject, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material to the business of the
Company and its subsidiary.

         6. Except for compliance with Rule 506 of Regulation D under the
Securities Act of 1933 and applicable state securities laws in connection with
the offer and sale of the Units, and except for compliance with applicable
federal and

<PAGE>

Board of Directors
July 18, 2000
Page 3

state securities laws in connection with the resale by purchasers of
the Underlying Common Stock (as defined in the purchase agreement), no consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental, or regulatory agency or
body having jurisdiction over the Company or its subsidiary or any of their
respective properties or assets is required for the execution, delivery and
performance under the Documents or the consummation of the transactions
contemplated hereby.

We hereby authorize the Purchasers to rely upon this opinion as if it were
addressed individually to each Purchaser.

Very truly yours,

HEDGER & HEDGER

Raymond C. Hedger, Jr.

RCH:JMHREGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of the 18th day
of July, 2000, by and among Derma Sciences, Inc., a Pennsylvania corporation
with offices located at 214 Carnegie Center, Suite 100, Princeton, New Jersey,
08540 ("Derma Sciences" or "the Company"), Kensington Management Group, LLC, 200
Park Avenue, New York, New York, 10016, Dolphin Offshore Partners, 129 East 17th
Street, New York, New York, 10003, Redwood Asset Management, Ovre Ullorn
Terrasse No. 32, 0358, Oslo, Norway and Edward J. Quilty, 214 Carnegie Center,
Suite 100, Princeton, New Jersey, 08540 (these latter individually, "Purchaser"
and collectively, "Purchasers").

     This Agreement is made pursuant to the Purchase Agreement of even date
herewith between the Company and the Purchasers (the "Purchase Agreement"). In
order to induce the Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide for the benefit of the Purchasers of the Units (as defined
below), and any subsequent holders of Registrable Securities (as defined below),
the registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the closing under the Purchase Agreement.

     The parties hereby agree as follows:

     1. DEFINITIONS. As used in this Agreement, the following capitalized terms
shall have the following meanings:

     CLOSING DATE: Has the meaning such term is given in the Purchase Agreement.

     COMMON STOCK: The shares of common stock, par value $.01 per share, of the
Company.

     EFFECTIVE DATE: The date that the Resale Registration Statement is declared
effective by the SEC.

     EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from time to
time.

     HOLDER: Each beneficial holder from time to time of Registrable Securities.

     INDEMNIFIED HOLDER: See Section 6(a).

     NASD: National Association of Securities Dealers, Inc.

     PERSON: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.

                                        1
<PAGE>

     PROSPECTUS: The prospectus included in any Registration Statement, as
supplemented by any prospectus supplement and as amended by all amendments,
including post-effective amendments and all material incorporated by reference
in such prospectus.

     REGISTRABLE SECURITIES: The Underlying Common Stock; provided that
Underlying Common Stock ceases to be a Registrable Security when it (i) has been
effectively registered under Section 5 of the Securities Act and disposed of in
accordance with any Registration Statement, (ii) has been distributed to the
public pursuant to Rule 144 under the Securities Act ("Rule 144") (or any
similar provisions then in force) or (iii) is eligible for distribution to the
public by the Holder pursuant to Rule 144(k) (or any similar provisions then in
force).

     REGISTRATION EXPENSES: See Section 5.

     REGISTRATION STATEMENT: Any registration statement of the Company which, in
accordance with Section 3 hereof, covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such Registration Statement.

     SECURITIES ACT: The Securities Act of 1933, as amended from time to time.

     SEC: The Securities and Exchange Commission.

     UNDERLYING COMMON STOCK: The Common Stock comprising the Units together
with the Common Stock issuable upon exercise of the Warrants.

     UNITS: The Company's series E units, each consisting of one share of Common
Stock, $.01 par value, and one and one tenth (1.1) warrants to purchase one
share of Common Stock at a price of $0.85 per whole share.

     WARRANT AGREEMENT: The Warrant Agreement between the Company and
StockTrans, Inc., as warrant agent, attached as Exhibit 1 to the Purchase
Agreement.

     WARRANT PRICE: Has the meaning such term is given in the Warrant Agreement.

     WARRANTS: The warrants to purchase Common Stock issued pursuant to the
Warrant Agreement and pursuant to the Purchase Agreement.

                                        2
<PAGE>

     WARRANT SHARES: The shares of Common Stock issuable upon exercise of the
Warrants.

     2. SECURITIES SUBJECT TO THIS AGREEMENT. Each Holder from time to time
shall be entitled to the benefits of this Agreement. A Person is deemed to be a
Holder whenever such Person is the beneficial owner of Registrable Securities.
The Company is entitled to treat the record holder of Registrable Securities as
beneficial owner of Registrable Securities unless otherwise notified by the
Holder thereof.

     3. RESALE REGISTRATION; TIMING OF FILING, EFFECTIVENESS AND PERIOD OF
USABILITY. Subject to the provisions of Section 4 hereof, the Company shall file
not later than 60 days after the date hereof, and use its best efforts to cause
to be declared effective not later than 90 days after the date hereof, a
Registration Statement on any appropriate form under the Securities Act for all
the Registrable Securities such as to permit the public resale of the
Registrable Securities.

     The Company agrees to use its best efforts to keep the Registration
Statement continuously effective and usable for resale of Registrable Securities
until the date which is two (2) years (the "Effectiveness Period") after the
date upon which the Commission declares the Registration Statement effective or
such shorter period which shall terminate when all the Registrable Securities
covered by such Registration Statement have been sold pursuant to such
Registration Statement or when all Registrable Securities otherwise have been
sold pursuant to Rule 144 or are freely tradeable in essentially the same manner
as contemplated in Section 4 below. The Effectiveness Period shall be extended,
day for day, by the length of any "black out" periods declared pursuant to
section 4(l) hereof.

     In the event the Registration Statement has not been declared effective
within 90 days of the date hereof, the Company shall remit to each Purchaser a
penalty equal to .05479% of such Purchaser's investment in the Units for each
day beyond 90 days that the Registration statement has not been declared
effective; provided, however, if the Company files the Registration Statement
within 60 days of the date hereof and responds to all comments of the SEC
relative to the Registration Statement within 15 days of the receipt thereof,
then the foregoing penalty shall not apply.

     4. REGISTRATION PROCEDURES. In connection with the Company's obligation to
file a Registration Statement as provided in Section 3 hereof, the Company will
as expeditiously as possible:

                (a) before filing a Registration Statement or Prospectus or any
         amendments or supplements thereto, furnish to the Holders covered by
         such Registration Statement a copy of all such documents proposed to be
         filed, which documents will be subject to the review of such Holders,
         and the Company will not file any Registration Statement or amendment
         thereto or any Prospectus or any supplement thereto to which the
         Holders of a majority of the Registrable Securities covered by such
         Registration Statement shall reasonably object (provided that the
         Company may assume, for the purposes of the foregoing that any Holder
         has no objection if the Company has not received notice from such
         Holder within five business days after delivery of such documents to
         such Holder);

                (b) prepare and file with the SEC such amendments and
         post-effective amendments to the Registration Statement, and such
         supplements to the Prospectus, as may be required by the rules,

                                        3
<PAGE>

         regulations or instructions applicable to the registration form
         utilized by the Company or by the Securities Act or rules and
         regulations thereunder or otherwise necessary to keep the Registration
         Statement effective for the applicable period and cause the Prospectus
         as so supplemented to be filed pursuant to Rule 424 under the
         Securities Act; and comply with the provisions of the Securities Act
         with respect to the disposition of all securities covered by such
         Registration Statement during the applicable period in accordance with
         the intended methods of disposition by the sellers thereof set forth in
         such Registration Statement or supplement to the Prospectus;

                (c) notify each Purchaser and the Holders promptly, and confirm
          such advice in writing,

                      (1) when the Prospectus or any Prospectus supplement or
                  post-effective amendment has been filed, and, with respect to
                  the Registration Statement or any post-effective amendment,
                  when the same has become effective,

                      (2) of the issuance by the SEC of any stop order
                  suspending the effectiveness of the Registration Statement or
                  the initiation of any proceedings for that purpose, and

                      (3) of the receipt by the Company of any notification with
                  respect to the suspension of the qualification of the
                  Registrable Securities for sale in any jurisdiction or the
                  initiation or threatening of any proceeding for such purpose;

                (d) make every reasonable effort to obtain the withdrawal of any
         order suspending the effectiveness of the Registration Statement at the
         earliest possible moment;

                (e) furnish, without charge, to each Purchaser and, upon
         request, each Holder, at least one conformed copy of the Registration
         Statement and any post-effective amendment thereto, including financial
         statements and schedules, all documents incorporated therein by
         reference and all exhibits (including those incorporated by reference);

                (f) deliver to each Purchaser and each Holder without charge, as
         many copies of the Prospectus (including each preliminary prospectus)
         and any amendment or supplement thereto as such Persons may reasonably
         request; the Company consents to the use of the Prospectus or any
         amendment or supplement thereto by each Purchaser and each Holder in
         connection with the offering and sale of the Registrable Securities
         covered by the Prospectus or any amendment or supplement thereto;

                (g) use its reasonable efforts to cause the Registrable
         Securities covered by the Registration Statement to be registered with
         or approved by such governmental agencies or authorities as may be
         necessary to enable the Holders thereof to consummate the disposition
         of such Registrable Securities in such jurisdictions as the Holders may
         reasonably specify in response to inquiries to be made by the Company,
         provided that the Company will not be required to qualify generally to
         do business in any jurisdiction where it is not then so qualified or to

                                        4
<PAGE>

         take any action which would subject it to general service of process in
         any such jurisdiction where it is not then so subject;

                (h) if any event shall occur as a result of which it is
         necessary, in the opinion of counsel for the Company, to amend or
         supplement the Prospectus in order to make the Prospectus not
         misleading in the light of the circumstances existing at the time it is
         delivered by a Holder, prepare a supplement or post-effective amendment
         to the Registration Statement or the related Prospectus or any document
         incorporated therein by reference or file any other required document
         so that, as thereafter delivered to the Holders, the Prospectus will
         not contain an untrue statement of a material fact or omit to state any
         material fact necessary to make the statements therein not misleading;

                (i) obtain a CUSIP number for all Registrable Securities
         (unless already obtained), not later than the Effective Date;

                (j) make available for inspection during normal business hours
         by a representative of the Holders of a majority of the Registrable
         Securities and any attorney or accountant retained by such
         representative, all financial and other records, pertinent corporate
         documents and properties of the Company, and cause the Company's
         officers, directors and employees to supply all information reasonably
         requested by such Holders or any such attorney or accountant in
         connection with the Registration Statement; provided that all such
         records, information or documents shall be kept confidential by such
         Persons unless disclosure of such records, information or documents is
         required by court or administrative order or is generally available to
         the public other than as a result of disclosure in violation of this
         Section 4(j);

                (k) otherwise use its best efforts to comply with all applicable
         rules and regulations of the SEC, and make generally available to its
         security holders an earnings statement satisfying the provisions of
         Section 11(a) of the Securities Act (in accordance with Rule 158
         thereunder or otherwise), no later than 45 days after the end of the
         12-month period (or 90 days, if such period is a fiscal year) beginning
         with the first month of the Company's first fiscal quarter commencing
         after the Effective Date, which statements shall cover said 12-month
         period;

                (l) if at any time an event of the kind described in Section
         4(h) shall occur, notify each Purchaser and the Holders that the use of
         the Prospectus must be discontinued (the Company will not declare any
         such "black-out" periods in excess of twenty business days during any
         twelve month period, unless otherwise required); and

                (m) on or prior to the date the Registration Statement is
         declared effective by the SEC, cause all of the Underlying Common Stock
         to be listed for trading on the Boston Stock Exchange (or on any other
         national securities exchange) and the Nasdaq SmallCap Market.

                Each Holder as to which any registration is being effected
         agrees, as a condition to the registration obligations with respect to
         such Holder provided herein, to furnish to the Company such information

                                        5
<PAGE>

         regarding the distribution of such Registrable Securities as the
         Company may from time to time reasonably request in writing.

                Each Holder agrees by acquisition of such Registrable Securities
         that, upon receipt of any notice from the Company described in Section
         4(l), such Holder will forthwith discontinue disposition of Registrable
         Securities until such Holder's receipt of the copies of the
         supplemented or amended Prospectus contemplated by Section 4(f) hereof,
         or until it is advised in writing by the Company (which notice the
         Company shall give as promptly as possible), that the use of the
         Prospectus may be resumed, and has received copies of any additional or
         supplemental filings which are incorporated by reference in the
         Prospectus, and, if so directed by the Company, such Holder will
         deliver to the Company (at the Company's expense) all copies, other
         than permanent file copies then in such Holder's possession, of the
         Prospectus covering such Registrable Securities current at the time of
         receipt of such notice.

     5. REGISTRATION EXPENSES. All of the following expenses ("Registration
Expenses") incident to the Company's performance of or compliance with this
Agreement will be borne by the Company, regardless of whether the Registration
Statement becomes effective:

                (a)  all registration, filing and listing fees;

                (b) fees and expenses of counsel acceptable to the Holders of
         a majority of the Registrable Securities for compliance with
         securities or blue sky laws;

                (c) the Company's printing, messenger, telephone and delivery
         expenses;

                (d)  fees and disbursements of counsel for the Company;

                (e) fees and disbursements of all independent certified public
         accountants of the Company (including the expenses of any special audit
         necessary to satisfy the requirements of the Securities Act); and

                (f) fees and expenses associated with any NASD filing required
         to be made in connection with the Registration Statement.

     The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on the Boston Stock Exchange and the Nasdaq SmallCap Market.

     6. INDEMNIFICATION AND CONTRIBUTION.

     (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Holder, its officers, directors, employees and agents and
each Person who controls such Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an "Indemnified Holder") from and against

                                        6
<PAGE>

all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or alleged untrue statement or omission or
alleged omission thereof based upon information furnished in writing to the
Company by such Holder or its agent expressly for use therein; provided further,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the Prospectus, if such untrue statement or alleged untrue statement, omission
or alleged omission was completely corrected in an amendment or supplement to
the Prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such Holder
thereafter fails to deliver such Prospectus as so amended or supplemented, prior
to or concurrently with the sale of a Registrable Security to the person
asserting such loss, claim, damage, liability or expense who purchased such
Registrable Security which is the subject thereof from such Holder. This
indemnity will be in addition to any liability which the Company may otherwise
have.

     If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against any Indemnified Holder in respect
of which indemnity may be sought from the Company, such Indemnified Holder shall
promptly notify the Company in writing (but the omission to so notify the
Company shall not relieve it of any liability that it may have against any
Indemnified Holder otherwise than under this subsection), and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all expenses.
Indemnified Holders shall have the right, collectively, to employ their own
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be the expense of the Indemnified
Holders unless (a) the Company has agreed to pay such fees and expenses or (b)
the Company shall have failed to assume the defense of such action or proceeding
and have failed to employ counsel reasonably satisfactory to the Indemnified
Holders in any such action or proceeding or (c) the named parties to any such
action or proceeding (including any impleaded parties) include the Indemnified
Holders and the Company, and the Indemnified Holders shall have been advised by
counsel that there may be one or more legal defenses available to the
Indemnified Holders which are different from or additional to those available to
the Company (in which case, if the Indemnified Holders notify the Company in
writing that they elect to employ their own counsel at the expense of the
Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of the Indemnified Holders, it being understood,
however, that the Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for the Indemnified Holders which firm shall be designated in writing by
the Indemnified Holders representing at least a majority of the aggregate

                                        7
<PAGE>

principal amount of the outstanding Registrable Securities). Any such fees and
expenses payable by the Company shall be paid to the Indemnified Holders
entitled thereto as incurred by the Indemnified Holders. The Company shall not
be liable for any settlement of any such action or proceeding effected without
its written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the Company
agrees to indemnify and hold harmless the Indemnified Holders from and against
any loss or liability by reason of such settlement or judgment.

     (b) INDEMNIFICATION BY HOLDER. Each Holder agrees to indemnify and hold
harmless the Company, its respective directors and officers and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Holder, but only with respect to
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement or Prospectus, or any amendment
or supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Company or its respective directors or
officers or any such controlling person, in respect of which indemnity may be
sought against a Holder, such Holder shall have the rights and duties given the
Company, and the Company or its respective directors or officers or such
controlling person shall have the rights and duties given to each holder by the
preceding paragraph. In no event shall the liability of any Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.

     (c) CONTRIBUTION. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) or Section 6(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company from the sale of the Units to each Purchaser pursuant to the
Purchase Agreement on the one hand and each Holder from the offering of the
Registrable Securities by such Holder, on the other hand, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and each Holder on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, or liabilities, as well
as the other relevant equitable considerations. The relative benefits received
by the Company on the one hand and each Holder on the other shall be deemed to
be in the same proportion as the aggregate amount paid by each Purchaser to the
Company pursuant to the Purchase Agreement for the Registrable Securities
purchased by such Holder that were sold pursuant to the Registration Statement
bears to the difference (the "Difference") between the amount such Holder paid
for the Registrable Securities that were sold pursuant to the Registration
Statement and the amount received by such Holder from such sale. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company

                                        8
<PAGE>

or the particular Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Holders agree that it would not be just and
equitable if contributions pursuant to this Section 6(c) were to be determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable consideration referred to in the first sentence of this
Section 6(c). The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this Section
6(c) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigation or defending against
any action or claim that is the subject of this Section 6(c). Notwithstanding
the provisions of this Section 6(c), each Holder shall not be required to
contribute any amount in excess of the amount by which the Difference exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

     7. RULE 144 AND RULE 144A. For so long as the Company is subject to the
reporting requirements of Section 13 or 15 of the Exchange Act, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder. If the Company is not subject to the
reporting requirements of Section 13 or 15 of the Exchange Act, the Company also
covenants that it will provide the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any Holder which
continue to be "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act and it will take such further action as any holder of
such Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell its Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, so long as such provision does not require the
public filing of information relating to the Company which the Company is not
otherwise required to file, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or (c) any similar rule or regulation
hereafter adopted by the SEC that does not require the public filing of
information relating to the Company. Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.

     8. MISCELLANEOUS.

     (a) NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Agreement enter into any agreement with respect to their securities
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any such
agreements.

     (b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not take
any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the Holders to include

                                        9
<PAGE>

such Registrable Securities in a registration undertaken pursuant to this
Agreement.

     (c) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of a majority of
the Registrable Securities.

     (d) NOTICES. All notices, requests, consents and other communications
hereunder shall be by telecopier, with a copy being mailed by a nationally
recognized overnight express courier, and shall be deemed given when receipt is
acknowledged by transmit confirmation report, and shall be delivered as
addressed as follows:

                  (1) if to a Purchaser, at the most current address given by
         the Purchaser to the Company in accordance with the provisions of this
         Section 8(d) which address initially is as set forth at the head of
         this Agreement;

                  (2)  if to a Holder, at its address of record as indicated on
         the books of the transfer agent and registrar for the Registrable
         Securities; and

                  (3) if to the Company, initially at its address set forth at
         the head of this Agreement and thereafter at such other addresses
         notice of which is given in accordance with the provisions of this
         Section 8(d).

     (e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders.

     (f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without reference to its
rules as to conflicts of law) and the federal law of the United States of
America.

     (i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                                       10
<PAGE>

     (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

     (k) CALCULATION OF MAJORITY. For purposes of determining whether the
Holders of a majority of the Registrable Securities have taken action pursuant
thereto, any Warrants then outstanding shall be deemed to have been converted
into Underlying Common Stock which shares shall be treated as outstanding for
purposes hereof.

     9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Facsimile signatures are considered to be
originals and shall have the same effect.

     IN WITNESS WHEREOF, the Purchasers and Company have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.

                                    COMPANY:

                                   DERMA SCIENCES, INC.

                                   By:_________________________________________
                                      Edward J. Quilty, President and CEO

                                   PURCHASERS:

                                   KEINSINGTON MANAGEMENT GROUP, LLC

                                   By:__________________________________________

                                       11
<PAGE>

                                  DOLPHIN OFFSHORE PARTNERS

                                   By:__________________________________________

                                   REDWOOD ASSET MANAGEMENT

                                   By:__________________________________________
                                      Morten Hornness, Analyst

                                   EDWARD J. QUILTY

                                   _____________________________________________

                                       12

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