exv10w2



 


EXHIBIT 10.2


REGEN BIOLOGICS, INC.



SERIES C CONVERTIBLE PREFERRED STOCK

PURCHASE AGREEMENT


Dated as of September 30, 2003


 







 


REGEN BIOLOGICS, INC.



SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT



     This Agreement, dated as of September 30, 2003, is entered into by and
among ReGen Biologics, Inc., a Delaware corporation (the “Company”), and
the individuals and entities listed on Exhibit A hereto (each a
“Purchaser” and collectively, the “Purchasers”).


     In consideration of the mutual promises and covenants contained in this
Agreement, the parties agree as follows:


     1. Authorization and Sale of Shares and Warrants.


       1.1 Authorization. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of up to 5,133,451 million shares of
its Series C Convertible Preferred Stock, $0.01 par value per share (the
“Series C Preferred”), having the rights, restrictions, privileges and
preferences set forth in the Certificate of Designations, Preferences and
Rights of Series C Convertible Preferred Stock of the Company attached hereto
as Exhibit B (the “Certificate of Designations”). The Company
has, or before the Closing will have, adopted and filed the Certificate of
Designations with the Secretary of State of the State of Delaware.


       1.2 Sale of Shares and Warrants. Subject to the terms and
conditions of this Agreement, at the Closing the Company will sell and issue to
each of the Purchasers, and each of the Purchasers will purchase from the
Company, (i) the number of shares of Series C Preferred set forth opposite such
Purchaser’s name on Exhibit A for the purchase price of $0.4481 per
share (the “Purchase Price”) such number of shares to be determined by
rounding down any fractional shares to the nearest whole number; and (ii) a
warrant, substantially in the form attached hereto as Exhibit C (a
“Warrant”), to purchase its pro rata portion of an aggregate of 479,967 shares
of common stock, par value $0.01 per share of the Company (the “Common Stock”),
such pro rata portion will be determined according to such Purchaser’s
percentage of participation in the Closing as defined in Section 2 hereof. The
shares of Series C Preferred sold under this Agreement are referred to as the
“Shares.” The Company’s agreement with each of the Purchasers is a
separate agreement, and the sale of Shares to each of the Purchasers is a
separate sale.


     2. The Closing. The closing (the “Closing”) of the sale and
purchase of the Shares under this Agreement shall take place at the offices of
Shaw Pittman LLP, 1650 Tysons Blvd., McLean, Virginia, at such time, date and
place and in such manner, including via facsimile or electronic delivery, as
are mutually agreeable to the Company and the Purchasers, but in no


 







 



event later than September 30, 2003. At the Closing, the Company shall
deliver to each of the Purchasers a certificate for the number of Shares and a
Warrant being purchased at the Closing by such Purchaser, registered in the
name of such Purchaser and a Warrant, against payment to the Company of the
Purchase Price, by wire transfer or other method acceptable to the Company.
The date of the Closing is hereinafter referred to as the “Closing
Date.” The Company may sell up to the balance of the authorized number of
shares of Series C Preferred not sold at the Closing to additional purchasers
at a price not less than $0.4481 per share.



     3. Representations, Warranties and Covenants of the Company.
Except as and to the extent set forth in the Disclosure Schedule delivered to
the Purchasers concurrently herewith, the Company represents and warrants as
follows:


          3.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and corporate authority to carry
on its business as it is now being conducted or is proposed to be conducted,
and to own the properties and assets that it now owns. The Company is duly
qualified and authorized to do business, and is in good standing as a foreign
corporation, in each jurisdiction where the nature of its activities and of its
properties makes such qualification necessary and where a failure to so qualify
would have a material adverse effect on the Company’s business or properties.
Copies of the Company’s original Certificate of Incorporation, as amended and
restated to date (the “Certificate of Incorporation”), and its bylaws,
as amended and restated to date (the “Bylaws”), heretofore delivered to
the Purchasers, are complete and correct copies of such instruments as
presently in effect. The Company has no subsidiaries other than those listed
in Section 3.6 and does not otherwise own or control any equity interest in any
corporation or other business entity.


          3.2 Power and Authority; Enforceability.


               (a) The Company has full corporate power and authority to enter into this
Agreement to issue the Shares and Warrants hereunder and to carry out the
transactions contemplated hereby. The Company and its stockholders have, or by
the Closing will have, taken all action required by law, its Certificate of
Incorporation or its Bylaws to authorize the execution and delivery of this
Agreement, the issuance of the Shares and Warrants pursuant to the terms
hereof, and the consummation of the transactions contemplated hereby. This
Agreement and the Registration Rights Agreement, as defined in Section 5.4,
have been duly executed and delivered by the Company and, assuming the valid
authorization, execution and delivery of this Agreement by the Purchasers, are
valid and binding agreements of the Company, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors, as well as judicial principles respecting
election of remedies or limiting the availability of specific performance,
injunctive relief and other equitable remedies.


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               (b) The Shares, when issued in compliance with the provisions of this
Agreement, and the shares of Common Stock issuable upon conversion of the
Series C Preferred and exercise of the Warrants (the “Underlying Shares”), when
issued upon such conversion in accordance with the terms of the Certificate of
Incorporation (i) will be validly issued, fully paid and nonassessable, and
(ii) will be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the holders thereof through no action
of the Company; provided, however, that the Shares and the
Underlying Shares will be subject to restrictions on transfer under state
and/or federal securities laws. There are no rights of first refusal held by
any stockholders of the Company with respect to the issuance of the Shares.
The Shares are not subject to any preemptive rights.


          3.3 No Conflicts or Violation. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
will violate any provision of the Certificate of Incorporation or the Bylaws,
or violate or be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of or accelerate the performance required by, or
cause the acceleration of the maturity of any debt or obligation pursuant to,
or result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of the Company under, any agreement or
commitment to which the Company is a party or by which the Company is bound, or
to which the property of the Company is subject, which would materially
adversely affect the financial condition of the Company, or, to the best
knowledge of the Company, violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority.


          3.4 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for the compliance with notice filing
and other requirements under federal and applicable state securities laws,
which compliance will have occurred within the appropriate time periods
therefor.


          3.5 Capitalization. At the Closing, the authorized capital stock
of the Company will consist of 117,900,000 shares of Common Stock, and
60,000,000 shares of preferred stock (the “Preferred Stock”), of which
15,298,351 shares will have been designated Series A Convertible Preferred
Stock (the “Series A Stock”), of which 15,298,351 shares are
outstanding, 30,000,000 shares of which will have been designated as the Series
C Preferred, of which 17,112,702 shares are outstanding. All currently issued
and outstanding shares have been issued in compliance with applicable state and
federal securities laws. As of the Closing, the Company has reserved for
issuance, pursuant to its currently active Stock Option Plans, 8,450,000 shares
of Common Stock and has reserved for issuance pursuant to its currently
inactive Stock Option Plans 8,443,528 shares of Common Stock. As of the
Closing, there are


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outstanding options and warrants to purchase 12,791,540 and 7,273,554 shares of
Common Stock, respectively. Except as contemplated herein, or as set forth on
Section 3.5 of the Disclosure Schedule, (i) there are no commitments as
of the date hereof pursuant to which the Company is or may become obligated to
issue any of its capital stock, (ii) there are no preemptive or similar rights
to purchase or otherwise acquire from the Company any shares of capital stock
pursuant to any provision of law, the Certificate of Incorporation or Bylaws of
the Company, or any agreement to which the Company is a party or otherwise, and
(iii) there is no agreement, restriction or encumbrance with respect to the
sale or voting of any outstanding shares of the Company’s capital stock.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby will result in any antidilution adjustment
for the holders of the Company’s capital stock or for the holder of any options
or warrants to acquire shares of the Company’s capital stock.



          3.6 Subsidiaries. The Company is the sole holder of the issued and
outstanding shares of capital stock of RBio, Inc. and MetaContent, Inc. (each a
“Subsidiary” and collectively, the “Subsidiaries “), and the Company holds of
record and beneficially owns all of the capital stock of each Subsidiary free
and clear of any hypothecation, assignment, deposit arrangement, Lien,
preference, priority or other security agreement, warrant, attachment, right of
first refusal, preemptive right, conversion, put, call or other restriction on
transfer (other than restrictions imposed by federal and state securities
laws), or preferential arrangement of any kind or nature whatsoever. There are
no proxies, voting rights, stockholders agreements or other agreements or
understandings with respect to the voting or transfer of the capital stock of
the Subsidiaries. There are no commitments pursuant to which any Subsidiary is
or may become obligated to issue any of its capital stock.


          3.7 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any material liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) of the type that would be required
to be set forth on financial statements in accordance with GAAP, which are not
fully reflected on the financial statements which are a part of the Company’s
annual report on Form 10K/A for the year ended December 31, 2002, filed with
the commission on April 14, 2003 or the financial statements which are a part
of the quarterly report on Form 10-Q for the quarter ended June 30, 2003, filed
with the Commission on August 14, 2003 (collectively, the “Financial
Statements”) and there are no undisclosed loss contingencies (as such term is
used in Statement of Financial Accounting Standards No. 5 (“Statement No.
5”) issued by the Financial Accounting Standards Board in March, 1975)
which are not adequately provided for in the Financial Statements as required
by Statement No. 5.


          3.8 Absence of Changes. Except as set forth in Section 3.8
of the Disclosure Schedule, since June 30, 2003, there has not been (a) any
material adverse change in the financial condition, results of operations,
assets, liabilities or business of the Company or any Subsidiary, (b) any
material increase in the liabilities or obligations of the Company or any


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Subsidiary of any nature whatsoever (contingent or otherwise), (c) any asset or
property of the Company or any Subsidiary made subject to a lien of any kind,
(d) any waiver of any valuable rights of the Company, or the cancellation of
any debts or claims held by the Company or any Subsidiary, (e) any payment of
dividends on, or other distributions with respect to, or any direct or indirect
redemption or acquisition of, any shares of the capital stock of the Company or
any Subsidiary, or any agreement or commitment therefor, (f) any issuance of
any stock, bonds or other securities of the Company or any Subsidiary other
than pursuant to or in connection with transactions described herein or
contemplated by this Agreement, (g) any mortgage, pledge, sale, assignment or
transfer of any tangible or intangible assets of the Company or any Subsidiary,
(h) any loan by the Company or any Subsidiary to any officer, director,
employee or stockholder of the Company or any Subsidiary, or any agreement or
commitment therefor, (i) any damage, destruction or loss (whether or not
covered by insurance) adversely affecting the assets, property or business of
the Company or any Subsidiary, (j) any extraordinary increase in the aggregate
amount of salaries or other compensation paid or payable to employees or agents
of the Company or any Subsidiary, (k) any change in the accounting methods or
practices followed by the Company or any Subsidiary or any theretofore adopted,
(l) any capital expenditure in excess of US $75,000, or (m) any commitments
with respect to any of the foregoing.



          3.9 Encumbrances. Except as set forth in Section 3.9 of the
Disclosure Schedule, the Company or its Subsidiaries own outright all the
property and assets, real, personal or mixed, tangible or intangible, reflected
in the Financial Statements, or not so reflected because not required to be
reflected but which are used or useful in the business of the Company or its
Subsidiaries, or acquired by the Company or any Subsidiary since June 30, 2003
(in each case other than assets disposed of in the ordinary course of business
since June 30, 2003), subject to no mortgages, liens, security interests,
pledges, charges or other encumbrances of any kind.


          3.10 Litigation. There is no action, suit, customer claim,
proceeding or investigation at law or in equity, or by or before any
governmental instrumentality or other agency, now pending or threatened against
or affecting the Company or any Subsidiary nor, to the best knowledge of the
Company, does there exist any basis for any such pending or threatened action,
suit, customer claim, proceeding or investigation. Neither the Company nor any
of its Subsidiaries is a party to or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or governmental agency or
instrumentality.


          3.11 No Defaults. As of the date hereof, neither the Company nor
any of its Subsidiaries is in default (a) under its Certificate of
Incorporation as currently in effect or Bylaws, (b) under any indenture,
mortgage, lease, purchase or sales order or any other contract, agreement or
instrument to which the Company or any Subsidiary is a party or by which it is
bound, or any order, writ, injunction, judgment or decree of any court or
governmental agency or instrumentality. There exists no condition, event or
act which constitutes, or which after notice or lapse of time or both would
constitute, a default under any of the foregoing.


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          3.12 Compliance with Laws. To the best of its knowledge, the
Company and each of its Subsidiaries is in compliance with laws, rules,
ordinances, governmental regulations and orders of all governmental authorities
and/or jurisdictions currently applicable to the conduct of its business as
conducted or proposed to be conducted and has all permits, licenses,
certificates and authorizations required for the conduct of such business.


          3.13 Title to Properties and Assets; Liens, Etc. The Company and
each of its Subsidiaries has good and marketable title to its material
properties and assets, and has good title to all its leasehold interests, in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than for taxes not yet due or payable or as set forth in the Financial
Statements or the notes thereto or in Section 3.13 of the Disclosure
Schedule.


          3.14 Copyrights, Patents and Other Intangible Assets.


               (a) Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the Company nor its Subsidiaries is obligated to make any payments by
way of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any patent, trademark, proprietary process, trade name, copyright
or other intangible asset, with respect to the use thereof or in connection
with its business as currently conducted or as proposed to be conducted or
otherwise and it has not granted any licenses or manufacturing publication or
production rights with respect to its business as currently conducted or as
proposed to be conducted.


               (b) Except as set forth in Section 3.14 of the Disclosure Schedule,
the Company and each of its Subsidiaries owns or has the right to use, free and
clear of all liens, claims and restrictions, all patents, trademarks,
proprietary processes, service marks, trade names, copyrights (and licenses
with respect to the foregoing) necessary to its business as now conducted and
as proposed to be conducted. Such rights are described in Section 3.14
of the Disclosure Schedule and may be used in the conduct of its business as
now conducted or as proposed to be conducted without, to the best of the
Company’s or applicable Subsidiary’s knowledge, infringing upon or otherwise
acting adversely to the right or claimed right of any person under or with
respect to any of the foregoing.


               (c) Each employee of the Company and its Subsidiaries has signed a
proprietary information agreement, each of which agreements will be in full
force and effect as of the Closing. Neither the Company nor any of its
Subsidiaries, after reasonable investigation, is aware that any of its
employees is or will be in violation thereof, and the Company and each of its
Subsidiaries will use its best efforts to prevent any such violation.


               (d) Neither the Company nor any of its Subsidiaries has received any
communications alleging that the Company or any Subsidiary has violated or, by
conducting its


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business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity, nor is the Company or any Subsidiary aware of any
third party violation of any of the Company’s patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights.
Except as set forth in Section 3.14 of the Disclosure Schedule, neither
the Company nor any of its Subsidiaries is aware that any of its employees (or
any person whom the Company or any Subsidiary presently intends to hire) is
obligated under any contract (including licenses, covenants or commitments of
any nature) or agreement, or subject to any judgment, decree or order of any
court or administrative agency, that would conflict with his obligation to use
such employee’s best efforts to promote the interests of the Company or any
Subsidiary.



               (e) Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the carrying on of the Company’s business or any Subsidiary’s business
by the employees of the Company or any Subsidiary (or persons whom the Company
presently intends to hire), nor the conduct of the Company’s or any
Subsidiary’s business as currently conducted or as proposed to be conducted,
will, to the Company’s or any Subsidiary’s knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such persons is
now obligated. Except as set forth in Section 3.14 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries believe it is or will
be necessary to utilize any inventions of any of its employees (or persons it
currently intends to hire) made or owned prior to their employment by the
Company or any Subsidiary or that it is or will be necessary to utilize any
other assets or rights of any of its employees (or persons it currently intends
to hire) made or owned prior to their employment with the Company or any
Subsidiary in violation of any limitations or restrictions to which any such
person is a party or to which any of such assets or rights may be subject.


          3.15 Material Agreements. Except as set forth in Section
3.15 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any written or oral contract not made in the
ordinary course of business and, whether or not made in the ordinary course of
business, neither the Company nor any of its Subsidiaries is a party to any
written or oral (a) contract with any labor union; (b) contract for the future
purchase of fixed assets or for the future purchase of materials, supplies or
equipment in excess of US $75,000 per year; (c) contract for the employment of
any officer, individual employee or other person on a full-time basis (other
than an at-will employment contract) or any contract with any person on a
consulting basis; (d) bonus, pension, profit-sharing, retirement, stock
purchase, stock option, hospitalization, medical insurance or similar plan,
contract or understanding in effect with respect to employees or any of them or
the employees of others; (e) agreement or indenture relating to the borrowing
of money or to the mortgaging, pledging or otherwise placing a lien on any
assets of the Company or any of its Subsidiaries; (f) guaranty by the Company
or any of its Subsidiaries of any obligation for borrowed money or otherwise;
(g) lease or agreement under which the Company or any of its Subsidiaries is
lessee of or holds or operates any property, real


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or personal, owned by any other party; (h) lease or agreement under which the
Company or any of its Subsidiaries is lessor of or permits any third party to
hold or operate any property, real or personal, owned or controlled by the
Company or any of its Subsidiaries; (i) agreement or other commitment for
capital expenditures; (j) contract, agreement or commitment under which the
Company or any of its Subsidiaries is obligated to pay any brokers fees,
finder’s fees or any such similar fees to any third party; (k) contract,
agreement or commitment under which the Company or any of its Subsidiaries has
issued, or may become obligated to issue any shares of capital stock of the
Company or any of its Subsidiaries , or any warrants, options, convertible
securities or other commitments pursuant to which the Company or any of its
Subsidiaries is or may become obligated to issue any of its securities except
as are referred to in this Agreement; or (1) any other contract, agreement,
arrangement or understanding which is material to the business of the Company
or any of its Subsidiaries or which is material to, and which a prudent
investor would need to review in order to make, an informed investment decision
with respect to the purchase of the Shares hereunder.



          3.16 Registration Rights; Co-Sale Rights. Except as set forth in
the Section 3.16 of the Disclosure Schedule, neither the Company nor any
of its Subsidiaries is under any contractual obligation to register for sale
under the Securities Act of 1933, as amended (the “Act”), any of its
presently outstanding securities or any of its securities which may hereafter
be issued. Assuming the accuracy of the Purchasers’ representations to the
Company, no registration of the Series C Preferred Stock issued and sold
pursuant to this Agreement will be required. Except as set forth in Section
3.16 of the Disclosure Schedule, and except as limited by state and Federal
law, there are no obligations, contractual arrangements or other understandings
with respect to the alienability or voting of the Company’s or any of its
Subsidiaries’ Common Stock or Preferred Stock.


          3.17 Brokers or Finders; Other Offers. Except for fees payable to
Harris Nesbitt Gerard, Inc. and Vail Securities Investment, Inc., neither the
Company nor any of its Subsidiaries has incurred, or will incur, directly or
indirectly, as a result of any action taken by the Company or any of its
Subsidiaries, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with the offering of the
Series C Preferred.


          3.18 Tax Returns and Payments. The Company and each of its
Subsidiaries have accurately prepared and timely filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be
due and payable on said returns, any assessments, fees or charges and all other
taxes due and payable by the Company or any Subsidiary on or before the date
hereof have been paid prior to the Company or any of its Subsidiaries becoming
delinquent. No deficiency assessment or proposed adjustment of the Company’s
or any of it Subsidiaries’ federal, state or local taxes is pending, and
neither the Company nor any of its Subsidiaries has knowledge of any proposed
liability for any tax to be imposed upon it, its properties or assets for which
it does not have an adequate reserve reflected in the Financial Statements. To
the best of


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the Company’s or any of its Subsidiaries knowledge, none of the federal or
state income tax returns or state franchise tax returns of the Company or any
Subsidiary has ever been audited by federal or state tax officials,
respectively.



          3.19 Insurance. The Company and each of its Subsidiaries maintains
insurance coverage reasonably adequate for the operation of its business
(taking into account the cost and availability of such insurance).


          3.20 Environmental and Safety Laws. To the best of its knowledge,
neither the Company nor any of its Subsidiaries is in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.


          3.21 Commission Documents.


               (a) The Company has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the Commission since December 31, 2002 (the “Company
SEC Documents”). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Act or the
Securities Exchange Act of 1934, as amended and the Regulations (as defined in
Section 4.4), as the case may be, and none of the Company SEC Documents when
filed (unless amended or superseded by a Company Filed SEC Document filed prior
to the date hereof, then on the date of such later filing) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Except to the
extent that information contained in a Company SEC Document has been revised or
superseded in a subsequently filed Company SEC Document, none of the Company
SEC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.


          (b) The Financial Statements of the Company included in the Company SEC
Documents complied as to form, as of their respective dates of filing with the
Commission, in all material respects with applicable accounting requirements
and the published rules and regulations of the Commission with respect thereto
(the “Accounting Rules”), have been prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q of the
Commission) applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present, in all material
respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended




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(subject, in the case of unaudited statements, to normal recurring non-material
year-end audit adjustments).


          3.22 Full Disclosure. This Agreement, the representations and
warranties by the Company contained herein, the Disclosure Schedule and the
Exhibits hereto, and all certificates expressly required to be delivered or to
be furnished to the Purchasers pursuant to this Agreement, when read together,
do not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.


     4. Representations, Warranties and Covenants of the Purchasers.
Each Purchaser severally represents, warrants and agrees as follows:


          4.1 Information. Each Purchaser represents that it has had an
opportunity to ask questions of the principal officers of the Company and to
obtain any additional information necessary to permit an informed evaluation of
the benefits and risks associated with the investment made hereby. Each
Purchaser has made its own independent investigation of the Company and is
aware of the Company’s proposed business and financial condition. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 3 herein or the right of the Purchasers to rely
thereon.


          4.2 Accredited Investors. Each Purchaser represents that it is an
accredited investor within the meaning of the Act and Regulation D thereunder,
or by reason of its business or financial experience, or the business or
financial experience of its professional advisor, it has the capacity to
protect its own interests in connection with this transaction.


          4.3 Experience. Each Purchaser represents that it has had
sufficient experience in business, financial and investment matters to evaluate
the merits and risks involved in the investment made hereby and further
represents that it is able to bear the economic risk of such investment for an
indefinite period of time or to lose the entire investment made hereby, and has
the capacity to protect its own interests in connection with the transactions
contemplated herein.


          4.4 Investment Intent. Each Purchaser represents that it is
acquiring the Shares for its own account and not with a view to any sale or
distribution thereof within the meaning of the Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder as amended from time to time (the “Regulations”), except to
the extent permitted by the Act and the Regulations. Each Purchaser agrees
that it will make no sale, offer to sell or transfer of any Shares in violation
of the Act, the Regulations or any other federal or state securities law, and
each Purchaser understands that certificates representing the same will bear a
legend to such effect.


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          4.5 Restriction on Transfer. Each Purchaser understands that none
of the Shares nor the offer and sale thereof, has been registered under the Act
or the securities laws of any state and there is at the date hereof no public
market for such securities. Each Purchaser further understands and agrees that
none of the Shares may be sold, offered for sale or transferred in any manner
for an indefinite period of time unless and until (a) a registration statement
with respect thereto is in effect under the Act and applicable state laws, or
(b) it has been established to the reasonable satisfaction of the Company and
its counsel that the proposed transaction is exempt from registration under the
Act and applicable state laws or that registration under the Act and applicable
state laws is not required.


          4.6 Binding Effect, etc. Each Purchaser represents that (a) such
Purchaser has full power and authority to purchase such Shares, (b) such
Purchaser’s agreement to purchase the Shares constitutes a valid and binding
agreement enforceable in accordance with its terms, and (c) the purchase of the
Shares as contemplated hereby will not conflict with or otherwise violate any
charter documents or any other obligations of such Purchaser.


     5. Conditions to the Obligations of the Purchasers. The obligation
of each of the Purchasers under Section 1.2 of this Agreement is subject to the
fulfillment, or the waiver by such Purchaser, of each of the following
conditions on or before the Closing:


          5.1 Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true on and as of
the Closing Date with the same effect as though such representation and
warranty had been made on and as of that date.


          5.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.


          5.3 Certificates and Documents. The Company shall have delivered
to the Purchasers:


               (a) The Certificate of Incorporation of the Company, as amended and
restated and in effect as of the Closing Date (including Certificates of
Designations), certified by the Secretary of State of the State of Delaware;


               (b) The Bylaws of the Company, as amended and restated and in effect as of
the Closing Date, certified by its Secretary as of the Closing Date; and


               (c) Resolutions of the Board of Directors of the Company, authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated hereby, certified by the Secretary of the Company as of the
Closing Date.


11







 


          5.4 Registration Rights Agreement. The Company shall have entered
into an Amended and Restated Registration Rights Agreement (each a
“Registration Rights Agreement” and collectively, the “Registration Rights
Agreements”) with each Purchaser substantially in the form attached hereto as
Exhibit D.


          5.6 Compliance Certificates. The Company shall have delivered to
the Purchasers a certificate, executed by the President of the Company, dated
the Closing Date, certifying to the fulfillment of the conditions specified in
paragraphs 5.1, 5.2 and 5.3 of this Agreement.


          5.7 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers and their counsel, and the
Purchasers and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.


     6. Condition to the Obligations of the Company. The obligations of
the Company under Section 1.2 of this Agreement are subject to the fulfillment,
or the waiver by the Company, of the following condition on or before the
Closing:


          6.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchasers contained in Section 4 shall
be true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date.


     7. Transfer of Shares.


          7.1 Restricted Shares. “Restricted Shares” means (i) the
Shares, (ii) the shares of Common Stock issued or issuable upon conversion or
exercise of the Shares or the Warrants, (iii) any shares of capital stock of
the Company acquired by the Purchasers pursuant to any other agreement or
instrument, and (iv) any other shares of capital stock of the Company issued in
respect of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events).


          7.2 Requirements for Transfer.


               (a) Restricted Shares shall not be sold or transferred unless either (i)
they first shall have been registered under the Act, or (ii) the Company first
shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Act.


12







 


               (b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Purchaser which is a corporation to a
wholly owned subsidiary of such corporation, a transfer by a Purchaser which is
a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, or a transfer by a Purchaser which is a limited
liability company to (a) a member or officer of such limited liability company,
(b) a retired member who resigns after the date hereof or to the estate of any
such member or (c) a retired member; provided that the transferee in
each case agrees in writing to be subject to the terms of this Section 7 to the
same extent as if it were the original Purchaser hereunder, or (ii) a transfer
made in accordance with Rule 144 under the Act.


          7.3 Legend. Each certificate representing Restricted Shares shall
bear a legend substantially in the following form:



	  	 “THE SHARES REPRESENTED BY THIS
      CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
      OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER SUCH ACT
      OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE
      EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.” 	 



The foregoing legend shall be removed from the certificates representing any
Restricted Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.


     8. Miscellaneous.


          8.1 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement, and the rights and obligations of each
Purchaser hereunder, may be assigned by such Purchaser to any person or entity
to which Shares are transferred by such Purchaser, and such transferee shall be
deemed a “Purchaser” for purposes of this Agreement; provided
that the transferee provides written notice of such assignment to the Company.
The Company may not assign its rights under this Agreement.


          8.2 Confidentiality. Each Purchaser agrees that he, she or it will
keep confidential and will not disclose, divulge or use for any purpose other
than to monitor his, her or its investment in the Company any confidential,
proprietary or secret information which such Purchaser may obtain from the
Company pursuant to financial statements, reports and other


13







 


materials submitted by the Company to such Purchaser pursuant to this
Agreement or otherwise (“Confidential Information”), unless such
Confidential Information is known, or until such Confidential Information
becomes known, to the public (other than as a result of a breach of this
Section 8.2 by such Purchaser); provided, however, that a
Purchaser may disclose Confidential Information (i) to such Purchaser’s
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with monitoring its investment
in the Company, (ii) to any prospective purchaser of any Shares from such
Purchaser, provided that such prospective purchaser agrees in writing to
be bound by the provisions of this Section 8.2, (iii) to any affiliate of such
Purchaser or to a partner, stockholder or subsidiary of such Purchaser,
provided that such affiliate agrees in writing to be bound by the
provisions of this Section 8.2, or (iv) as may otherwise be required by law,
provided that the Purchaser takes reasonable steps to minimize the
extent of any such required disclosure. Notwithstanding any other provisions
of this Section 8.2, a Purchaser shall be free to use the Residuals (as defined
below) of any Confidential Information for any purpose, subject only to any
patents or copyrights of the Company in such Confidential Information. The
term “Residuals” shall mean any information in non-tangible form which
is retained in the memory of a Purchaser or any partner, officer, employee or
representative of a Purchaser.


          8.3 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Closing of the transactions contemplated
hereby until thirty (30) days following the date on which the Form 10-K for
ReGen Biologics for the fiscal year ended December 31, 2003 shall have been
filed with the Commission; provided, however, that the
representation and warranties of Section 3.2 of this Agreement shall survive
indefinitely.


          8.4 Expenses. The Company shall pay, at the Closing, the
reasonable fees, up to a maximum of US $ 25,000 including fees, expenses and
disbursements, related to the representation of the Purchasers, such
representatives to be designated by the Purchasers, in connection with the
preparation of this Agreement and the other agreements contemplated hereby and
thereby and the closing of the transactions contemplated hereby and thereby.


          8.5 Brokers. Each Purchaser represents and warrants to the other
parties hereto that he, she or it has not retained a finder or broker in
connection with the transactions contemplated by this Agreement, and the
Company and each of the Purchasers agrees that such party will indemnify and
save the other parties harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders’ fees or
commissions, or consulting fees in connection with the transactions
contemplated by this Agreement asserted by any person on the basis of any
statement or representation alleged to have been made by such indemnifying
party.


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          8.6 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.


          8.7 Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.


          8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
(without reference to the conflicts of law provisions thereof).


          8.9 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:



	 	If to the Company, at:






	 	509 Commerce Street, East Wing

Franklin Lakes, NJ 07417

Facsimile: (201) 651-5141

Attention: Gerald E. Bisbee, Jr., Ph.D,






          or at such other address or addresses as may have been furnished in
writing by the Company to the Purchasers;




     If to a Purchaser, at the address set forth on Exhibit A for such
Purchaser, or at such other address or addresses as may have been furnished to
the Company in writing by such Purchaser.


     Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.


          8.10 Complete Agreement. This Agreement (including its Exhibits
and the Disclosure Schedule delivered in accordance herewith) constitutes the
entire agreement and


15







 


understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.


          8.11 Amendments and Waivers. Except as otherwise expressly set
forth in this Agreement, any term of this Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 50% of the shares of Common Stock issued or issuable upon conversion of
the Shares. Notwithstanding the foregoing, this Agreement may be amended with
the consent of the holders of less than all of the shares of Common Stock
issued or issuable upon conversion of the Shares only in a manner which applies
to all such holders in the same fashion and any amendment, termination or
waiver effected in accordance with this Section 8.11 shall be binding upon each
holder of any Shares (including shares of Common Stock into which such Shares
have been converted) even if they do not execute such consent, each future
holder of all such securities and the Company. No waivers of or exceptions to
any term, condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.


          8.12 Pronouns. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural,
and vice versa.


          8.13 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same document. This
Agreement may be executed by facsimile signatures.


          8.14 Section Headings. The section headings are for the
convenience of the parties only and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the parties.


[Signature Page to Follow]


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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.



	 	 ReGen Biologics, Inc. 
    




	 	 By:

      

      Name:

      Title:	

      _______________________________

      Gerald E. Bisbee, Jr., Ph.D.

      President, Chief Executive Officer and Chairman 




	 	PURCHASERS:






	 	If Individual:






	 	Print Name:  	 
	 	 	

	 	 	 
	 	Signature:  	 
	 	 	



  	 	 	 



	 	Contact Information:  
	 	 	

	 	 
	 	

	 	Dollar Amount Purchased:  
	 	 	



	 	 


	 	 If Corporation, Partnership,
      Limited Liability
      Company or Other Entity:  



	 	 	 
	 	Print Name of Entity:
       



	 	 	

	 	 	 
	 	 Signature By: 
    
	 	 	

	 	 
	 	Contact Information:  
	 	 	

	 	 	 
	 	

	 	 	 
	 	Dollar Amount Purchased:  
	 	 	





 







 


EXHIBIT A


Purchasers



  	 	 	 	 	 	 	 	 	 
	Name
	 	Number of Shares
        of	 	Dollar Amount
	 	 	Series C Preferred	 	Purchased
	 	 	 	 	

        	 	 	 	

        
	 	 	 	 	

        	 	 	 	

        
	 	 	 	 	

        	 	 	 	

        
	 	 	 	 	

        	 	 	 	

        
	 	 	 	 	

        	 	 	 	

        






 








 


EXHIBIT B  

Certificate of Designations




 







 




EXHIBIT C


Warrant




 







 




EXHIBIT D


Registration Rights Agreement


Document #: 1252864 v.1