EXHIBIT 10.39: Stock Option
Agreement dated October 1, 2008 between Registrant and Richard L. Franklin,
MD.

    


    


    SYNTHEMED,
INC.

    STOCK
OPTION AGREEMENT

    


    (Non-Qualified
Stock Option)

    


    


    AGREEMENT entered into as of the date
set forth on the signature page hereto by and between SyntheMed, Inc., a
Delaware corporation, with a business address of 200 Middlesex Essex Turnpike,
Iselin, New Jersey (together with its subsidiaries, if any, the "Company"), and
the undersigned (the "Grantee").

    


    WHEREAS, the Company desires to grant
to the Grantee a non-qualified stock option to acquire shares of the Company's
Common Stock, $.001 par value (the "Shares"); and

    


    WHEREAS, each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the
option.

    


    NOW THEREFORE, in consideration of the
premises and of the mutual covenants and agreements contained herein, the
Company and the Grantee hereby agree as follows:

    


    1.           Grant of
Option.

    


    The Company hereby grants to the
Grantee a non-qualified stock option (the "Option") to purchase all or any part
of an aggregate of the number of Shares set forth on the signature page to this
Agreement on the terms and conditions hereinafter set forth.  The
Option shall NOT be treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").

    


    2.           Purchase
Price.

    


    The purchase price ("Purchase Price")
for the Shares covered by the Option shall be the dollar amount per share set
forth on the signature page to this Agreement.

    


    3.           Time of Vesting and Exercise
of Option.

    


    Subject to Section 4 hereof, the Option
shall vest and become exercisable on the dates and as to the installment amounts
set forth on the signature page to this Agreement.  To the extent the
Option (or any portion thereof) is not exercised by the Grantee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date (as hereinafter
defined) or until earlier termination as hereinafter provided.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    4.           Term; Extent of
Exercisability.

    


    The Option shall expire as to each
installment amount on the date set forth next to each such amount on the
signature page to this Agree­ment (the "Expiration Date"), subject to
earlier termination as herein provided.

    


    
      (a)    Termination
Without Cause.  In the event the Grantee’s employment or service is
terminated by the Company for any reason other than “disability”, death or for
“cause” (collectively, a “Termination without cause”), the Option shall become
one hundred percent vested and fully exercisable immediately, and shall
terminate on the earlier to occur of (i) the first anniversary of the date on
which the Grantee’s employment or service is terminated by the Company, or
second anniversary thereof in the case of such termination during the first year
of the Option’s term, and (ii) the date of expiration of the Option
term.

    

    


    (b)           Termination
For Cause.  In the event the Grantee’s employment or service is
terminated by the Company for “cause”, the Option shall terminate as of the date
the Grantee’s employment or service is terminated by the Company and the Grantee
shall automatically forfeit all shares underlying any exercised portion of the
Option for which the Company has not yet delivered the share certificates, upon
refund by the Company of the Exercise Price paid by the Grantee for such
shares.

    


    (c)           Termination
Due to Disability.  In the event the Grantee’s employment or service
is terminated by the Company on account of Grantee’s “disability”, the Option
shall become one hundred percent vested and fully exercisable by the Grantee
immediately, and shall terminate on the earlier to occur of the first
anniversary thereof or the date of expiration of the Option term.

    


    (d)           Termination
Due to Death.  In the event of the death of the Grantee, the Option
shall become one hundred percent vested and fully exercisable by the Grantee
immediately, and shall terminate on the earlier to occur of the first
anniversary thereof or six months after the probate of the Grantee’s estate, but
in any event no later than the date of expiration of the Option
term.

    


    (e)           Voluntary
Termination.  In the event the Grantee terminates his or her
employment with or services to the Company at his or her own volition, the
Option shall, unless the Committee determines otherwise, terminate on the
expiration of six (6) months after the date on which the Grantee’s employment
with or service to the Company is terminated, or one (1) year in the case of
termination of employment or services during the first year of the Option term,
but in no event later than the date of expiration of the Option
term.  Any portion of the Option that is not exercisable as of the
date on which the Grantee’s employment with or service to the Company is
terminated shall terminate as of such date unless the Committee determines
otherwise.

     

    
      
        
        

      

      
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    (f)           Termination
Without Cause Upon a Change of Control.  Notwithstanding the
provisions of Section 4(a) above, if the Grantee’s employment or service is
terminated by the Company on account of a “termination without cause” during the
one year period following a Change of Control, the Option shall become one
hundred percent vested and fully exercisable for the two year period after the
date on which the Grantee’s employment or service is terminated by the Company,
but in no event later than the date of expiration of the Option
term.  As used herein, a “Change of Control” shall be deemed to have
occurred if:

     

    (i)           Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 35% of the voting power of the then outstanding securities of the Company,
and such person owns more aggregate voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors
than any other person;

    


    (ii)           The
shareholders of the Company approve (or, if shareholder approval is not
required, the Board approves) an agreement providing for (i) the merger or
consolidation of the Company with another corporation where the shareholders of
the Company, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to 50% or more of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company; or

    


    (iii)           After
the effective date of the Plan, directors are elected such that a majority of
the members of the Board shall have been members of the Board for less than two
years, unless the election or nomination for election of each new director who
was not a director at the beginning of such two-year period was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period. 

    


    (g)           For
purposes of this Section 4:

    


    (i)           The
term “Company” shall mean the Company and its parent and subsidiary
corporations, or any successor thereto.

    


    (ii)           The
term “disability” shall mean a Grantee’s becoming disabled within the meaning of
section 22(e)(3) of the Code.

    


    (iii)           The
term “termination for cause” shall mean, except to the extent specified
otherwise by the Committee that the Grantee has materially breached his or her
employment or service contract with the Company, or has been engaged in fraud,
embezzlement, theft, commission of a felony in the course of his or her
employment or service which is injurious to the Company, or has disclosed trade
secrets or confidential information of the Company to persons not entitled to
receive such information.  If this clause (iii) conflicts with the
definition of “Cause” or “termination for cause” (or any similar definition) in
an employment or service agreement between the Company and the Grantee, the
terms of the employment or service agreement shall govern.

     

    
      
        
        

      

      
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    5.           Manner of Exercise of
Option.

    


    
      (a)    To the
extent that the right to exercise the Option has accrued and is in effect, the
Option may be exercised in full or in part by giving written notice to the
Company stating the number of Shares as to which the Option is being
exer­cised and accompanied by payment in full for such Shares. No partial
exercise may be made for less than one hundred (100) full Shares of Common
Stock. Payment shall be in cash or its equivalent or by other means approved by
the Committee or such officer to whom it may delegate such authority, which may
include, among other methods, delivery of previously acquired shares of Company
Stock (alone or in combination with cash) and broker-assisted cashless exercise.
Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person exercising
the Option, not less than fifteen (15) and not more than forty-five (45) days
from the date of receipt of the notice by the Company.

    

    


    (b)           The
Company shall at all times during the term of the Option reserve and keep
available such number of Shares of its Common Stock as will be sufficient to
satisfy the requirements of the Option.

    


    6.           Non-Transferability.

    


    Except as provided below, only the
Grantee or his or her authorized representative may exercise rights under the
Option.  The Grantee may not transfer the Option except (i) by will,
(ii) by the laws of descent and distribution, (iii) to the Company (as
contemplated by Rule 16b-3 of the Exchange Act, (iv) pursuant to a domestic
relations order (as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the regulations thereunder), or (v)
as otherwise permitted by the Committee.  If the Grantee dies prior to
termination of the Option, any person designated by the Grantee to exercise the
Option or other person entitled to succeed to the rights of the Grantee
(“Successor Grantee”) may exercise the Grantee’s rights under the
Option.  A Successor Grantee must furnish proof satisfactory to the
Company of his or her right to receive the Option.

    


    7.           Representation Letter and
Investment Legend.

    


    In the event that for any reason the
Shares to be issued upon exercise of the Option shall not be effectively
registered under the Securities Act of 1933 (" 1933 Act"), upon any date on
which the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form attached
hereto as Exhibit 1 and the Company shall place an "investment legend",
so-called, as described in Exhibit 1, upon any certificate for the Shares issued
by reason of such exercise.

     

    
      
        
        

      

      
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    8.           No Special Employment
Rights.

    


    The provisions of this Section 9 are
applicable only to Grantees who are employ­ees of the Company. Nothing
contained in this Option shall be construed or deemed by any person under any
circumstances to bind the Company to continue the employment of the Grantee for
the period within which this Option may be exercised. However, during the period
of the Grantee's employment, the Grantee shall render diligently and faithfully
the services which are assigned to the Grantee from time to time by the Board of
Directors or by the executive officers of the Company and shall at no time take
any action which directly or indi­rectly would be inconsistent with the best
interests of the Company.

    


    9.           Rights as a
Stockholder.

    


    The Grantee shall have no rights as a
stockholder with respect to any Shares which may be purchased by exercise of
this Option unless and until a certificate or certificates representing such
Shares are duly issued and delivered to the Grantee.

    


    10.           Withholding
Taxes.

    


    The
Company shall be entitled to refrain from issuing any Shares upon exercise of
the Option until appropriate arrangements satisfactory to the Company have been
made for the payment of any tax amounts (federal, state, local or other) that
may be required to be withheld or paid with respect thereto at the minimum
statutory rate.  The Company shall have the right to take such action
as may be necessary or appropriate to satisfy any such tax obligations
including, without limitation, deducting the same from any other remuneration
owing to the Grantee.  The Company may, in its sole discretion and in
accordance with procedures it may establish, permit the Grantee to satisfy any
such tax obligation through election to withhold Shares purchased upon exercise
of the Option or by delivery to the Company of already owned shares of Common
Stock. The Grantee acknowledges that if he or she is subject to Section 16 of
the Securities Exchange Act of 1934, payment of taxes in such manner may be
deemed under Section 16 to be non-exempt “sales” of the shares so withheld or
delivered unless approved in advance by the Board of Directors or by the
Committee.

     

    11.           No Guarantee of Tax
Consequences.

     

                          The
Company makes no representation, commitment or guarantee that any federal or
state tax treatment will apply or be available to any person eligible for the
benefits under the Option.

    


    


    [SIGNATURE
PAGE FOLLOWS]

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the Company has caused this agreement to be executed, and the
grantee has hereunto set his or her hand, all as of the 1st day of October,
2008.

     

     

    
      
        
          
            	 	

                    SYNTHEMED,
      INC.

                  
	 	 
      
	 	 
      
	 	
                    By:
      /s/ Robert P.
      Hickey

                  
	 	
                    Title:
      President and CEO

                  
	 	 
      
	 	 
      
	 	
                    GRANTEE

                  
	 	 
      
	 	
                    Print
      Name: Richard L. Franklin, MD

                  
	 	 
      
	 	
                    Sign
      Name: /s/ Richard L. Franklin, MD

                  
	 	 
      
	 	
                    Address:__________________________________

                  
	 	 
      
	 	
                    _________________________________________

                  
	 	 
      
	 	
                    Social
      Security Number:
______________________

                  


          

        

      

    

    


    OPTION
INFORMATION

    


    Options
to purchase 750,000 shares, exercisable as to 125,000 shares at $.40/share,
125,000 shares at $.60/share, 250,000 shares at $.80/share and 250,000 shares at
$1.00/share, provided that vesting of the $.40 and $.60 installments is subject
to the 30-day average stock price achieving a $.60 level by the first
anniversary of grant and vesting of the remaining two installments is subject to
the stock price achieving a $1.00 30-day average level by the second anniversary
of the date of, and expiring on the tenth anniversary of, the date of
grant.

     

    
      
        
        

      

      
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    EXHIBIT
1

    TO STOCK OPTION
AGREEMENT

    


    Gentlemen:

    


    In connection with the exercise by me
of an option to purchase shares of Common Stock, $.001 par value, of SyntheMed,
Inc. (the "Company"), I hereby acknowl­edge that I have been informed as
follows:

    


    1.           The
shares of Common Stock of the Company to be issued to me pursuant to the
exercise of said option (the "Shares") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, accordingly, must
be held indefinitely unless the Shares are subsequently regis­tered under
the Securities Act, or an exemption from such registration is
available.

    


    2.           Routine
sales of securities made in reliance upon Rule 144 under the Securities Act can
be made only after the holding period provided by that Rule has been satisfied,
and, in any sale to which that Rule is not applicable, registration or
compliance with some other exemp­tion under the Securities Act will be
required.

    


    3.           The
availability of Rule 144 is dependent upon adequate current public
infor­mation with respect to the Company being available and, at the time
that I may desire to make a sale pursuant to the Rule, the Company may neither
wish nor be able to comply with such requirement.

    


    In consideration of the issuance of
certificates for the Shares to me, I hereby represent and warrant that I am
acquiring the Shares for my own account for investment, and that I will not
sell, pledge or transfer the Shares in the absence of an effective registration
state­ment covering the same, except as permitted by the provisions of Rule
144, if applicable, or some other applicable exemption under the Securities Act.
In view of this representation and warranty, I agree that there may be affixed
to the certificates for the Shares to be issued to me, and to all certificates
issued hereafter representing the Shares (until in the opinion of counsel, which
opinion must be reasonably satisfactory in form and substance to counsel for the
Company, it is no longer necessary or required) a legend as
follows:

    


    
      	
               
      

            	
              "The
      securities represented by this certificate have not been registered under
      the Securities Act of 1933, as amended, and were acquired by the
      registered holder pursuant to a representation and warranty that such
      holder was acquir­ing the Shares for his own account and for
      investment, with no intention of transfer or disposition of the same in
      violation of the registration requirements of that Act. These securities
      may not be sold, pledged, or transferred in the absence of an effective
      registration statement under such Act, or an opinion of counsel, which
      opinion is reasonably satisfactory to counsel to the Company, to the
      effect that registration is not required under such
  Act."

            


    

     

    
      
        
        

      

      
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    I further agree that the Company may
place a stop transfer order with its transfer agent, prohibiting the transfer of
the Shares, so long as the legend remains on the certificates represent­ing
the Shares.

     

     

    
      
        
          
            
              	 	
                      Very
      truly yours,

                    
	 	 
      
	 	 
      


            

          

        

      

    

     

     

    
      
        
        

      

      
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