exv10w5



 





Exhibit 10.5



THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY
STATE. THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES
ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, 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: April 5, 2007




     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 non-assessable
shares of Series D 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 non-assessable
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 $63.00 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 $0.63 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 Article 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 April 5, 2012 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



2









 







Stock, issued upon exercise of the Warrants, the Company may deem and treat the
registered Holder as the absolute owner thereof.




     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 stock dividends, 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 otherwise than as a
cash dividend; 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 over (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



5









 







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.




     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):



6









 





          if to the Company to:



ReGen Biologics, Inc.

509 Commerce Street

Franklin Lakes, NJ 07417

Attention: Brion D. Umidi

Telecopy: 201.651.5141



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 5th day
of April, 2007.



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 D Convertible Preferred Stock




9









 





EXHIBIT B




NOTICE OF EXERCISE




	 	 	 	 	 
	To:

	 	ReGen Biologics, Inc.	 	 
	 

	 	509 Commerce Street
	 	                    , 20___
	 

	 	Franklin Lakes, NJ 07417	 	 






     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:	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 






10









 






EXHIBIT C




NOTICE OF CONVERSION




	 	 	 	 	 
	To:

	 	ReGen Biologics, Inc.	 	 
	 

	 	509 Commerce Street
	 	                    , 20___
	 

	 	Franklin Lakes, NJ 07417	 	 






     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: