exv10w5



 


Exhibit 10.5



     THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS.


REGEN BIOLOGICS, INC.



COMMON STOCK PURCHASE WARRANT



     This certifies that, for good and valuable consideration, ReGen Biologics,
Inc., a Delaware corporation (the “Company”), grants to Vail Securities
Investment, Inc. or registered assigns (the “Warrantholder”), the right to
subscribe for and purchase from the Company 100,000 validly issued, fully paid
and nonassessable shares (the “Warrant Shares”) of the Company’s Common Stock,
par value $0.01 per share (the “Common Stock”), at the purchase price per share
of $0.4481(the “Exercise Price”), from time to time, prior to 5:00PM Eastern
Standard Time on September 23, 2009 (the “Expiration Date”), all subject to
the terms, conditions and adjustments herein set forth. Capitalized terms
shall have the meanings set forth in Section 10 of this Warrant.


Certificate No.:      Vail Securities Investment, Inc.


Number of Warrant Shares: 100,000


Name of Warrantholder: Vail Securities Investment, Inc.


 






 



	 	1.	 	Duration and Exercise of Warrant; Limitation on Exercise; Payment of Taxes.



          1.1. Duration and Exercise of Warrant. Subject to the terms and
conditions set forth herein, the Warrant may be exercised, in whole or in part,
by the Warrantholder by:



               (a)     the surrender of this Warrant to the Company, with a duly executed
Exercise Form specifying the number of Warrant Shares to be purchased, during
normal business hours on any Business Day prior to the Expiration Date; and



               (b)     the delivery of payment to the Company, for the account of the
Company, by cash, by wire transfer of immediately available funds or by
certified or bank cashier’s check, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. The Company agrees that such Warrant Shares shall be deemed
to be issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid (or as
provided in Section 1.2 below).



          1.2. Conversion Right (Cashless Exercise).



               (a)     In lieu of the payment of the Exercise Price, the Warrantholder shall
have the right (but not the obligation), to require the Company to convert this
Warrant, in whole or in part, into shares of Common Stock (the “Conversion
Right”) as provided for in this Section 1.2. Upon exercise of the Conversion
Right, the Company shall deliver to the Warrantholder (without payment by the
Warrantholder of any of the Exercise Price; provided, however, that the
Warrantholder shall be required to pay the par value for any shares of Common
Stock so delivered) that number of shares of Common Stock equal to the quotient
obtained by dividing (i) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the aggregate Exercise Price in
effect immediately prior to the exercise of the Conversion Right from the
aggregate Fair Market Value for the shares of Common Stock issuable upon
exercise of the Warrant immediately prior to the exercise of the Conversion
Right) by (ii) the Fair Market Value of one share of Common Stock immediately
prior to the exercise of the Conversion Right.



               (b)     The Conversion Right may be exercised by the Warrantholder on any
Business Day prior to the Expiration Date by delivering the Warrant
Certificate, together with a duly executed Exercise Form (with the conversion
section completed), to the Company, exercising the Conversion Right and
specifying the total number of shares of Common Stock the Warrantholder will be
issued pursuant to such conversion.



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               (c)     Fair Market Value of a share of Common Stock as of a particular date
(the “Determination Date”) shall mean:




		
	 	     (i)     If the Common Stock is listed on a national securities exchange,
then the Fair Market Value shall be the average of the last ten (10)
Daily Sales Prices (as hereinafter defined) of the Common Stock on the
principal national securities exchange on which the Common Stock is
listed or admitted for trading on the last ten (10) Business Days prior
to the Determination Date, or if not listed or traded on any such
exchange, then the Fair Market Value shall be the average of the last ten
(10)Daily Sales Prices of the Common Stock on the National Market (the
“National Market”) of the National Association of Securities Dealers
Automated Quotations System (“Nasdaq”) on the last ten (10) Business Days
prior to the Determination Date. The “Daily Sales Price” shall be the
closing price of the Common Stock at the end of each day; or




		
	 	     (ii)     If the Common Stock is not so listed or admitted to unlisted
trading privileges or if no such sale is made on at least nine (9) of
such days, then the Fair Market Value shall be the higher of (x) the Book
Value per share and (y) the fair value as reasonably determined in good
faith by the Company’s Board of Directors or a duly appointed committee
of the Board of Directors (which determination shall be described in
detail in the written notice delivered to the Warrantholder together with
the Common Stock certificates). If the Warrantholder objects to the fair
value determined by the Company’s Board of Directors pursuant to clause
(y) above, the Warrantholder shall have the right to appoint an
independent appraiser (mutually consented to by the Company, such consent
not to be unreasonably withheld) to determine the fair value. The
independent appraiser shall be a nationally recognized investment banking
firm or nationally recognized expert experienced in the valuation of
companies engaged in the business conducted by the Company. The
determination of such independent appraiser as to the fair value shall be
controlling. The fees and expenses of the independent appraiser shall be
paid by the Company unless the fair value determined by the Company’s
Board of Directors equals or exceeds the fair value determined by the
independent appraiser.



          1.3. Limitations on Exercise. Notwithstanding anything to the contrary
herein, this Warrant may be exercised only upon the delivery to the Company of
any certificates or other documents reasonably requested by the Company to
satisfy the Company that the proposed exercise of this Warrant may be effected
without registration under the Securities Act.



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          1.4. Warrant Shares Certificate. A stock certificate or certificates for
the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within ten (10) Business Days after receipt of the Exercise Form
and, if such exercise is not
pursuant to Section 1.2, receipt of payment of the purchase price. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the stock certificate or certificates, deliver to the
Warrantholder a new Warrant evidencing the rights to purchase the remaining
Warrant Shares, which new Warrant shall in all other respects be identical to
this Warrant.



          1.5. Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the
Warrantholder shall be required to pay any and all taxes which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then Warrantholder as reflected
upon the books of the Company.



          1.6. Divisibility of Warrant; Transfer of Warrant.



               (a)     Subject to the provisions of this Section 1.6, this Warrant may be
divided into warrants of one thousand (1,000) shares or multiples thereof, upon
surrender at the principal office of the Company, without charge to any
Warrantholder. Upon such division, the Warrants may be transferred of record
as the then Warrantholder may specify without charge to such Warrantholder
(other than any applicable transfer taxes). In addition, subject to the
provisions of this Section 1.6, the Warrantholder shall also have the right to
transfer this Warrant in its entirety to any person or entity.



               (b)     Upon surrender of this Warrant to the Company with a duly executed
Assignment Form and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant or Warrants of like
tenor in the name of the assignee named in such Assignment Form, and this
Warrant shall promptly be canceled. Each Warrantholder agrees that prior to
any proposed transfer (whether as the result of a division or otherwise) of
this Warrant, such Warrantholder shall give written notice to the Company of
such Warrantholder’s intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer in sufficient
detail, and, if reasonably requested by the Company, shall be accompanied by a
written opinion of legal counsel, which opinion shall be addressed to the
Company and be reasonably satisfactory in form and substance to the Company’s
counsel, to the effect that the proposed transfer of this Warrant may be
effected without registration under the Securities Act. In addition, the
Warrantholder and the transferee shall execute any documentation reasonably
required by the Company to ensure



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compliance with the Securities Act. The term
“Warrant” as used in this Agreement shall be deemed to include this Warrant and
any Warrants issued in substitution or exchange for this Warrant.



	 	2.	 	Restrictions on Transfer;

Restrictive Legends.



          Except as otherwise permitted by this Section 2, each Warrant shall (and
each Warrant issued upon direct or indirect transfer or in substitution for any
Warrant pursuant to Section 1.6 or Section 4 shall) be stamped or otherwise
imprinted with a legend in substantially the following form:




		
	 	     THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS.



Except as otherwise permitted by this Section 2, each stock certificate for
Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:



		
	 	     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY
BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.



          Notwithstanding the foregoing, the Warrantholder may require the Company
to issue a Warrant or a stock certificate for Warrant Shares, in each case
without a legend, if: (i) such Warrant or such Warrant Shares, as the case may
be, have been registered for resale under the Securities Act, (ii) the
Warrantholder has delivered to the Company an opinion of legal counsel, which
opinion shall be addressed to the Company and be reasonably satisfactory in
form and substance to the Company’s counsel, to the effect that such
registration is not required with respect to such Warrant or such Warrant
Shares, as the case may be, or (iii) such Warrant or Warrant Shares, as the
case may be, may be sold without restriction (including, without limitation, as
to volume) pursuant to Rule 144.



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     3.     Company Representations, Warranties and Covenants.


     The Company hereby represents, warrants, covenants and agrees as follows:


          3.1. All Warrant Shares which are issued upon the exercise of this Warrant
will, upon issuance, be validly issued, fully paid, and nonassessable, not
subject to any preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the issue thereof,
other than taxes with respect to any transfer occurring contemporaneously with
such issue;



          3.2. During the period within which this Warrant may be exercised, the
Company will at all times have authorized and reserved, and keep available free
from preemptive rights, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant;



          3.3. The Company will, from time to time, take all such action as may be
required to assure that the par value per share of the Warrant Shares is at all
times equal to or less than the then effective Exercise Price;



          3.4. The Company shall not, by amendment of its certificate of
incorporation or through any reorganization, transfer of assets, spinoff,
consolidation, merger, dissolution, issue or sale of securities or any other
action or inaction, seek to avoid the observance or performance of any of the
terms of this Warrant, and shall at all times in good faith assist in
performing and giving effect to the terms hereof and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of
the Warrantholder against dilution or other impairment;



          3.5. This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting the enforcement of
creditors’ rights;



          3.6. The execution and delivery of this Warrant are not, and the issuance
of the Warrant Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, in violation of the Company’s certificate of
incorporation or bylaws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a material
default under, any material indenture, mortgage, contract or other instrument
of which the Company is a party or by which it is bound or require the consent
or approval of, the giving of notice to, the registration or filing with or



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the
taking of any action in respect of or by, any federal, state or local
government authority or agency (other than such consents, approvals, notices,
actions or filings as have already been obtained or made); and


          3.7. The authorized capital stock of the Company shall consist of (a)
130,000,000 shares of Common Stock, of which [29,070,786] shares are issued
and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01
per share, of which [37,614,799] shares are issued and outstanding. All issued
and outstanding shares of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable, and such shares have been issued
in compliance with all applicable federal and state securities laws.



     4.     Loss or Destruction of Warrant.


     Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of such bond or indemnification as the Company may
reasonably require, and, in the case of such mutilation, upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new
Warrant of like tenor.


     5.     Ownership of Warrant.


     The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.


     6.     Certain Adjustments.


          6.1. The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:



               (a)     Stock Dividends. If at any time after the date of the issuance of
this Warrant (i) the Company shall fix a record date for the issuance of any
stock dividend payable in shares of Common Stock or (ii) the number of shares
of Common Stock shall have been increased by a subdivision or splitup of shares
of Common Stock, then, on the record date fixed for the determination of
holders of Common Stock entitled to receive such dividend or immediately after
the effective date of such subdivision or split up, as the case may be, the
number of shares to be delivered upon exercise of this Warrant will be
increased so that the Warrantholder will be entitled to receive the number of
shares of Common Stock that such Warrantholder would have owned immediately
following such action had this Warrant been



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exercised in full immediately prior
thereto, and the Exercise Price will be adjusted as provided below in paragraph
(g).


               (b)     Combination of Stock. If the number of shares of Common Stock
outstanding at any time after the date of the
issuance of this Warrant shall have been decreased by a combination of the
outstanding shares of Common Stock, then, immediately after the effective date
of such combination, the number of shares of Common Stock to be delivered upon
exercise of this Warrant will be decreased so that the Warrantholder thereafter
will be entitled to receive the number of shares of Common Stock that such
Warrantholder would have owned immediately following such action had this
Warrant been exercised in full immediately prior thereto, and the Exercise
Price will be adjusted as provided below in paragraph(g).



               (c)     Reorganization, Merger, etc. If any capital reorganization of the
Company, any reclassification or recapitalization of the Common Stock, any
consolidation of the Company with or merger of the Company with or into any
other person, or any sale or lease or other transfer of all or substantially
all of the assets of the Company to any other person (each, a “Transaction”),
shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, other securities or assets (whether such stock,
other securities or assets are issued or distributed by the Company or another
person) with respect to or in exchange for Common Stock, then, upon exercise of
this Warrant, the Warrantholder shall have the right to receive the kind and
amount of stock, other securities or assets receivable upon such Transaction by
a holder of the number of shares of Common Stock that such Warrantholder would
have been entitled to receive upon exercise of this Warrant had this Warrant
been exercised in full immediately before such Transaction. The Company shall
execute and deliver to the Warrantholder at least twenty (20) Business Days
prior to effecting such Transaction a certificate setting forth the
Warrantholder’s rights as set forth in the preceding sentence. No Transaction
shall be consummated unless adequate provision (in the reasonable opinion of
the Warrantholder) has been made in the definitive agreement for the
adjustments set forth herein and for the successor entity in any such
Transaction to assume the Company’s obligations hereunder. The provisions of
this Section 6.1(c) shall similarly apply to successive Transactions.



               (d)     Other Dividends and Distributions. If the Company shall, at any time
after the date of issuance of this Warrant, fix a record date to distribute to
all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock) or evidences of its indebtedness or assets (including
all cash dividends or other distributions, whether paid from retained earnings
of the Company or otherwise), then the Warrantholder shall be entitled to
receive, upon exercise of the Warrant, that portion of such distribution to
which it would



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have been entitled had the Warrantholder exercised its Warrant
immediately prior to the date of such distribution. At the time it fixes the
record date for such distribution, the Company shall allocate sufficient
reserves to ensure the timely and full performance of the provisions of this
Section 6.1(d). The Company shall promptly (but in any case no later than five
(5) Business Days prior to the record date of such distribution) mail by first
class, postage prepaid, to the Warrantholder, notice that such distribution
will take place.


               (e)     Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued to any Warrantholder in connection with the exercise of this
Warrant. Instead of any fractional shares of Common Stock that would otherwise
be issuable to such Warrantholder, the Company will round up any fractional
shares to the nearest whole number of shares if the fraction is .5 or above and
round down if the fraction is below .5.



               (f)     Carryover. Notwithstanding any other provision of this Section 6, no
adjustment shall be made to the number of shares of Common Stock to be
delivered to the Warrantholder (or to the Exercise Price) if such adjustment
represents less than 1% of the number of shares to be so delivered, but any
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of the number of
shares to be so delivered.



               (g)     Exercise Price Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of this Warrant is adjusted as provided in this
Section 6.1 (other than pursuant to Section 6.1(h)), the Exercise Price payable
upon the exercise of this Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise
of the Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares purchasable immediately
thereafter.



               (h)     Adjustment of Number of Warrant Shares Purchasable. Upon any
adjustment of the Exercise Price as provided in this Section 6.1 (other than
pursuant to Section 6.1(g)), the Warrantholder shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest .001 of a share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock purchasable hereunder immediately prior
to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.



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          6.2. Rights Offering. In the event the Company shall effect an offering
of Common Stock pro rata among its stockholders, the Warrantholder shall be
entitled to elect to participate in each and every such offering as if this
Warrant had been exercised immediately prior to each such offering. The
Company shall promptly (but in any case no later than ten (10) Business Days
prior to such rights offering) mail by first class, postage prepaid, to the
Warrantholder, notice that such rights offering will take place.



          6.3. Notice of Adjustments. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments and a certificate of a
firm of independent
public accountants of recognized national standing selected by the Board
of Directors of the Company (who shall be appointed at the Company’s expense
and who may be the independent public accountants regularly employed by the
Company) setting forth in reasonable detail the number of Warrant Shares 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.



          6.4. Notice of Extraordinary Corporate Events. In case the Company after
the date hereof shall propose to (a) distribute any dividend (whether stock or
cash or otherwise) to the holders of shares of Common Stock or to make any
other distribution to the holders of shares of Common Stock, (b) offer to the
holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options,(other
than an offer for which notification is required under Section 6.2) or (c)
effect any reclassification of the Common Stock (other than a reclassification
involving merely the subdivision or combination of outstanding shares of Common
Stock), any capital reorganization, any consolidation or merger (other than a
merger in which no distribution of securities or other property is to be made
to holders of shares of Common Stock), any sale, transfer or other disposition
of all or substantially all of its property, assets and business, or the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall mail to each Warrantholder notice of such proposed action,
which notice shall specify the date on which (i) the books of the Company shall
close, or (ii) a record shall be taken for determining the holders of Common
Stock entitled to receive such stock dividends or other distribution or such
rights or options, or (iii) such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation,
dissolution or winding up shall take place or commence, as the case may be, and
the date, if any, as of which it is expected that holders of record of Common
Stock shall be entitled to receive securities or other property deliverable
upon such




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action. Such notice shall be mailed in the case of any action
covered by clause (a) or (b) above at least ten (10) days prior to the record
date for determining holders of Common Stock for purposes of receiving such
payment or offer, or in the case of any action covered by clause (c) above at
least ten (10) days prior to the date upon which such action takes place and
ten (10) days prior to any record date to determine holders of Common Stock
entitled to receive such securities or other property.


          6.5. Effect of Failure to Notify. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice,
pursuant to Sections 6.4 and 6.5 shall not affect the legality or validity of
the adjustment to the Exercise Price, the number of shares purchasable upon
exercise of this Warrant, or any transaction giving rise thereto.



     7.          Investment Representations and Warranties. The Warrantholder
represents to the Company that (i) the Warrantholder has received adequate
information with respect to all matters it considers material in the
acquisition of this Warrant; (ii) the Warrantholder understands that this
Warrant has not been registered under the Securities Act, and is offered in
reliance on exemptions therefrom based, in part, upon the representations and
warranties contained herein; (iii) the Warrantholder has the requisite
knowledge and experience in financial, tax and business matters and, in
particular, investments in securities, to evaluate the merits and risks of this
Warrant; (iv) the Warrantholder is in a financial position to hold this Warrant
indefinitely and can bear the economic risk of losing its entire investment;
(v) the Warrantholder acknowledges that the Company is a speculative venture
and it is familiar with the nature of and risks attendant to investments of
this type of investment; (vi) the Warrantholder is acquiring this Warrant
solely for the Warrantholder’s own account and not with a view to distribution;
(vii) the Warrantholder is an “accredited investor,” as such term is defined in
Rule 501(a) of Regulation D of the Securities Act; (viii) the Warrantholder
understands that this Warrant is not freely transferable; and (ix) this Warrant
was not offered to the Warrantholder by means of general solicitation.


     8.          Amendments. Any provision of this Warrant may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Holders who hold a majority in interest of the Warrant Shares. Any
amendment or waiver effected in accordance with this Section 8 shall be binding
upon each Holder and the Company.


     9.          Expiration of the Warrant. The right to exercise this Warrant shall
terminate on the Expiration Date. All terms


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of this Warrant applicable to the
Warrant Shares shall survive exercise and/or expiration of this Warrant.


     10.     Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:


     Assignment Form: an Assignment Form in the form annexed hereto as Exhibit
B.


     Book Value: per share of Common Stock as of any date herein shall mean
the Consolidated Net Worth of the Company and its Subsidiaries as of such date
divided by the number of shares of Common Stock outstanding as of such date.


     Business Day: any day other than a Saturday, Sunday or a day on which
national banks are authorized by law to close in the State of New Jersey.


     Common Stock: the meaning specified on the cover of this Warrant.


     Company: the meaning specified on the cover of this Warrant.


     Consolidated Net Worth: as of any date herein specified, the total
consolidated assets of the Company and its Subsidiaries minus the total
consolidated liabilities of the Company and its Subsidiaries (exclusive of any
liabilities associated with this Warrant) as determined from the consolidated
balance sheet of the Company and its Subsidiaries from the most recent fiscal
quarter, which consolidated balance sheet shall be prepared in accordance with
generally accepted accounting principles, shall be in reasonable detail, and
shall be certified as complete and correct by the chief financial or accounting
officer of the Company.


     Conversion Right: the meaning specified in Section 1.2(a).


     Daily Sales Price: the meaning specified in Section 1.2(c)(i)


     Determination Date: the meaning specified in Section 1.2(c).


     Exchange Act: means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to a
comparable section, if any, of any such similar Federal statute.


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     Exercise Form: an Exercise Form in the form annexed hereto as Exhibit A.


     Exercise Price: the meaning specified on the cover of this Warrant.


     Expiration Date: the meaning specified on the cover of this Warrant.


     Fair Market Value: the meaning specified in Section 1.2(c).


     Holder(s): holder(s) of (i) the Warrant Shares and other securities
issued or issuable upon exercise of the Warrants and (ii) any securities issued
or issuable with respect to any Common Stock or other securities referred to in
subdivision (i) by way of stock dividend or stock split or in connection with a
combination or other reorganization or otherwise.


     Nasdaq: the meaning specified in Section 1.2(c)(i).


     National Market: the meaning specified in Section 1.2(c)(i).


     Rule 144: Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit Holders to
sell securities of the Company to the public without registration.


     SEC: the Securities and Exchange Commission or any other Federal agency
at the time administering the Securities Act or the Exchange Act, whichever is
the relevant statute for the particular purpose.


     Securities Act: the meaning specified on the cover of this Warrant, or
any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.


     Transaction: the meaning specified in Section 6.1(c).


     Warrant: the meaning specified in Section 1.6(b).


     Warrantholder: the meaning specified on the cover of this Warrant.


     Warrant Shares: the meaning specified on the cover of this Warrant.


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     11.          Miscellaneous.


          11.1. Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to the Warrants.



          11.2. Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company and the Warrantholder and their
respective heirs, legal representatives, successors and assigns. Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any
person other than the Company and the Warrantholder, or their respective heirs,
legal representatives, successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant.



          11.3. Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.



          11.4. Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.



          11.5. Further Assurances. Each of the Company and the Warrantholder shall
do and perform all such further acts and things and execute and deliver all
such other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Agreement.



          11.6. Notices. All notices and other communications required or permitted
to be given under this Warrant shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by United States mail, postage
prepaid, to the parties hereto at the following addresses or to such other
address as any party hereto shall hereafter specify by notice to the other
party hereto:




	 	 	 	 	 
	 	 	
(a)
	 	if to the Company, addressed to:
	 	 	 	 	 
	 	 	 	 	ReGen Biologics, Inc.
	 	 	 	 	509 Commerce Street, East Wing
	 	 	 	 	Franklin Lakes, NJ 07417
	 	 	 	 	 
	 	 	
(b)
	 	if to the Warrantholder, addressed to:
	 	 	 	 	 
	 	 	 	 	the address of such Warrantholder
	 	 	 	 	appearing on the books of the Company.



14






 



Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, or on the third Business Day after the mailing thereof.


          11.7. Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.



          11.8. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to such
agreements made and to be performed entirely within such State.



          11.9. No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be determined as conferring upon the Warrantholder any rights as
a stockholder of the Company or as imposing any liabilities on the
Warrantholder to purchase any securities whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.



     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.



	 	 	 	 	 
	 	 	REGEN BIOLOGICS, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:



Dated:        , 2003



15






 





Exhibit A


EXERCISE FORM



(To be executed upon exercise of this Warrant)



     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to
purchase
          of the Warrant Shares and
herewith tenders (i) payment for such Warrant Shares to the order of ReGen
Biologics, Inc. in the amount of
$            
or (ii) Warrants to purchase
            shares of Common Stock in order to exercise the Conversion Right (as
defined in Section 1.2 of the Warrant) and payment of the par value for
            of the Warrant Shares, in either case, in accordance with the terms
of this Warrant. The undersigned requests that a certificate for such Warrant
Shares be registered in the name of
              and that such
certificates be delivered to
              
whose address is
                       .




	Dated:	 	 	 
	 	 	
	 





	 	 	 	 	 	 	 
	 	 	
Signature	 	 	 	 
	 	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Print Name)
	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Street Address)
	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(City)
	(State)	(Zip Code)



Signed in the Presence of:








 






 





Exhibit B


ASSIGNMENT FORM



(To be executed only upon transfer of this Warrant)



     For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto
                the
right represented by such Warrant to purchase
               shares of Common
Stock of ReGen Biologics, Inc. to which such Warrant relates and all other
rights of the Warrantholder under the within Warrant, and appoints
                    Attorney to make such transfer on the books of ReGen
Biologics, Inc. maintained for such purpose, with full power of substitution in
the premises.

	Date:	 	 	 
	 	 	
	 




	 	 	 	 	 	 	 
	 	 	
Signature	 	 	 	 
	 	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Print Name)
	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Street Address)
	 	 	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(City)  	(State)	(Zip Code)


Signed in the presence of: