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

Exhibit 10.3
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH ANY APPLICABLE RULES OF THE SECURITIES AND EXCHANGE
COMMISSION.

_________  Warrants

REGEN BIOLOGICS, INC.
WARRANT CERTIFICATE
 
Warrant to Purchase
Preferred or Common Stock
 
Date of Issue:  July 24, 2008

This warrant certificate (“Warrant Certificate”) certifies that for value
received ___________________________ or registered assigns (the “Holder”) is the
owner of the warrant specified above (the “Warrant”), which entitles the Holder
thereof to purchase, at any time on or before the Expiration Date (hereinafter
defined) (i) up to ________ fully paid and nonassessable shares of Series F
Convertible Preferred Stock, $0.01 par value (“Preferred Stock”), of ReGen
Biologics, Inc., a Delaware corporation (the “Company”), or (ii) after the
Mandatory Conversion (as hereinafter defined) of the Preferred Stock, up to
_____________ fully paid and nonassessable shares of Common Stock, $0.01 par
value (“Common Stock”), of ReGen Biologics, Inc., a Delaware corporation (the
“Company”), at the Exercise Price (as defined herein).  “Mandatory Conversion”
means the conversion of the Preferred Stock pursuant to Paragraph 7(a) of the
Certificate of Designations, Preferences and Rights in the form attached hereto
as Exhibit A.

 
 

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

 

 
1.
Warrant; Exercise Price

This Warrant shall entitle the Holder to purchase up to (i) __________ shares of
Preferred Stock of the Company and the purchase price payable upon exercise of
the Warrants shall initially be $1.00 per share of Preferred Stock, subject to
adjustment as hereinafter provided (as may be adjusted from time to time, the
“Preferred Exercise Price”) or, (ii) after the Mandatory Conversion of the
Preferred Stock, ____________ shares of Common Stock of the Company and the
purchase price payable upon exercise of the Warrants shall initially be $0.01
per share of Common Stock, subject to adjustment as hereinafter provided (as may
be adjusted from time to time, the “Common Exercise Price” and together with the
Preferred Exercise Price, the “Exercise Price”).  The Exercise Price and number
of shares of Preferred Stock or, after the Mandatory Conversion, Common Stock,
issuable upon exercise of this Warrant are subject to adjustment as provided in
Section 6.

 
2.
Exercise; Expiration Date

2.1           This Warrant is exercisable, at the option of the Holder, at any
time or times after issuance and on or before the Expiration Date (as
hereinafter defined), upon surrender of this Warrant Certificate to the Company
together with a duly completed Notice of Exercise, in the form attached hereto
as Exhibit B, and payment of an amount equal to the product of (i) the Preferred
Exercise Price times the number of shares of Preferred Stock to be acquired, or
(ii) after the Mandatory Conversion, the Common Exercise Price times the number
of shares of Common Stock to be acquired.  Payment of the Exercise Price for the
Warrant Shares (as hereinafter defined) shall be in lawful money of the United
States of America, paid by wired transfer or cashier’s check drawn on a United
States bank or pursuant to the terms of Section 9.  In the case of exercise of
the Warrant for less than all the Warrant Shares (as hereinafter defined)
represented by this Warrant Certificate, the Company shall cancel the Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate for the balance of such Warrant Shares (as hereinafter
defined).

2.2           The term “Expiration Date” shall mean 5:00 p.m. New York time on
July 24, 2013 or if such date shall in the State of New York be a holiday or a
day on which banks are authorized to close, then 5:00 p.m. New York time the
next following date which in the State of New York is not a holiday or a day on
which banks are authorized to close.

 
3.
Registration and Transfer on Company Books

3.1           The Company shall maintain books for the registration and transfer
of the Warrants and the registration and transfer of the shares of Preferred
Stock or, after the Mandatory Conversion, Common Stock, issued upon exercise of
the Warrants.

3.2           Prior to due presentment for registration of transfer of this
Warrant Certificate, or the shares of Preferred Stock or, after the Mandatory
Conversion, Common Stock, issued upon exercise of the Warrants, the Company may
deem and treat the registered Holder as the absolute owner thereof.

 
2

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

 

3.3           Neither this Warrant nor the shares of Preferred Stock or, after
the Mandatory Conversion, Common Stock, issuable upon exercise hereof (the
“Warrant Shares”) have been registered under the Securities Act of 1933, as
amended (the “Act”).  The Company will not transfer this Warrant or issue or
transfer the Warrant Shares unless (i) there is an effective registration
covering such Warrant or Warrant Shares, as the case may be, under the Act and
applicable states securities laws, (ii) it first receives a letter from an
attorney, acceptable to the Company's board of directors or its agents, stating
that in the opinion of the attorney the proposed issue or transfer is exempt
from registration under the Act and under all applicable state securities laws,
or (iii) the transfer is made pursuant to Rule 144 under the Act.  Subject to
the foregoing, this Warrant Certificate, the Warrant represented hereby, and the
Warrant Shares, may be sold, assigned or otherwise transferred voluntarily by
the Holder to officers or directors of the Holder, to members of such persons'
immediate families, or to the Holder's parent or subsidiary corporations.  The
Company shall register upon its books any permitted transfer of a Warrant
Certificate, upon surrender of same to the Company with a written instrument of
transfer duly executed by the registered Holder or by a duly authorized
attorney.  Upon any such registration of transfer, new Warrant Certificate(s)
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be canceled by the Company.  A Warrant Certificate may also be exchanged,
at the option of the Holder, for new Warrant Certificates representing in the
aggregate the number of Warrant Shares evidenced by the Warrant Certificate
surrendered.

 
4.
Reservation of Shares

The Company covenants that it will at all times reserve and keep available out
of its authorized Preferred Stock, or, after the Mandatory Conversion, Common
Stock, solely for the purpose of issue upon exercise of the Warrant, such number
of shares of Preferred Stock or Common Stock as shall then be issuable upon the
exercise of the entire Warrant.  The Company covenants that all Warrant Shares
shall be duly and validly issued and, upon payment for such shares as set forth
herein, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof, and, with regard to the Common Stock, that
upon issuance such shares shall be listed on each national securities exchange,
if any, on which the other shares of outstanding Common Stock of the Company are
then listed.

 
5.
Loss or Mutilation

Upon receipt by the Company of reasonable evidence of the ownership of and the
loss, theft, destruction or mutilation of any Warrant Certificate and, in the
case of loss, theft or destruction, of indemnity reasonably satisfactory to the
Company, or, in the case of mutilation, upon surrender and cancellation of the
mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new Warrant Certificate representing the number of Warrant Shares
evidenced by the lost, stolen, destroyed or mutilated Warrant Certificate.

 
3

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

 

 
6.
Adjustments of Exercise Price and Shares

6.1           In the event of changes in the outstanding Preferred Stock or
Common Stock of the Company by reason of dividends, distributions, split-ups,
recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, consolidation, acquisition of the
Company (whether through merger or acquisition of substantially all the assets
or stock of the Company), or the like, the number and class of shares available
under the Warrant in the aggregate and the Exercise Price shall be
correspondingly adjusted to give the Holder of the Warrant, on exercise for the
same aggregate Exercise Price, the total number, class, and kind of shares or
other property as the Holder would have owned had the Warrant been exercised
prior to the event and had the Holder continued to hold such shares until the
event requiring adjustment.  The form of this Warrant need not be changed
because of any adjustment in the number of Warrant Shares subject to this
Warrant or the Exercise Price provided herein.

6.2           If at any time or from time to time the holders of all of the
shares of Preferred Stock or, after the Mandatory Conversion, Common Stock, of
the Company (or the holders of all of the shares of stock or other securities at
the time receivable upon the exercise of this Warrant) shall, as a class, have
received or become entitled to receive, without payment therefor:

 
(i)
Common Stock or any shares of stock or other securities which are at any time
directly or indirectly convertible into or exchangeable for Common Stock, or any
rights or options to subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution (other than a dividend or
distribution covered in Section 6.1 above),

 
(ii)
any cash paid or payable; or

 
(iii)
Common Stock or additional stock or other securities or property (including
cash) by way of spinoff, split-up, reclassification, combination of shares or
similar corporate rearrangement (other than shares of Common Stock pursuant to
Section 6.1 above),

then, and in each such case, the Holder hereof will, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of
Preferred Stock or, after the Mandatory Conversion, Common Stock receivable
thereupon, and without payment of any additional consideration therefor, the
amount of stock and other securities and property (including cash in the cases
referred to in clauses (ii) and (iii) above) which such Holder would hold on the
date of such exercise had he been the holder of record of such Preferred Stock
or, after the Mandatory Conversion, Common Stock, as of the date on which
holders of Preferred Stock or, after the Mandatory Conversion, Common Stock,
received or became entitled to receive such shares or all other additional stock
and other securities and property.

 
4

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

 

6.3           Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrant or the Exercise Price of such Warrant Shares is
adjusted, as herein provided, the Company shall mail to the Holder, at the
address of the Holder shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chief Financial Officer or
Secretary of the Company, which sets forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Exercise Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.

 
7.
Conversion

7.1           In lieu of exercise of any portion of the Warrant as provided in
Section 2.1 hereof, the Warrants represented by this Warrant Certificate (or any
portion thereof) may, at the election of the Holder, be converted into the
nearest whole number of shares of Preferred Stock or, after the Mandatory
Conversion, Common Stock, equal to:  (1) the product of (a) the number of
Warrants to be so converted, (b) the number of shares of Preferred Stock or,
after the Mandatory Conversion, Common Stock, then issuable upon the exercise of
each Warrant and (c) the excess, if any, of (i) the Preferred Stock Market Price
Per Share (as determined pursuant to Section 8.3) or, after the Mandatory
Conversion, Common Stock Market Price Per Share (as determined pursuant to
Section 8.2) with respect to the date of conversion minus (ii) the Exercise
Price in effect on the business day next preceding the date of conversion,
divided by (2) the Preferred Stock Market Price Per Share or, after the
Mandatory Conversion, Common Stock Market Price Per Share with respect to the
date of conversion.

7.2           The conversion rights provided under this Section 7 may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding.  In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit C.  The Warrants (or so many thereof as shall have been surrendered
for conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions.  As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates representing the number
of shares of Common Stock to which the Holder shall be entitled as a result of
the conversion, and (ii) if the Warrant Certificate is being converted in part
only, a new certificate in principal amount equal to the unconverted portion of
the Warrant Certificate.

 
8.
Fractional Shares and Warrants; Determination of Market Price Per Share

8.1           Anything contained herein to the contrary notwithstanding, the
Company shall not be required to issue any fraction of a share of Preferred
Stock or, after the Mandatory Conversion, Common Stock, in connection with the
exercise of Warrants.  Warrants may not be exercised in such number as would
result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Preferred Stock or, after the Mandatory Conversion,
Common Stock, unless the Holder is exercising the entire Warrant then owned by
the Holder.  In such event, the Company shall, upon the exercise of the Warrant,
issue to the Holder the largest aggregate whole number of shares of Preferred
Stock or, after the Mandatory Conversion, Common Stock, called for thereby upon
receipt of the Exercise Price for the entire Warrant and pay a sum in cash equal
to the remaining fraction of a share of Preferred Stock or, after the Mandatory
Conversion, Common Stock, multiplied by the Preferred Stock Market Price Per
Share (as determined pursuant to Section 8.3 below) or, after the Mandatory
Conversion, the Common Stock Market Price Per Share (as determined pursuant to
Section 8.2 below) as of the last business day preceding the date on which the
Warrants are presented for exercise.

 
5

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

 

8.2           As used herein, the “Common Stock Market Price Per Share” with
respect to any date shall mean the average closing price per share of Company's
Common Stock for the ten (10) trading days immediately preceding such date
during which the Common Stock has traded.  The closing price for each such day
shall be the closing sale price or, in case no such sale takes place on such
day, the closing price on the last trading day, in either case on the principal
securities exchange on which the shares of Common Stock of the Company are
listed or admitted to trading, the last sale price, or in case no sale takes
place on any such day, the average of the high and low sales prices of the
Common Stock on the Over-the-Counter Bulletin Board (“OTCBB”) or any comparable
system, or if the Common Stock is not reported on OTCBB, or a comparable system,
the average of the closing bid and asked prices as furnished by two members of
the National Association of Securities Dealers, Inc. selected from time to time
by the Company for that purpose.  If such bid and asked prices are not
available, then "Common Stock Market Price Per Share" shall be equal to the fair
market value of the Company's Common Stock as determined in good faith by the
board of directors of the Company.

8.3           “Preferred Stock Market Price Per Share” with respect to any date
shall mean the Common Stock Market Price Per Share (as determined pursuant to
Section 8.2) multiplied by 100.

 
9.
Notices

All notices, requests, demands, claims, and other communications hereunder shall
be in writing and shall be delivered by certified or registered mail (first
class postage pre-paid), guaranteed overnight delivery, or facsimile
transmission if such transmission is confirmed by delivery by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery,
to the following addresses and telecopy numbers (or to such other addresses or
telecopy numbers which such party shall subsequently designate in writing to the
other party):

if to the Company to:

ReGen Biologics, Inc.
411 Hackensack Avenue
Hackensack, NJ  07601
Attention: Brion D. Umidi
Telecopy: 201.651.5141

 
6

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

 

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP
1650 Tysons Boulevard
McLean, VA 22102
Attention: David C. Main, Esq.
Telecopy: 703.770.7901

if to the Holder to the address set forth on the books of the Company.

Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if delivered by
hand, by messenger or by courier, or if sent by facsimile, upon confirmation of
receipt.

 
10.
Governing Law

This Warrant Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

 
7

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

 

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed by its officers thereunto duly authorized and its corporate seal to be
affixed hereon, as of this 24th day of July, 2008.

REGEN BIOLOGICS, INC.

By:  
       
Name:
Brion D. Umidi
   
Title:
Senior Vice President and
     
Chief Financial Officer
 

Attest:

   
Name:
 
Title:
 

 
8

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

 

EXHIBIT A

Certificate of Designations, Preferences and Rights
of Series F Convertible Preferred Stock

 

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

 

EXHIBIT B

NOTICE OF EXERCISE

 
To:
ReGen Biologics, Inc.

411 Hackensack Avenue
______________, 20_____

Hackensack, NJ  07601

The undersigned hereby irrevocably elects to purchase, pursuant to Section 2 of
the Warrant Certificate accompanying this Notice of Exercise, _______ Warrant
Shares of the total number of Warrant Shares issuable to the undersigned
pursuant to the accompanying Warrant Certificate, and herewith makes payment of
$___________ in payment in full of the aggregate Exercise Price of such shares.

Please issue a certificate or certificates representing said Warrant Shares in
the name of the undersigned or in such other name as is specified below:

       
The Warrant Shares shall be delivered to the following:
                       

       
Name of Holder
                     
Signature
         
Address:
                                     

 

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

 

EXHIBIT C

NOTICE OF CONVERSION

 
To:
ReGen Biologics, Inc.

411 Hackensack Avenue
______________, 20_____

Hackensack, NJ  07601

The undersigned hereby irrevocably elects to convert, pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrant
Shares of the total number of Warrant Shares issuable to the undersigned
pursuant to the accompanying Warrant Certificate into shares of the Preferred
Stock /Common Stock (circle one) of the Company (the “Shares”).

The number of Shares to be received by the undersigned, calculated in accordance
with the provisions of Section 7.1 of the accompanying Warrant Certificate, is
________________.

   

Please issue a certificate or certificates representing said Warrant Shares in
the name of the undersigned or in such other name as is specified below:

   

The Warrant Shares shall be delivered to the following:

           

       
Name of Holder
                     
Signature
         
Address:
                                     

 
 

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