ex10_3.htm


    
      

    

    Exhibit
10.3

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH ANY APPLICABLE RULES OF THE SECURITIES AND EXCHANGE
COMMISSION.

    


    


    _________  Warrants

    


    


    REGEN
BIOLOGICS, INC.

    WARRANT
CERTIFICATE

     

    Warrant
to Purchase

    Preferred
or Common Stock

     

    Date of
Issue:  July 24, 2008

    


    


    This
warrant certificate (“Warrant
Certificate”) certifies that for value received
___________________________ or registered assigns (the “Holder”) is the owner of the
warrant specified above (the “Warrant”), which entitles the
Holder thereof to purchase, at any time on or before the Expiration Date
(hereinafter defined) (i) up to ________ fully paid and nonassessable shares of
Series F Convertible Preferred Stock, $0.01 par value (“Preferred Stock”), of ReGen
Biologics, Inc., a Delaware corporation (the “Company”), or (ii) after the
Mandatory Conversion (as hereinafter defined) of the Preferred Stock, up to
_____________ fully paid and nonassessable shares of Common Stock, $0.01 par
value (“Common Stock”),
of ReGen Biologics, Inc., a Delaware corporation (the “Company”), at the Exercise
Price (as defined herein).  “Mandatory Conversion” means
the conversion of the Preferred Stock pursuant to Paragraph 7(a) of the
Certificate of Designations, Preferences and Rights in the form attached hereto
as Exhibit
A.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              1.

            	
              Warrant; Exercise
      Price

            


    

    


    This
Warrant shall entitle the Holder to purchase up to (i) __________ shares of
Preferred Stock of the Company and the purchase price payable upon exercise of
the Warrants shall initially be $1.00 per share of Preferred Stock, subject to
adjustment as hereinafter provided (as may be adjusted from time to time, the
“Preferred Exercise
Price”) or, (ii) after the Mandatory Conversion of the Preferred Stock,
____________ shares of Common Stock of the Company and the purchase price
payable upon exercise of the Warrants shall initially be $0.01 per share of
Common Stock, subject to adjustment as hereinafter provided (as may be adjusted
from time to time, the “Common
Exercise Price” and together with the Preferred Exercise Price, the
“Exercise
Price”).  The Exercise Price and number of shares of Preferred
Stock or, after the Mandatory Conversion, Common Stock, issuable upon exercise
of this Warrant are subject to adjustment as provided in Section 6.

    


    
      	
               
      

            	
              2.

            	
              Exercise; Expiration
      Date

            


    

    


    2.1           This
Warrant is exercisable, at the option of the Holder, at any time or times after
issuance and on or before the Expiration Date (as hereinafter defined), upon
surrender of this Warrant Certificate to the Company together with a duly
completed Notice of Exercise, in the form attached hereto as Exhibit B, and
payment of an amount equal to the product of (i) the Preferred Exercise Price
times the number of shares of Preferred Stock to be acquired, or (ii) after the
Mandatory Conversion, the Common Exercise Price times the number of shares of
Common Stock to be acquired.  Payment of the Exercise Price for the
Warrant Shares (as hereinafter defined) shall be in lawful money of the United
States of America, paid by wired transfer or cashier’s check drawn on a United
States bank or pursuant to the terms of Section 9.  In the case of
exercise of the Warrant for less than all the Warrant Shares (as hereinafter
defined) represented by this Warrant Certificate, the Company shall cancel the
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate for the balance of such Warrant Shares (as hereinafter
defined).

    


    2.2           The
term “Expiration Date”
shall mean 5:00 p.m. New York time on July 24, 2013 or if such date shall in the
State of New York be a holiday or a day on which banks are authorized to close,
then 5:00 p.m. New York time the next following date which in the State of New
York is not a holiday or a day on which banks are authorized to
close.

    


    
      	
               
      

            	
              3.

            	
              Registration and
      Transfer on Company Books

            


    

    


    3.1           The
Company shall maintain books for the registration and transfer of the Warrants
and the registration and transfer of the shares of Preferred Stock or, after the
Mandatory Conversion, Common Stock, issued upon exercise of the
Warrants.

    


    3.2           Prior
to due presentment for registration of transfer of this Warrant Certificate, or
the shares of Preferred Stock or, after the Mandatory Conversion, Common Stock,
issued upon exercise of the Warrants, the Company may deem and treat the
registered Holder as the absolute owner thereof.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    3.3           Neither
this Warrant nor the shares of Preferred Stock or, after the Mandatory
Conversion, Common Stock, issuable upon exercise hereof (the “Warrant Shares”) have been
registered under the Securities Act of 1933, as amended (the “Act”).  The Company
will not transfer this Warrant or issue or transfer the Warrant Shares unless
(i) there is an effective registration covering such Warrant or Warrant Shares,
as the case may be, under the Act and applicable states securities laws, (ii) it
first receives a letter from an attorney, acceptable to the Company's board of
directors or its agents, stating that in the opinion of the attorney the
proposed issue or transfer is exempt from registration under the Act and under
all applicable state securities laws, or (iii) the transfer is made pursuant to
Rule 144 under the Act.  Subject to the foregoing, this Warrant
Certificate, the Warrant represented hereby, and the Warrant Shares, may be
sold, assigned or otherwise transferred voluntarily by the Holder to officers or
directors of the Holder, to members of such persons' immediate families, or to
the Holder's parent or subsidiary corporations.  The Company shall
register upon its books any permitted transfer of a Warrant Certificate, upon
surrender of same to the Company with a written instrument of transfer duly
executed by the registered Holder or by a duly authorized
attorney.  Upon any such registration of transfer, new Warrant
Certificate(s) shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled by the Company.  A Warrant Certificate
may also be exchanged, at the option of the Holder, for new Warrant Certificates
representing in the aggregate the number of Warrant Shares evidenced by the
Warrant Certificate surrendered.

    


    
      	
               
      

            	
              4.

            	
              Reservation of
      Shares

            


    

    


    The
Company covenants that it will at all times reserve and keep available out of
its authorized Preferred Stock, or, after the Mandatory Conversion, Common
Stock, solely for the purpose of issue upon exercise of the Warrant, such number
of shares of Preferred Stock or Common Stock as shall then be issuable upon the
exercise of the entire Warrant.  The Company covenants that all
Warrant Shares shall be duly and validly issued and, upon payment for such
shares as set forth herein, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof, and, with regard to
the Common Stock, that upon issuance such shares shall be listed on each
national securities exchange, if any, on which the other shares of outstanding
Common Stock of the Company are then listed.

    


    
      	
               
      

            	
              5.

            	
              Loss or
      Mutilation

            


    

    


    Upon
receipt by the Company of reasonable evidence of the ownership of and the loss,
theft, destruction or mutilation of any Warrant Certificate and, in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the Company,
or, in the case of mutilation, upon surrender and cancellation of the mutilated
Warrant Certificate, the Company shall execute and deliver in lieu thereof a new
Warrant Certificate representing the number of Warrant Shares evidenced by the
lost, stolen, destroyed or mutilated Warrant Certificate.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              6.

            	
              Adjustments of
      Exercise Price and Shares

            


    

    


    6.1           In
the event of changes in the outstanding Preferred Stock or Common Stock of the
Company by reason of dividends, distributions, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations,
reorganizations, liquidations, consolidation, acquisition of the Company
(whether through merger or acquisition of substantially all the assets or stock
of the Company), or the like, the number and class of shares available under the
Warrant in the aggregate and the Exercise Price shall be correspondingly
adjusted to give the Holder of the Warrant, on exercise for the same aggregate
Exercise Price, the total number, class, and kind of shares or other property as
the Holder would have owned had the Warrant been exercised prior to the event
and had the Holder continued to hold such shares until the event requiring
adjustment.  The form of this Warrant need not be changed because of
any adjustment in the number of Warrant Shares subject to this Warrant or the
Exercise Price provided herein.

    


    6.2           If
at any time or from time to time the holders of all of the shares of Preferred
Stock or, after the Mandatory Conversion, Common Stock, of the Company (or the
holders of all of the shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall, as a class, have received or become
entitled to receive, without payment therefor:

    


    
      	
               
      

            	
              (i)

            	
              Common
      Stock or any shares of stock or other securities which are at any time
      directly or indirectly convertible into or exchangeable for Common Stock,
      or any rights or options to subscribe for, purchase or otherwise acquire
      any of the foregoing by way of dividend or other distribution (other than
      a dividend or distribution covered in Section 6.1
  above),

            


    

    


    
      	
               
      

            	
              (ii)

            	
              any
      cash paid or payable; or

            


    

    


    
      	
               
      

            	
              (iii)

            	
              Common
      Stock or additional stock or other securities or property (including cash)
      by way of spinoff, split-up, reclassification, combination of shares or
      similar corporate rearrangement (other than shares of Common Stock
      pursuant to Section 6.1 above),

            


    

    


    then, and
in each such case, the Holder hereof will, upon the exercise of this Warrant, be
entitled to receive, in addition to the number of shares of Preferred Stock or,
after the Mandatory Conversion, Common Stock receivable thereupon, and without
payment of any additional consideration therefor, the amount of stock and other
securities and property (including cash in the cases referred to in clauses (ii)
and (iii) above) which such Holder would hold on the date of such exercise had
he been the holder of record of such Preferred Stock or, after the Mandatory
Conversion, Common Stock, as of the date on which holders of Preferred Stock or,
after the Mandatory Conversion, Common Stock, received or became entitled to
receive such shares or all other additional stock and other securities and
property.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    6.3           Whenever
the number of Warrant Shares purchasable upon the exercise of the Warrant or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall mail to the Holder, at the address of the Holder shown on the
books of the Company, a notice of such adjustment or adjustments, prepared and
signed by the Chief Financial Officer or Secretary of the Company, which sets
forth the number of Warrant Shares purchasable upon the exercise of each Warrant
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.

    


    
      	
               
      

            	
              7.

            	
              Conversion

            


    

    


    7.1           In
lieu of exercise of any portion of the Warrant as provided in Section 2.1
hereof, the Warrants represented by this Warrant Certificate (or any portion
thereof) may, at the election of the Holder, be converted into the nearest whole
number of shares of Preferred Stock or, after the Mandatory Conversion, Common
Stock, equal to:  (1) the product of (a) the number of Warrants to be
so converted, (b) the number of shares of Preferred Stock or, after the
Mandatory Conversion, Common Stock, then issuable upon the exercise of each
Warrant and (c) the excess, if any, of (i) the Preferred Stock Market Price Per
Share (as determined pursuant to Section 8.3) or, after the Mandatory
Conversion, Common Stock Market Price Per Share (as determined pursuant to
Section 8.2) with respect to the date of conversion minus (ii) the
Exercise Price in effect on the business day next preceding the date of
conversion, divided
by (2) the Preferred Stock Market Price Per Share or, after the Mandatory
Conversion, Common Stock Market Price Per Share with respect to the date of
conversion.

    


    7.2           The
conversion rights provided under this Section 7 may be exercised in whole or in
part and at any time and from time to time while any Warrants remain
outstanding.  In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit
C.  The Warrants (or so many thereof as shall have been
surrendered for conversion) shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Warrant
Certificate for conversion in accordance with the foregoing
provisions.  As promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver to the Holder (i) a certificate
or certificates representing the number of shares of Common Stock to which the
Holder shall be entitled as a result of the conversion, and (ii) if the Warrant
Certificate is being converted in part only, a new certificate in principal
amount equal to the unconverted portion of the Warrant Certificate.

    


    
      	
               
      

            	
              8.

            	
              Fractional Shares and
      Warrants; Determination of Market Price Per
  Share

            


    

    


    8.1           Anything
contained herein to the contrary notwithstanding, the Company shall not be
required to issue any fraction of a share of Preferred Stock or, after the
Mandatory Conversion, Common Stock, in connection with the exercise of
Warrants.  Warrants may not be exercised in such number as would
result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Preferred Stock or, after the Mandatory Conversion,
Common Stock, unless the Holder is exercising the entire Warrant then owned by
the Holder.  In such event, the Company shall, upon the exercise of
the Warrant, issue to the Holder the largest aggregate whole number of shares of
Preferred Stock or, after the Mandatory Conversion, Common Stock, called for
thereby upon receipt of the Exercise Price for the entire Warrant and pay a sum
in cash equal to the remaining fraction of a share of Preferred Stock or, after
the Mandatory Conversion, Common Stock, multiplied by the Preferred Stock Market
Price Per Share (as determined pursuant to Section 8.3 below) or, after the
Mandatory Conversion, the Common Stock Market Price Per Share (as determined
pursuant to Section 8.2 below) as of the last business day preceding the date on
which the Warrants are presented for exercise.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    8.2           As
used herein, the “Common Stock
Market Price Per Share” with respect to any date shall mean the average
closing price per share of Company's Common Stock for the ten (10) trading days
immediately preceding such date during which the Common Stock has
traded.  The closing price for each such day shall be the closing sale
price or, in case no such sale takes place on such day, the closing price on the
last trading day, in either case on the principal securities exchange on which
the shares of Common Stock of the Company are listed or admitted to trading, the
last sale price, or in case no sale takes place on any such day, the average of
the high and low sales prices of the Common Stock on the Over-the-Counter
Bulletin Board (“OTCBB”) or any comparable system, or if the Common Stock is not
reported on OTCBB, or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose.  If such bid and asked prices are not available, then "Common
Stock Market Price Per Share" shall be equal to the fair market value of the
Company's Common Stock as determined in good faith by the board of directors of
the Company.

    


    8.3           “Preferred Stock Market Price Per
Share” with respect to any date shall mean the Common Stock Market Price
Per Share (as determined pursuant to Section 8.2) multiplied by
100.

    


    
      	
               
      

            	
              9.

            	
              Notices

            


    

    


    All
notices, requests, demands, claims, and other communications hereunder shall be
in writing and shall be delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery, or facsimile transmission if
such transmission is confirmed by delivery by certified or registered mail
(first class postage pre-paid) or guaranteed overnight delivery, to the
following addresses and telecopy numbers (or to such other addresses or telecopy
numbers which such party shall subsequently designate in writing to the other
party):

    


    


    if to the
Company to:

    


    ReGen
Biologics, Inc.

    411
Hackensack Avenue

    Hackensack,
NJ  07601

    Attention:
Brion D. Umidi

    Telecopy:
201.651.5141


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    with a
copy to:

    


    Pillsbury
Winthrop Shaw Pittman LLP

    1650
Tysons Boulevard

    McLean,
VA 22102

    Attention:
David C. Main, Esq.

    Telecopy:
703.770.7901

    


    if to the
Holder to the address set forth on the books of the Company.

    


    Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered by hand,
by messenger or by courier, or if sent by facsimile, upon confirmation of
receipt.

    


    
      	
               
      

            	
              10.

            	
              Governing
      Law

            


    

    


    This
Warrant Certificate shall be governed by and construed in accordance with the
laws of the State of New York.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed by its officers thereunto duly authorized and its corporate seal to be
affixed hereon, as of this 24th day of
July, 2008.

    


    


    


    REGEN
BIOLOGICS, INC.

    


    


    


    
      	
              By:  
      

            	 
      	 
      	 
      
	 
      	
              Name:

            	
              Brion
      D. Umidi

            	 
      
	 
      	
              Title:

            	
              Senior
      Vice President and

            	 
      
	 
      	 
      	
              Chief
      Financial Officer

            	 
      


    

    


    


    


    Attest:

    


    


    


    
      	 
      	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      


    


    
      
         


      

      
        8

        
          

        

      

      
         


      

    


    EXHIBIT
A

    


    Certificate
of Designations, Preferences and Rights

    of Series
F Convertible Preferred Stock


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    EXHIBIT
B

    


    NOTICE OF
EXERCISE

    


    
      	
               
      

            	
              To:

            	
              ReGen
      Biologics, Inc.

            


    

    
      	
              411
      Hackensack Avenue

            	
              ______________,
      20_____

            


    

    Hackensack,
NJ  07601

    


    The
undersigned hereby irrevocably elects to purchase, pursuant to Section 2 of the
Warrant Certificate accompanying this Notice of Exercise, _______ Warrant Shares
of the total number of Warrant Shares issuable to the undersigned pursuant to
the accompanying Warrant Certificate, and herewith makes payment of $___________
in payment in full of the aggregate Exercise Price of such shares.

    


    Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

    


    


    
      	 
      	 
      
	 
      	 
      
	
              The
      Warrant Shares shall be delivered to the following:

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      


    

    


    


    
      	 
      	 
      	 
      
	 
      	
              Name
      of Holder

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Signature

            	 
      
	 
      	 
      	 
      
	 
      	
              Address:

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


    


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    EXHIBIT
C

    


    


    NOTICE OF
CONVERSION

    


    
      	
               
      

            	
              To:

            	
              ReGen
      Biologics, Inc.

            


    

    
      	
              411
      Hackensack Avenue

            	
              ______________,
      20_____

            


    

    Hackensack,
NJ  07601

    


    The
undersigned hereby irrevocably elects to convert, pursuant to Section 7 of the
Warrant Certificate accompanying this Notice of Conversion, _______ Warrant
Shares of the total number of Warrant Shares issuable to the undersigned
pursuant to the accompanying Warrant Certificate into shares of the Preferred
Stock /Common Stock (circle one) of the Company (the “Shares”).

    


    The
number of Shares to be received by the undersigned, calculated in accordance
with the provisions of Section 7.1 of the accompanying Warrant Certificate, is
________________.

    


    
      	 
      	 
      


    

    


    


    Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

    


    
      	 
      	 
      


    

    


    The
Warrant Shares shall be delivered to the following:

    


    
      	 
      	 
      
	 
      	 
      
	 
      	 
      


    

    


    


    


    
      	 
      	 
      	 
      
	 
      	
              Name
      of Holder

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Signature

            	 
      
	 
      	 
      	 
      
	 
      	
              Address: