ex10_6.htm


    
      

    

    Exhibit
10.6

    
       

      EMPLOYMENT
AGREEMENT

       

      This Employment Agreement (“Agreement”)
is entered into this 16th
day of February 2009, by and between James Flounlacker (the “Executive”) and
ReGen Biologics, Inc. (“ReGen” or the “Company”).

       

      WHEREAS, the Company wishes to retain
the services of Executive; and

       

      WHEREAS, the Executive desires to be
employed by the Company;

       

      NOW, THEREFORE, in consideration of the
promises and mutual agreements made herein, the sufficiency of which the parties
expressly acknowledge, and intending to be legally bound hereby, the Company and
Executive agree as follows:

       

      1.      Employment
Term.  The Company shall employ the Executive for a one-year
term beginning on February 16, 2009 (“Effective Date”).  Thereafter,
this Agreement will automatically renew for one-year terms, unless either party
provides the other party with ninety (90) days advance written notice of the
parties’ intent not to renew.

       

      2.      Employment
Duties.  Executive will serve in a full-time capacity as Senior
Vice President of Administration of the Company.  Executive shall be
responsible for the following activities of the Company: management,
coordination or oversight of key objectives, projects and processes, including
but not limited to coordination of the implementation of the sales strategy and
plan for the Company’s products in the United States, and other duties as
assigned by the Chief Executive Officer or his designee.  Executive
shall report directly to the Chief Executive Officer.

       

      3.      Compensation.

       

      (a)   
   The Company
shall pay Executive a base salary of $230,000 per annum, to be paid in
approximately equal bi-weekly installments, minus regular payroll
withholdings.  The Compensation Committee of the Board of Directors
shall review Executive’s base salary at the beginning of each calendar year
during its annual compensation review.  Such compensation may be
adjusted by the Company by mutual agreement with Executive at such annual
reviews.  Executive shall receive a $40,000 signing bonus, to be paid
in full along with the Company’s first payroll disbursed after the Effective
Date of this Agreement.  Executive shall also be eligible to receive
an annual performance bonus of up to 25% of his annual base salary, subject to
the achievement of defined goals and objectives.   Annual bonuses
are intended as incentive payments, and will not be paid after the termination
of Executive’s employment with the Company.

       

      (b)       Executive shall also be
entitled to an initial stock option grant of 110,000 shares of the Company’s
common stock vesting in equal installments over the first four years of his
employment by the Company, as well as a grant of 20,000 restricted shares of the
Company’s common stock, which shall become fully vested and unrestricted as of
December 31, 2009.  Both such grants shall be subject to the terms of
a separate stock option and grant agreement to be entered into between Executive
and the Company.

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      4.      Benefits.

       

      (a)           Executive
will be entitled during the term of this Agreement to such paid vacation, paid
holidays, and sick leave benefits as such benefits are provided by the Company
pursuant to the Company’s standard policies.  Additionally, Executive
shall be entitled during the term of this Agreement, and pursuant to the terms
of the individual benefit policies (including any eligibility requirements), to
(i) the Company’s standard health and disability benefits, (ii) participation in
the Company’s 401(k) program, and (iii) any other benefits that may be
customarily provided from time to time by the Company to its
employees.

       

      (b)           The
Company shall reimburse Executive for all documented reasonable expenses
incurred in connection with the performance of his duties under the Agreement
pursuant to the Company’s standard business expense reimbursement
policies.

       

      (c)           The
Company shall provide Executive during the Term of this Agreement the same level
of coverage of directors and officers liability insurance that the Company
extends to its other officers and directors.  In addition, Company
shall indemnify and hold Executive harmless from any and all claims, demands,
judgments, damages and attorneys’ fees resulting from his actions in the
performance of his duties under this Agreement on behalf of the Company to the
extent provided in the “Indemnification Agreement” attached hereto as Exhibit A, which
shall be executed by the Company and Executive simultaneously with the execution
of this Agreement.

       

      5.      Termination.

       

      (a)           For
Cause.  Notwithstanding any other provision of this Agreement,
the Company may terminate Executive’s employment for cause at any time without
notice.  For purposes of this Agreement, “cause” shall mean the
Executive’s (i) commission of an action having a material adverse effect on the
Company which constitutes an act of fraud, dishonesty, or moral turpitude, or
which, if proven in a court of law, would constitute a violation of a criminal
code or other law; (ii) divulging or using for a non-Company purpose the
Company’s Confidential Information (as such term is defined in Section 8); (iii)
commission of any act of discrimination or harassment; (iv) use of alcohol or
drugs that interferes with the performance of Executive’s duties or (v) material
breach of any duty or obligation of the Executive to the Company where such
failure is not corrected within thirty (30) days after Executive receives
written notice thereof, and an opportunity to cure (to the extent
curable).  Should the Company determine that such “cause” exists, it
may terminate Executive’s employment immediately.  Should the Company
terminate Executive’s employment pursuant to this Section 5(a), the Company’s
obligations under this Agreement shall cease, and except as required by
applicable law, Executive shall forfeit all rights to receive any other
compensation or benefits under this Agreement, except that he shall be entitled
to his base salary, minus regular payroll withholdings, for services rendered
through the effective date of termination.

       

      
        
           


        

        
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      (b)           Without
Cause.  Notwithstanding any other provision of this Agreement,
the Company may terminate Executive’s employment and this Agreement without
cause by providing Executive ninety (90) days advance written
notice.  In the event of a termination under this Section 5(b),
Executive will continue to receive his base salary, minus regular payroll
withholdings, and Company-paid health and other welfare benefits during the
ninety (90) day notice period and for an additional ninety (90) day period
thereafter.  In addition, Executive shall be entitled to exercise
vested stock options in accordance with their terms (but with an extension of 12
months of the period within which such options must be
exercised).  Solely for purposes of determining the vested percentage
of stock option and restricted stock grants at the time of such termination,
Executive shall be deemed to have continued employment with the Company for six
(6) months beyond the termination date.

       

      (c)    Material Change in
Responsibilities. Notwithstanding any other provision of this Agreement,
should the Company materially reduce Executive’s employment duties as specified
in Section 2 hereof, Executive may provide the Company thirty (30) days written
notice of any objection to such reduction.  The Company shall have
thirty (30) days following receipt of such notice to respond to and cure
Executive’s objection(s).  Should the Company fail to restore
Executive’s responsibilities in full or otherwise satisfy his objections during
this thirty (30) day period, Executive shall be entitled to resign; and such
resignation for purposes of salary and benefit continuation, and vesting, shall
be treated as a termination without cause as defined in Section
5(b).

       

      6.      Termination Due to Change in
Control.

       

      (a)           Defined.  For
purposes of this Agreement, a “change in control” is:  (1) the
purchase or other acquisition by any person, entity or syndicate group of
persons and/or entities within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended, or any comparable successor
provisions, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of forty percent (40%) or more of either the
outstanding shares of common stock or the combined voting power of the Company’s
then outstanding voting securities entitled to vote generally; (2) the approval
by the stockholders of the Company of a reorganization, merger or consolidation,
in each case, with respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than fifty percent (50%) of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company’s then outstanding securities; (3) a
liquidation or dissolution of the Company; or (4) the sale of all or
substantially all of the Company’s assets.

       

      (b)           In
the event that a change in control results in an involuntary termination of
Executive through elimination of his position, Executive shall be entitled to
exercise his stock options and any grants of restricted stock in accordance with
their terms, and to continuation of his salary and Company-provided health and
other welfare benefits for six (6) months as provided in Section
5(b).

       

      
        
           


        

        
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      (c)           In
the event of Executive’s termination pursuant to Section 6(b), Executive may, at
his sole option, elect to receive payment of six (6) months salary in the form
of a lump sum distribution, less applicable withholdings, which shall be payable
within twenty (20) days of the effective date of his termination.

       

      7.      Disability.  The
Company may terminate the employment of Executive in the event that he becomes
disabled during the term of this Agreement.  Executive shall be
considered “disabled” within the meaning of this Section if he is unable as a
result of accident or illness (physical or mental) to perform the material
duties of his position for a period of six (6) consecutive
months.  Executive’s termination pursuant to this Section shall be
treated as a termination without cause as defined in Section 5(b).

       

      8.      Confidentiality.  In
the course of performing his duties under this Agreement, Executive will have
access to “Confidential Information.”  Executive agrees and
acknowledges that this Confidential Information constitutes a valuable and
unique asset of the Company, and that its protection is of critical importance
to the Company.  To ensure that such Confidential Information is not
disclosed or divulged to third persons, Executive agrees:

       

      (a)           that
Confidential Information is owned by the Company, and is to be held by Executive
in trust and solely for the benefit of the Company;

       

      (b)           that
he shall not in any way utilize such Confidential Information for the gain or
advantage of Executive or others to the detriment of the Company;
and

       

      (c)           that
upon termination of this Agreement, he shall promptly return any and all such
Confidential Information to the Company, and shall thereafter without limitation
continue to abide by the confidentiality provisions of this
Section.

       

      For purposes of this Agreement,
“Confidential Information” shall include, but not be limited to, information
that has been created, discovered, developed or otherwise become known to the
Company and/or in which property rights have been assigned or otherwise conveyed
to the Company, which information has commercial value in the business in which
the Company is at the time engaged or in which it has an identified plan to be
engaged.  By way of illustration, but not limitation, Confidential
Information includes trade secrets, processes, structures, formulas, data and
know-how, improvements, inventions, product concepts, techniques, marketing
plans, strategies, forecasts, customer lists and information about the Company’s
employees, and/or consultants.

       

      Executive further agrees that he will
execute the Company’s proprietary information and invention agreement as a
condition of his employment.

       

      
        
           


        

        
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      9.      Non-Solicitation.

       

      (a)           Executive
agrees that during any term of this Agreement and for a six (6) month period
following any termination of this Agreement, he will not, directly or
indirectly, without the prior written consent of the Company, solicit or attempt
to solicit business similar to that provided by the Company from any individual
or entity that was a customer of the Company at any time during the six (6)
month period immediately prior to Executive’s termination of employment by the
Company.

       

      (b)           Executive
agrees that during the term of this Agreement and for a twelve (12) month period
following any termination of this Agreement (hereinafter referred to as the
“Employee Solicitation Period”), he will not, directly or indirectly, without
the prior written consent of the Company, solicit or induce any employee,
contractor or consultant of the Company to leave their position with the Company
to work for Executive or another employer or benefactor of Executive, or hire
for any purpose any such employee, contractor or consultant of the
Company.

       

      10.           Notices.  Any
notice or communication under this Agreement will be in writing and sent by
registered or certified mail addressed to the respective parties as
follows:

       

       

      
        	
                 
      

              	
                If
      to the Company:

              	
                Chief
      Executive or Chief Financial
Officer

              


      

      
        	
                 
      

              	
                ReGen
      Biologics, Inc.

              


      

      
        	
                 
      

              	
                411
      Hackensack Avenue

              


      

      
        	
                 
      

              	
                Hackensack,
      NJ 07601

              


      

      


      
        	
                 
      

              	
                If
      to the Executive:

              	
                James
      Flounlacker

              


      

      
        	
                 
      

              	
                907
      Country Club Drive

              


      

      
        	
                 
      

              	
                Vienna,
      VA 22180

              


      

      


       

      Executive
shall in such manner notify the Company of any change in his address above, and
thereafter, the Company shall forward any notices under this Agreement to
Executive at such new address.

       

      11.           Entire
Agreement.  This Agreement embodies the entire agreement of the
Parties relating to Executive’s employment and supersedes all prior agreements,
oral or written relating to this subject matter.  No amendment or
modification of this Agreement shall be valid or enforceable unless made in
writing and signed by both parties.

       

      12.           Governing
Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.

       

      
        
           


        

        
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      13.           Severability.  Should
one or more of the provisions of this Agreement be held invalid or unenforceable
by a court of competent jurisdiction, such provisions or portions thereof shall
be ineffective only to the extent of such invalidity or unenforceability, and
the remaining provisions of this Agreement or portions thereof shall
nevertheless be valid, enforceable and remain in full force and
effect.

       

      14.           §409A
Compliance.  The parties to this Agreement intend that no
benefit hereunder shall be treated as nonqualified deferred compensation for
purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and
agree that this Agreement shall be so interpreted.

       

      15.           Assignment.  This
Agreement shall be upon the parties and their respective heirs, representatives,
successors and assigns, and shall run to the benefit of the parties and their
respective heirs, representatives, successors and assigns.

       

       

      
        
          
            
              
                
                  
                    	
                            EXECUTIVE:

                          	 
      	
                            REGEN
      BIOLOGICS, INC.:

                          
	 	 	 
	
                            /s/
      James Flounlacker

                          	 
      	
                            /s/Brion
      D. Umidi

                          
	
                            James
      Flounlacker

                          	 
      	By:  	
                            Brion
      D. Umidi

                          
	 
      	 
      	Its:
      	
                            SVP
      and CFO

                          
	
                            April
      30, 2009

                          	 
      	
                            April
      30, 2009

                          
	
                            Date

                          	 
      	
                            Date

                          


                  

                

              

            

          

        

      

       

      
        
           


        

        
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      Exhibit
A

       

      Indemnification
Agreement

       

       

    

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