Exhibit 10.14
**CREDIT AGREEMENT**
     THIS CREDIT AGREEMENT (this “*Credit Agreement*”) is entered into as of November 30, 1998between REGEN BIOLOGICS, INC., a Delaware corporation (herein called “Borrower”) and SULZER MEDICAUSA HOLDING COMPANY, a Delaware corporation (herein called “Lender”).
          (1)       **Commitment.**   Lender hereby agrees to make loans (each a “*Loan*”) to Borrower, fromtime to time and in such amounts as Borrower shall request, up to an aggregate principalamount of Two Million Forty Two Thousand Six Hundred Dollars ($2,042,600). The obligationof Lender to make Loans to Borrower shall terminate on November 30, 2003, or upon theoccurrence and continuance of an Event of Default (such earlier date, the “*TerminationDate*”). Borrower may prepay any loan without penalty or premium and any principal amountsprepaid by Borrower may be reborrowerd; *provided, however*, that any principal amountsprepaid at the election of Lender pursuant to Section 3 of the Warrant (as defined below)may not be reborrowed by Borrower. The “*Warrant*” shall mean the warrant to purchase sharesof Borrower’s Series C Convertible Preferred Stock issued to Lender pursuant to the SeriesF Preferred Stock and Warrant Purchase Agreement (the “Purchase Agreement”) dated November30, 1998 between Borrower and Lender.
          (2)       **Conditions Precedent to Funding Loans.**   The obligation of Lender to make Loanshereunder shall be subject to the satisfaction of both of the following conditionsprecedent: (a) the closing under the Purchase Agreement shall have occurred; and (b)Borrower shall have obtained a permit from the California Department of Corporations toexempt the evidence of indebtedness under this Credit Agreement from the usury provisions ofthe Constitution of the State of California.
          (3)       **Procedure for Funding a Loan.**   From and after the occurrence of the conditionsprecedent set forth in Section 2 above and prior to the Termination Date, and subject tothe credit limitation set forth in Section 1, Lender shall, upon three (3) business daysprior written request by Borrower to Lender, transfer to Borrower by wire transfer in sameday funds to the account of Borrower specified in such written notice the amount requestedto be loaned to Borrower as set forth in such written notice; *provided, however*, that suchamount shall not be less than $500,000 except if less than $500,000 shall remain availableto be borrowed under Section 1, in which case such amount shall be not less than theremaining amount available to be borrowed under Section 1.
          (4)       **Principal and Interest.**   All outstanding principal and interest shall be due andpayable on December 1, 2003 or as determined in the last paragraph of Section 8. Interestshall accrue on the outstanding principal amount of each Loan fromthe date of funding of thesuch Loan until payment in full, at a rate of one-year LIBOR (as reported in The WallStreet Journal on the date of the funding of the Loan) per annum or the maximum ratepermissible by law (the laws of the State of California shall be deemed to be the lawsrelating to permissible rates of interest on commercial loans), whichever is less.Interest shall be calculated on the basis of a 365-day year for the actual number of dayselapsed and shall compound annually; *provided*, that nointerest so compounded shall be deemed principal for purposes of Section 1.
 

 

The interest rate on each Loanshall adjust on each anniversary of the date of the Loan (or the next business day if suchanniversary is a holiday or a weekend day) to the interest rate which would be applicableto a Loan initially funded on such date.
          (5)       **Schedule of Loans.**   Upon the funding of the initial Loan under the CreditAgreement, Borrower shall prepare and deliver to Lender the *Schedule of Loans*attachedhereto as *Exhibit A*, setting forth the information to be provided thereon. Upon anyadditional funding of a Loan, any repayment of a Loan (in part or in full) by Borrower, anyreduction in amounts owed hereunder by exercise of the Warrant, and on each anniversary ofthe funding of a Loan until such Loan is paid in full, Borrower shall amend the *Scheduleof Loans*to reflect such event and deliver to Lender the *Schedule of Loans*as so amended.
          (6)       **Place of Payment.**   All amounts payable hereunder shall be payable at Sulzer MedicaUSA Holding Company, 4000 Technology Drive, Angleton, TX 77515, unless another place ofpayment shall be specified in writing by Lender.
          (7)       **Application of Payments.**   Any payment made by Borrower, or reduction in amountsowed at the election of Lender pursuant to Section 3 of the Warrant, on any Loan hereundershall be applied first to accrued interest, and thereafter to principal.
          (8)       **Default.**   Each of the following events shall be an “*Event of Default*” hereunder:
               (a)       Borrower fails to pay timely any amount due under this Credit Agreement withinfive (5) business days thereafter;
               (b)       Borrower files any petition or action for relief under any bankruptcy,reorganization, insolvency or moratorium law or any other law for therelief of, or relatingto, debtors, now or hereafter in effect, or makes any assignment for the benefit ofcreditors or takes any corporate action in furtherance of any of the foregoing; or
               (c)       An involuntary petition is filed against Borrower (unless such petition isdismissed or discharged within sixty (60) days) under any bankruptcy statute now orhereafter in effect, or a custodian, receiver, trustee, assignee for the benefit ofcreditors (or other similar official) is appointed to take possession, custody or controlof any property of Borrower.
     Upon the occurrence and the continuance of anEvent of Default hereunder, all unpaid principal,accrued interest and other amounts owing hereunder shall, at the option of Lender, and, in the caseof an Event of Default pursuant to (b) or (c) above, automatically, be immediately due, payable andcollectible by Lender pursuant to applicable law.
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          (9)       **Competitive Arrangements.**   Notwithstanding anything to the contrary set forth inthis Credit Agreement, in the event that Borrower shall enter into an agreement with aCompetitor of Lender involving either the licensing of Borrower’s intellectual property tosuch Competitor or the codevelopment of intellectual property with such Competitor, in eachcase relating to future generations of the collagen meniscus implant and to which Lendershall not have given its written consent (each, a “*Competitive Arrangement*”), then in suchevent the obligation of Lender to extend any further Loans under this Agreement shallimmediately terminate. In addition, in the event Borrower enters into a CompetitiveArrangement, all unpaid principal, accrued interest and other amounts owing hereundershall, at the option of Lender, be due, payable and collectible by Lender pursuant toapplicable law on the date six months from the later of (i) the date Borrower enters intosuch Competitive Arrangement, and (ii) the date Lender provides Borrower written notice ofits intent to exercise its option to accelerate repayment of the amounts owing hereunderpursuant to this Section 9. For the purposes hereof, a “*Competitor*” of Lender shall mean acorporation, partnership, limited liability company or other such entity a substantialportion of the business of which is in the orthopedic and/or trauma fields.
          (10)       **Notices.**   All notices and other communications required or permitted hereundershall be in writing and shall be mailed by registered or certified mail, postage prepaid,or otherwise delivered by hand, telecopier or by messenger, addressed (a) if to Lender, atLender’s address set forth on the signature page hereof, or at such other address as Lendershall have furnished to Borrower in writing, or (b) if to Borrower, one copy should be sentto its address set forth on the signature page hereof and addressed to the attention of theCorporate Secretary, or at such other address as Borrower shall have furnished to Lender.Each such notice or other communication shall for all purposes of this Credit Agreement betreated as effective or having been given when delivered if delivered personally or bymessenger, courier service, telex, telegram or telecopier, or, if sent by mail, at theearlier of its receipt or seventy-two (72) hours after the same has been deposited in aregularly maintained receptacle for the deposit of the United States mail, addressed andmailed as aforesaid.
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          (11)       **Governing Law.**   This Credit Agreement shall be governed by, and construed andenforced in accordance with, the laws of the State of California, excluding conflict of lawsprinciples that would cause the application of laws of any other jurisdiction.       BORROWER REGEN BIOLOGICS, INC.          By: /s/ Gerald E. Bisbee, Jr.          Gerald E. Bisbee, Jr.President and Chief Executive Officer545 Penobscot Drive