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Exhibit 10.1

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “Agreement”), dated as of March 30, 2011, by and
among Sports Medicine Holding Company LLC, a Delaware limited liability company
(“Newco”),  ReGen Biologics, Inc., a Delaware corporation (the “Company”), and
the other parties named in the attached Schedule 1 (each, an “Investor”, and
collectively, the “Investors”).

W I T N E S S E T H:

WHEREAS, Investors who hold certain debt securities (the “Notes”) of the Company
desire to exchange with Newco such Notes for membership interests in Newco (the
“Newco Interests”), as applicable.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

ARTICLE I

EXCHANGE

1.             Exchange; Conditions Precedent; No Waiver.

1.1           Exchange.  Subject to and upon the satisfaction of the conditions
precedent set forth in Section 1.2, each Investor set forth on Schedule 1 who
holds Notes shall be deemed to have assigned such Notes to Newco (together with
the Investor’s interest in any documents relating to the Notes), and Newco shall
be deemed to have accepted such assignment, in exchange for the number of Newco
Interests corresponding to such Investor’s name as set forth on Schedule 1 (the
“Exchange”).  Upon the consummation of the Exchange, the limited liability
company agreement of Newco shall be deemed to be amended and restated in the
form of Exhibit A hereto and the Newco Interests shall be issued pursuant
thereto.  Upon consummation of the Exchange, Newco shall succeed to all right,
title and interest of each Investor in the Notes held by such Investor and any
interest, fees penalties or claims in respect thereof whether known or unknown
as of the date hereof.  Following the consummation of the Exchange, each
Investor agrees to pay over to Newco any amounts received by it in respect of
its Notes.

1.2           Conditions Precedent.  The Exchange is subject solely to the
satisfaction of the following conditions precedent:

(a)           Newco shall have acquired and own all or substantially all of the
assets of the Company on or before the date that is twelve months after the date
of this Agreement;

(b)           Ivy Capital Partners, LLC (“Ivy”) shall have commenced and be
using best efforts to raise not less than $5 million in aggregate cash equity
contributions into Newco;

(c)           Newco shall have received, from Ivy and its affiliates, from the
date of formation of Newco through the date of the Exchange, not less than $2.5
million in aggregate cash equity contributions; and

 
 

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(d)           Newco shall have issued to each Investor its respective Newco
Interests.

1.3           No Waiver.  Company agrees that it shall not assert against
Investor or Newco that either the existence of this Agreement or the
consummation of the Exchange constitutes a waiver of or defense to any claim or
amount in respect of the Notes.  Company hereby irrevocably waives any such
defense.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF NEWCO

2.             Representations and Warranties of Newco.

Newco hereby represents and warrants to the Company and each Investor that as of
the date hereof:

2.1           Limited Liability Company Existence and Qualification.  Newco is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.  Newco has all requisite limited
liability company power and authority to carry on its business as proposed to be
conducted.  Newco has all requisite limited liability power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.

2.2           Authorization of Agreements.  The execution and delivery by Newco
of this Agreement and the issuance, sale and delivery of the Newco Interests
being issued hereunder, and the consummation by Newco of the transactions
contemplated hereby, have been duly authorized by all requisite limited
liability company action on behalf of Newco.  This Agreement will constitute the
legal, valid and binding obligation of Newco, enforceable against each of Newco
in accordance with its terms, except to the extent that such validity, binding
effect and enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors’
rights generally from time to time in effect and by general equitable
principles.  The Newco Interests will be, when issued, duly authorized, validly
issued, fully paid and non-assessable and will be issued free of any preemptive
rights.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

3.             Representations and Warranties of the Company.

The Company hereby represents and warrants to Newco and each Investor that as of
the date hereof:

3.1           Corporate Company Existence and Qualification.  Except as set
forth on Schedule 3.1, the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.   The
Corporation has all requisite corporate power and authority to carry on its
business as proposed to be conducted.  The Corporation has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

3.2           Newco Notes.  Except as set forth on Schedule 3.2, the aggregate
Notes being exchanged under this Agreement represent all of the secured debt of
the Company.

 
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3.3           Acknowledgement.  The Company acknowledges and consents to the
exchange of Notes for Newco Interests.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTORS

4.             Representations, Warranties and Covenants of the Investors.  Each
Investor, severally and not jointly, hereby represents, warrants and covenants
to the Company and Newco that as of the date hereof:

4.1           Organization and Standing.  If the Investor is an entity, it is
validly existing and in good standing under the laws of the jurisdiction of its
organization.

4.2           Newco Notes.  The Notes to be exchanged by the Investor under this
Agreement represent all of the secured debt of the Company owned by the
Investor.

4.3           Waiver of Rights.  For a period extending twelve months from the
date of this Agreement, the Investor will not (i) commence bankruptcy
proceedings against the Company (although it may participate in bankruptcy
proceedings commenced by another person not in violation of Section 4.3 of this
Agreement), (ii) seek to exercise registration rights with respect to the
Company’s equity interests or (iii) seek to redeem any preferred equity
interests in the Company held by such Investor.

4.4           Consent to 363 Sale; Voting Rights.  For a period extending twelve
months from the date of this Agreement, the Investor agrees (i) to vote in favor
of Newco’s acquisition of all or substantially all of the Company’s assets in
any case under title 11 of the United States Code (the “Bankruptcy Code”)
commenced with respect to the Company (a “Bankruptcy Case”) (including, without
limitation, any Bankruptcy Case commenced in conjunction with the contemplated
sale of substantially all of the Company’s  assets to Newco pursuant to Section
363 of the Bankruptcy Code (the “Section 363 Sale”)); (ii) to permit Newco to
include each Investor’s Notes as part of Newco’s credit bid in the Section 363
Sale, and to not make any independent bid or take independent action in the
Section 363 Sale; (iii) to use commercially reasonable efforts to support and
accept the Section 363 Sale, (including, without limitation, the support and
acceptance of the Company’s motion to establish bidding procedures and to
approve the terms of the Newco purchase agreement); (iv)  to not change or
withdraw (or cause to be changed or withdrawn) any such vote, support or
acceptances; (v) to not object to, or otherwise commence any proceeding that
opposes or has the effect of opposing or altering the terms of the Section 363
Sale; (vi) to not directly or indirectly seek, solicit, support or encourage any
alternative to the Section 363 Sale; and (vii) not to take any other action not
required by law that is inconsistent with, or that would materially delay,
confirmation or consummation of, the Section 363 Sale.

4.5           Authorization and Approval of and Performance of this
Agreement.  The Investor has duly authorized the execution and delivery of this
Agreement and the transactions contemplated hereby.  The Investor, if an entity,
has all requisite entity-related power and authority to enter into this
Agreement and to consummate the transactions contemplated herein.  The execution
and delivery of this Agreement by the Investor will constitute the legal, valid
and binding obliga­tion of the Investor, enforceable against the Investor in
accordance with their respective terms, except to the extent that such validity,
binding effect and enforceability may be limited by applicable bank­ruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors’
rights gener­ally from time to time in effect and by general equitable
principles.

 
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4.6           Effect of Agreement.  The execution and delivery of this Agreement
by the Investor neither (i) conflicts or will conflict with or results or will
result in a breach of the terms, conditions or provisions of, or constitutes or
will constitute a default under, any of the govern­ing documents or instruments
of the Investor (if the Investor is a corporation, partnership, limited
liability company or trust), or a breach or violation of or default under or
grounds for termi­nation of, or an event which with the lapse of time or notice
could cause a default under or breach or violation of or grounds for termination
of, any note, indenture, mortgage, conditional bill of sale, title retention
agreement or any other agreement or instrument to which the Investor is a party,
or by which the Investor is bound,  nor (ii) violates any federal, state or
local law, statute, rule or other regulation, or order, judgment or other
similar decree of any federal, state or local governmental body, court or
agency.  The delivery by the Investor of its Notes will convey title thereto to
Newco, free and clear of all liens, charges, encumbrances or other restrictions
of any kind or nature.

4.7           Investment Representations.  The Investor is acquiring the Newco
Interests for its own account without a view to any distribution thereof in
violation of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the “Securities Act”).  The Investor represents that it
(a) is an “Accredited Investor” as that term is defined under Rule 501 under the
Securities Act, (b) has no contract, undertaking, agreement or arrangement with
any person (other than as contemplated hereunder) to sell, transfer or pledge to
such person or anyone else the Newco Interests, or any part thereof, (c) has
received any and all information regarding Newco which it has requested in
connection with the exchange and has had an opportunity to ask questions of, and
has received satisfactory answers from Newco (or its representatives) regarding
the terms and conditions of the exchange contemplated hereby, (d) has sufficient
knowledge and experience in business matters to evaluate the merits and risks of
an investment in Newco, (e) has adequate means of providing for its current
needs and possible contingencies, has no need for liquidity of its investment in
Newco, (f) would be able to bear the economic risk of a complete loss of its
investment in the Newco, (g) has not relied on Newco (or any of its officers,
directors, employees, shareholders, partners, advisors, and affiliates (and each
of their respective officers, directors, employees, shareholders, partners,
advisors and affiliates)) for any legal, investment or tax advice, and (h) has
not relied on any representation, warranty or other agreement of Newco (or any
of its officers, directors, employees, shareholders, partners, advisors, and
affiliates (and each of its respective officers, directors, employees,
shareholders, partners, advisors and affiliates)) other than those set forth in
this Agreement.  The Investor acknowledges that Newco is issuing the Newco
Interests in reliance upon the exemption from registration provided in Section
4(2) of the Securities Act or Regulation D promulgated thereunder and is relying
upon these representations and that the Newco Interests may only be transferred
if registered under the Securities Act or pursuant to an exemption from such
registration requirements.  The Investor agrees that the following legend may be
placed on any certificates evidencing its Newco Interests:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.  ANY SUCH TRANSFER
MAY ALSO BE SUBJECT TO APPLICABLE STATE SECURITIES LAWS.”

 
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ARTICLE V

MISCELLANEOUS

5.             Miscellaneous.

5.1           Notices, Etc.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to be duly
given if personally delivered with receipt acknowledged, if mailed by registered
or certified mail, first class, postage prepaid, if delivered by a nationally
recognized overnight courier service or if transmitted by facsimile machine
addressed as follows:

 
(a)
if to Newco:

Sports Medicine Holding Company LLC
c/o Ivy Capital Partners, LLC
One Paragon Drive, Suite 125
Montvale, NJ 07645
Attention: Robert W. Pangia
Telecopy:  [__]

with a copy to:

DLA Piper LLP (US)
1251 Avenue of the Americas, 27th Floor
New York, NY 10020
Attention: Jamie Knox, Esq.
Telecopy: 212.884.8692

or to such other address or such other person(s) as Newco may designate by
written notice to the other parties hereto, or

 
(b)
if to the Company to:

ReGen Biologics, Inc.
411 Hackensack Avenue
Hackensack, NJ  07601
Attention: Gerald E. Bisbee, Jr., Ph.D.
Telecopy: 201.651.5141

with a copy to:

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

(c)            if to the Investor, to the address as set forth set forth next to
its name on the signature page hereto.

 
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5.2           Further Assurances.  Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be reasonably necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby.  Each party agrees to cooperate with the others in the preparation and
filing of all forms, notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any applicable law in connection with
the transactions contemplated by this Agreement.

5.3           Entire Agreement.  This Agreement and the other documents
delivered on the date hereof pursuant hereto, contain the entire understanding
of the parties in respect of its subject matter and supersede all prior
agreements and understandings between the parties with respect to such subject
matter.

5.4           Expenses; Taxes.  The parties shall pay their own fees and
expenses, including their own counsel fees, incurred in connection with this
Agreement or any transaction contemplated hereby.

5.5           Amendment; Waiver.  This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by the parties’ written
instrument.  No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege.  No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts.  The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.

5.6           Binding Effect; Assignment.  This Agreement shall bind and inure
to the benefit of each of the parties hereto and the respective successors and
permitted assigns of each of the parties and shall bind all persons who become
bound as a debtor to this Agreement.

5.7           Counterparts; Facsimile Signature.  This Agreement may be executed
by facsimile signature and in any number of counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument.

5.8           Headings.  The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.

5.9           Governing Law; Jury Trial Waiver.  This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of New York, without regard to principles of conflicts of
law.  Jurisdiction shall lie in the State of New York.  THE UNDERSIGNED
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT
MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT
OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR
AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.
 
 
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5.10         Severability.  The parties stipulate that the terms and provisions
of this Agreement are fair and reasonable as of the date of this
Agreement.  However, if any provision of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.  If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, activity or subject, it shall be
construed by limiting, reducing or defining it, so as to be enforceable.

5.11         Full Performance.  The Company’s obligations, covenants and
representations under this Agreement are fully performed as of the date of this
Agreement and shall continue in full force and effect without further action on
the part of the Company.

 [Signature page to follow]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

  SPORTS MEDICINE HOLDING COMPANY LLC              
By:
         
Name:
         
Title:
 

 
 

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  REGEN BIOLOGICS, INC.              
By:
         
Name:
         
Title:
 

 
 
 

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NAME OF INVESTOR:
 
ADDRESS FOR NOTICES (Please Print):
                       
SIGNATURE:
         
Attention:
 
By:
   
Telecopy:
   
Name:
 
Phone:
   
Title:
 
Email Address:
       
Tax Identification #: 
 

 
 

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