Document:

exv4w5

 

Exhibit 4.5

 AMENDED AND RESTATED

 REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement is made and entered into as of
September 23, 2003 (this “Agreement”), by and among ReGen Biologics, Inc., a
Delaware corporation (the “Company”), each of the holders of the Series A
Convertible Preferred Stock, par value $0.01 per share, of the Company (the
“Series A Preferred”) and each of the holders of the Series C Convertible
Preferred Stock, par value $0.01 per share, of the Company (the “Series C
Preferred”) listed on Schedule 1 attached hereto (individually, a “Stockholder”
and, collectively, the “Stockholders”).

     WHEREAS, the Company and the holders of the Series A Preferred are parties
to that certain Registration Rights Agreement dated June 21, 2002 (the “Prior
Rights Agreement”) providing for certain registration rights;

     WHEREAS, Section 7 of the Prior Rights Agreement provides that the Prior
Rights Agreement may be amended by the written consent of the holders of a
majority of the Registrable Securities then outstanding; and

     WHEREAS, pursuant to the terms of the Series C Convertible Preferred Stock
Purchase Agreement, dated as of September 23, 2003 by and among the Company and
the Purchasers named therein (the “Series C Purchase Agreement”), the Company
has agreed to provide to the holders of the Series C Preferred certain
registration rights under the 1933 Act with respect to shares of the Company’s
common stock, par value $0.01 per share (“Common Stock”);

     WHEREAS, the Stockholders desire to enter into this Agreement in order to
amend the rights and obligations under the Prior Rights Agreement with the
rights and obligations set forth in this Agreement.

     Now, Therefore, the parties hereto agree that the Prior Rights Agreement
shall be amended and restated in its entirety as follows:

     1.     Definitions; Certain Rules of Construction. Certain capitalized terms
are used in this Agreement with the specific meanings defined below in this
Section 1. Except as otherwise explicitly specified to the contrary or unless
the context clearly requires otherwise, (a) the capitalized term Section refers
to sections of this Agreement, (b) the capitalized term Exhibit refers to
exhibits to this Agreement, (c) references to a particular Section include all
subsections thereof, (d) the word including shall be construed as including
without limitation, (e) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect, (f) words in
the singular or plural form include the plural and singular form, respectively,
and (g) references to a particular Person include such Person’s successors and
assigns to the extent not prohibited by this Agreement.

 

 

     1.1. 1933 Act means the Securities Act of 1933, as amended, and all
regulations thereunder.

     1.2. 1934 Act means the Securities Exchange Act of 1934, as amended, and
all regulations thereunder.

     1.3. Board of Directors means the Board of Directors of the Company.

     1.4. Common Stock means the Company’s common stock, par value $.01 per
share, and other securities issued in respect of shares of Common Stock. The
number of shares of Common Stock covered by this Agreement and owned by each
Stockholder or into which each Stockholder has conversion rights under any
preferred stock is set forth opposite such Stockholder’s name on Schedule 1.

     1.5. Company is defined in the recitals to this Agreement.

     1.6. Company Indemnitees is defined in Section 2.8(b).

     1.7. Expiration Date means the fifth anniversary of the date of this Agreement.

     1.8. Form S-1, Form S-3, and Form S-4 mean such respective registration
forms in effect on the date hereof (or any successor registration forms
subsequently adopted by the SEC) under the 1933 Act.

     1.9. Holder means (a) any Person that owns, or has the right to acquire,
Registrable Securities and (b) any assignee thereof in accordance with Section
2.12.

     1.10. Holder Indemnitee is defined in Section 2.8(a).

     1.11. Indemnitee means each of the Company Indemnitees and the Holder
Indemnitees.

     1.12. Initiating Holders is defined in Section 2.1(a).

     1.13. Person means any present or future natural person or any
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.

     1.14. register, registered and registration refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the 1933 Act and the automatic effectiveness, or the
declaration or ordering of effectiveness, of such registration statement or
document.

2

 

     1.15. Registrable Securities means (i) Series A Registrable Securities,
and (ii) Series C Registrable Securities.

     1.16. Rule 144 is defined in Section 2.10(a).

     1.17. SEC means the Securities and Exchange Commission.

     1.18. Series A Registrable Securities means (i) any shares of Common Stock
of the Company issued or issuable to the Stockholders upon the exercise,
exchange or conversion of such Stockholder’s shares of Series A Preferred, as
the case may be, and (ii) any shares of Common Stock or other capital stock
issuable upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event with respect to any of the foregoing after the
date hereof, excluding in all cases, however, any Series A Registrable
Securities sold by a Person in a transaction in which rights under this
Agreement are not assigned in accordance with this Agreement or any Series A
Registrable Securities able to be sold to the public or pursuant to Rule
144(k).

     1.19. Series C Registrable Securities means (i) any shares of Common Stock
of the Company issued or issuable to the Stockholders upon the exercise,
exchange or conversion of such Stockholder’s shares of Series C Preferred, as
the case may be, (ii) any shares of Common Stock of the Company issued or
issuable upon the exercise, exchange or conversion of the warrants issued or
issuable to Harris Nesbitt Gerard in connection with the placement of the
Series C Preferred and (iii) any shares of Common Stock or other capital stock
issuable upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event with respect to any of the foregoing after the
date hereof, excluding in all cases, however, any Series C Registrable
Securities sold by a Person in a transaction in which rights under this
Agreement are not assigned in accordance with this Agreement or any Series C
Registrable Securities able to be sold to the public or pursuant to Rule
144(k).

     1.20. Significant Stockholder is defined in Section 2.12.

     1.21. Stockholder and Stockholders are defined in the recitals to this
Agreement.

     1.22. Violation means, with respect to any registration statement which
includes any Registrable Securities:

		
	 	     (a) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto;

		
	 	     (b) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; or

3

 

		
	 	     (c) any violation or alleged violation by the Company of the 1933
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the 1933
Act, the 1934 Act or any state securities law in connection with any
matter relating to such registration statement.

     2.     Registration Rights.

     2.1. Demand Registration.

		
	 	     (a) Series A Stockholders.

		
	 	     (i) At any time at least ninety days after the filing by the
Company of its Form 10-K with respect to the fiscal year ending
December 31, 2003, if the Company shall receive a written request
from the Holders of not less than 30% of the Registrable Securities
then outstanding and entitled to registration rights under this
Section 2 held by the Series A Stockholders (the “Series A
Initiating Holders”) that the Company effect the registration under
the 1933 Act of an amount of Registrable Securities set forth in
the written request provided that such registration shall have a
minimum anticipated aggregate net offering price of Ten Million
Dollars ($10,000,000) based on the then current trading price of
the Common Stock, then the Company shall, within ten days of the
receipt thereof, give written notice of such request to all
Holders. Such Holders shall have the right, by giving written
notice to the Company within 20 days from receipt of the Company’s
notice, to elect to have included in such registration such of
their Registrable Securities as such Holders may request in such
notice of election. Subject to the limitations of this Section
2.1, the Company shall use commercially reasonable efforts to
effect such a registration statement as soon as practicable and in
any event to file a registration statement under the 1933 Act
within forty-five (45) days of the receipt of such request if the
Company is eligible to use Form S-3 or, if the Company is not
eligible to use Form S-3, within sixty (60) days of such request,
covering all the Registrable Securities which the Holders shall in
writing request to be included in such registration and to use
commercially reasonable efforts to have such registration statement
become effective. The registration statement filed pursuant to the
request of the Initiating Holders may, subject to the cutback
provisions of Section 2.1(a)(ii) below, include other securities of
the Company that are held by officers and directors of the Company,
or that are held by Persons who, by virtue of agreements with the
Company, are entitled to include their securities in any such
registration.

		
	 	     (ii) If the Series A Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as part of their
request made pursuant to this Section 2.1(a) and the Company shall
include such information in the written notice referred to in
Section 2.1(a)(i). In such event, the right of any Holder to
include its Registrable Securities in such registration shall be
conditioned upon such Holder’s participation in such underwriting
and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders

4

 

		
	 	proposing to distribute their
securities through such underwriting shall (together with the
Company as provided in Section 2.3(d)) enter into an underwriting
agreement in
customary form with the underwriter or underwriters selected
for such underwriting by a majority in interest of the Initiating
Holders and approved by the Board of Directors, which approval
shall not be unreasonably withheld. Notwithstanding any other
provision of this Section 2.1(a), if, in the case of a registration
requested pursuant to Section 2.1(a), the underwriter advises the
Company and the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten
pursuant hereto, and all securities other than Registrable
Securities sought to be included in the underwriting shall first be
excluded. To the extent that further limitation is required, the
number of Series C Registrable Securities that may be included in
the underwriting shall be reduced pro rata among all Holders
thereof desiring to participate in such underwriting (according to
the number of Series C Registrable Securities then held by each
such Holder). If all Series C Registrable Securities have been
excluded and further reduction is required, the number of Series A
Registrable Securities that may be included in the underwriting
shall be reduced pro rata among all Holders thereof desiring to
participate in such underwriting (according to the number of Series
A Registrable Securities then held by each such Holder). No Series
A Registrable Securities requested by any Holder to be included in
a registration pursuant to Section 2.1(a) shall be excluded from
the underwriting unless all securities other than Series A
Registrable Securities are first excluded and no Series C
Registrable Securities requested by any Holder to be included in a
registration pursuant to Section 2.1(a) shall be excluded from the
underwriting unless all securities other than Registrable
Securities are first excluded.

		
	 	     (iii) The Company is obligated to effect only two (2)
registrations pursuant to Section 2.1(a), counting for this purpose
only registrations which have been declared effective.

		
	 	     (iv) Notwithstanding the provisions of this Section 2.1(a), in
the event that the Company is requested to file any registration
statement pursuant to Section 2.1(a):

		
	 	     (1) The Company shall not be obligated to effect the
filing of such registration statement during the period
starting with the date sixty (60) days prior to the date of
the Company’s good faith estimate of the filing of, and
ending on a date one hundred eighty (180) days following the
effective date of any other registration statement pertaining
to a public offering of securities for the account of the
Company;

5

 

		
	 	     (2) the Company shall not be obligated to effect more
than one (1) registration pursuant to Section 2.1(a) in any
twelve (12) month period; and

		
	 	     (3) if the Company shall furnish to the Series A
Initiating Holders a certificate signed by the President of
the Company stating that, in
the good faith judgment of the Board of Directors, it
would not be in the best interests of the Company and its
stockholders generally for such registration statement to be
filed, the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days
after receipt of the request of the relevant Series A
Initiating Holders; provided, however, that the Company may
not utilize the right set forth in this Section 2.1(a)(iv)(3)
more than once in any 12-month period.

		
	 	     (v) Each registration requested pursuant to Section 2.1(a)
shall be effected by the filing of a registration statement on Form
S-3 (if applicable) (or if such form is not available, Form S-1 or
any other form which includes substantially the same information
(other than information which is incorporated by reference) as
would be required to be included in a registration statement on
such form as currently constituted), unless another form would be
equally effective.

		
	 	     (b) Series C Stockholders.

		
	 	     (i) At any time after the closing of the Series C Purchase
Agreement, if the Company shall receive a written request from the
Holders of not less than 25% of the Registrable Securities then
outstanding and entitled to registration rights under this Section
2 held by the Series C Stockholders (the “Series C Initiating
Holders”) that the Company effect the registration under the 1933
Act of an amount of Registrable Securities set forth in the
written request, then the Company shall, within ten days of the
receipt thereof, give written notice of such request to all
Holders. Such Holders shall have the right, by giving written
notice to the Company within 20 days from receipt of the Company’s
notice, to elect to have included in such registration such of
their Registrable Securities as such Holders may request in such
notice of election. Subject to the limitations of this Section
2.1, the Company shall use commercially reasonable efforts to
effect such a registration statement as soon as practicable and in
any event to file a registration statement under the 1933 Act
within forty-five (45) days of the receipt of such request if the
Company is eligible to use Form S-3 or, if the Company is not
eligible to use Form S-3, within sixty (60) days of such request,
covering all the Registrable Securities which the Holders shall in
writing request to be included in such registration and to use
commercially reasonable efforts to have such registration statement
become effective. The registration statement filed pursuant to the
request of the Initiating Holders may, subject to the cutback
provisions of Section 2.1(b)(ii) below, include other securities of
the Company that are held by officers and directors of the Company,
or that are held by Persons

6

 

		
	 	who, by virtue of agreements with the
Company, are entitled to include their securities in any such
registration.

		
	 	     (ii) If the Series C Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as part of their
request made pursuant to this Section 2.1(b)
and the Company shall include such information in the written
notice referred to in Section 2.1(b)(i). In such event, the right
of any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder’s participation
in such underwriting and the inclusion of such Holder’s Registrable
Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder)
to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the
Company as provided in Section 2.3(d)) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the
Initiating Holders and approved by the Board of Directors, which
approval shall not be unreasonably withheld. Notwithstanding any
other provision of this Section 2.1(b), if, in the case of a
registration requested pursuant to Section 2.1(b), the underwriter
advises the Company and the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten
pursuant hereto, and all securities other than Registrable
Securities sought to be included in the underwriting shall first be
excluded. To the extent that further limitation is required, the
number of Series A Registrable Securities that may be included in
the underwriting shall be reduced pro rata among all Holders
thereof desiring to participate in such underwriting (according to
the number of Series A Registrable Securities then held by each
such Holder). If all Series A Registrable Securities have been
excluded and further reduction is required, the number of Series C
Registrable Securities that may be included in the underwriting
shall be reduced pro rata among all Holders thereof desiring to
participate in such underwriting (according to the number of Series
C Registrable Securities then held by each such Holder). No Series
C Registrable Securities requested by any Holder to be included in
a registration pursuant to Section 2.1(b) shall be excluded from
the underwriting unless all securities other than Series C
Registrable Securities are first excluded and no Series A
Registrable Securities requested by any Holder to be included in a
registration pursuant to Section 2.1(b) shall be excluded from the
underwriting unless all securities other than Registrable
Securities are first excluded.

7

 

		
	 	     (c) (iii) The Company is obligated to effect only two (2) registration
pursuant to Section 2.1(b), counting for this purpose only a
registration which has been declared effective.

		
	 	           (iv) Notwithstanding the provisions of this Section 2.1(b), in
the event that the Company is requested to file any registration
statement pursuant to Section 2.1(b):

		
	 	     (1) The Company shall not be obligated to effect the
filing of such registration statement in any particular
jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to
service of process in effecting such registration,
qualification or compliance;

		
	 	     (2) the Company shall not be obligated to effect the
filing of such registration statement during the period
starting with the date sixty (60) days prior to the date of
the Company’s good faith estimate of the filing of, and
ending on a date one hundred eighty (180) days following the
effective date of any other registration statement pertaining
to a public offering of securities for the account of the
Company; and

		
	 	     (3) if the Company shall furnish to the Series C Initiating
Holders a certificate signed by the President of the Company
stating that, in the good faith judgment of the Board of Directors,
it would not be in the best interests of the Company and its
stockholders generally for such registration statement to be filed,
the Company shall have the right to defer such filing for a period
of not more than one hundred twenty (120) days after receipt of the
request of the relevant Series C Initiating Holders; provided,
however, that the Company may not utilize the right set forth in
this Section 2.1(b)(iv)(2) more than once in any 12-month period.

		
	 	           (v) Each registration requested pursuant to Section 2.1(b)
shall be effected by the filing of a registration statement on Form
S-3 (if applicable) (or if such form is not available, Form S-1 or
any other form which includes substantially the same information
(other than information which is incorporated by reference) as
would be required to be included in a registration statement on
such form as currently constituted), unless another form would be
equally effective.

     2.2. Incidental Registration. If the Company proposes to register any of
its capital stock under the 1933 Act, whether for its own account or for the
account of stockholders other than the Holders (other than a registration
relating solely to the sale of securities to participants in a Company stock
plan, a registration on Form S-4 or a registration relating to a transaction
covered by Rule 145 under the 1933 Act, or a registration in which the only
equity securities

8

 

being registered are shares of Common Stock issuable upon
conversion of debt securities or
newly issued convertible preferred stock being registered as part of a
primary offering), the Company shall, each such time, promptly give each Holder
written notice of such registration. Upon the written request of any Holder
given within twenty (20) days after mailing of such notice by the Company, the
Company shall, subject to the provisions of Section 2.8, use commercially
reasonable efforts to cause a registration statement covering all of the
Registrable Securities that each such Holder has requested to be registered to
become effective under the 1933 Act. Except as otherwise set forth herein, the
Company shall be under no obligation to complete any offering of its securities
it proposes to make and shall incur no liability to any Holder for its failure
to do so.

     2.3. Obligations of the Company. Whenever required under this Section 2
to use commercially reasonable efforts to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible, prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use commercially reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities to be registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days; provided, that in the case of any registration of
Registrable Securities on Form S-3 that are intended to be offered on a
continuous or delayed basis, such 120 day period will be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold; provided, further, that (i) Rule 415, or any
successor rule promulgated under the 1933 Act, permits an offering on a
continuous or delayed basis, and (ii) applicable rules under the 1933 Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (x) includes any prospectus required by
Section 10(a)(3) of the 1933 Act, or (y) reflects facts or events representing
a material or fundamental change in the information set forth in the
registration statement, the incorporation by reference in the registration
statement of information required to be included in (x) or (y) above to be
contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1933
Act. In addition, the Company shall:

		
	 	     (a) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement, and use commercially reasonable efforts to
cause each such amendment and supplement to become effective, as may be
necessary to comply with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such registration statement;

		
	 	     (b) furnish to the Holders such reasonable number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;

		
	 	     (c) use commercially reasonable efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of

9

 

		
	 	such states and jurisdictions as shall be
reasonably requested by the Holders, except that the
Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or file a general consent to
service of process or subject itself to taxation in any such state or
jurisdiction;

		
	 	     (d) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering, and
generally provide its cooperation with such managing underwriter,
including making available members of senior management for the
underwriters’ “road show” presentations; provided, however, that each
Holder participating in such underwriting shall also enter into and
perform its obligations under such an underwriting agreement, including
furnishing any opinion of counsel or entering into a lock-up agreement
reasonably requested by the managing underwriter;

		
	 	     (e) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and promptly file such amendments and supplements which may be
required pursuant to Section 2.3(a) on account of such event and use
commercially reasonable efforts to cause each such amendment and
supplement to become effective;

		
	 	     (f) use its commercially reasonable efforts to furnish, at the
request of any Holder requesting registration of Registrable Securities
pursuant to this Section 2, on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 2, if such securities are being
sold through underwriters, or if not, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion or opinions, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as
is customarily given by company counsel to the underwriters in an
underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public
accountant of the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities;

		
	 	     (g) apply for listing and use commercially reasonable efforts to
list the Registrable Securities being registered on any national
securities exchange on which a class of the Company’s equity securities
is listed or, if the Company does not have a class of equity securities
listed on a national securities exchange, apply for qualification and use
commercially reasonable efforts to qualify the Registrable Securities
being registered

10

 

		
	 	for inclusion on the automated quotation system of the National
Association of Securities Dealers, Inc. or on a national securities
exchange; and

		
	 	     (h) take all necessary action to the extent commercially reasonable,
including the filing of post-effective amendments, to permit the Holders
to include their Registrable Securities in such registration in
accordance with the terms of this Section 2.

     2.4. Furnish Information.

		
	 	     (a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 2 in respect of the
Registrable Securities of any selling Holder that such selling Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition
of such Registrable Securities as shall be required to effect the
registration of such Registrable Securities. The Company shall have no
responsibility to any selling Holder, to the extent such selling Holder
fails to provide such information in a timely manner, and if the Company,
acting reasonably, determines it appropriate, the Company may delay the
filing of any such registration statement until the Holder provides such
information or exclude the Holder’s securities from the registration.

		
	 	     (b) No Holder shall distribute any prospectus or make any offer to
sell (or solicit any offer to purchase) or sell any Registrable
Securities in a transaction covered by a prospectus from and after the
time that the Company notifies the Holder that the prospectus fails to
state a material fact, contains a material misstatement or fails to state
a fact necessary in order to make the statements included in the
prospectus not misleading until the Company has provided a revised,
amended or supplemented prospectus that corrects the misstatement or
omission and, if so directed by the Company, each Holder will deliver to
the Company (at the Company’s expense) all copies of the prospectus
covering such Registrable Securities that is current at the time of the
receipt of the notice then in the Holder’s possession, excluding one file
copy which may be retained by the Holder.

		
	 	     (c) Each Holder shall comply with the prospectus delivery
requirements of the Securities Act in connection with offers to sell,
solicitations of offers to purchase, and sales of Registrable Securities
in connection with any offer or sale pursuant to a registration
statement.

     2.5. Expenses of Demand Registration. The Company shall bear all expenses
relating to Registrable Securities incurred in connection with each
registration, filing or qualification pursuant to Section 2.1, including all
registration, filing and qualification fees, printing and accounting fees, fees
and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders; provided, however, that
all underwriting discounts and commissions, if any, and transfer taxes relating
to Registrable Securities included in any registration effected pursuant to
Section 2 will be borne and paid ratably by the Holders of such Registrable
Securities.

11

 

     2.6. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to any registration pursuant to Section
2.2 for each Holder, including all registration, filing and qualification fees,
printing and accounting fees, fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of one counsel for the selling
Holders; provided, however, that all underwriting discounts and commissions, if
any, and transfer taxes relating to Registrable Securities included in any
registration effected pursuant to Section 2.3 will be borne and paid ratably by
the Holders of such Registrable Securities.

     2.7. Underwriting Requirements. In connection with any offering involving
an underwriting of securities being issued by or for the account of the
Company, the Company shall not be required under Section 2.2 to include any of
the Holders’ securities in such underwriting unless such Holders accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity, if any, as will
not, in the good faith opinion of the underwriters, adversely affect the
success of the offering by the Company. If the managing underwriter for the
offering shall advise the Company in writing that the total amount of
securities, including Registrable Securities, requested to be included in such
offering exceeds the amount of securities to be sold that can be successfully
offered, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
managing underwriter determines in its sole discretion will not adversely
affect the success of the offering. The securities so included in the offering
will be reduced as follows:

		
	 	     (a) first, all securities which stockholders other than the Company
and the Holders seek to include in the offering shall be excluded from
the offering to the extent limitation on the number of shares included in
the underwriting is required; and

		
	 	     (b) if further limitation on the number of shares to be included in
the offering is required after elimination of all shares held by selling
stockholders other than Holders of Registrable Securities, then the
securities that may be included in the underwriting by Holders shall be
reduced pro rata among the selling Holders in accordance with the number
of shares of Registrable Securities held by each such Holder.

For purposes of the preceding sentence concerning apportionment, for any
selling stockholder which is a Holder of Registrable Securities and which is a
partnership or a corporation, the partners, retired partners and stockholders
of such Holder, or the estates and family members of such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall
collectively be deemed to be a “selling Holder,” and any pro rata reduction
with respect to such “selling Holder” shall be based upon the aggregate number
of shares carrying registration rights owned by all entities and individuals
included in such “selling Holder,” as defined in this sentence.

     2.8. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:

12

 

		
	 	     (a) The Company will indemnify and hold harmless each Holder, the
officers, directors, partners, agents and employees of each Holder, any
underwriter (as defined in the 1933 Act) for such Holder and each Person,
if any, who controls, or is controlled by, such Holder or underwriter
within the meaning of the 1933 Act or the 1934 Act (collectively, the
“Holder Indemnitees”), against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the 1933 Act,
the 1934 Act or any other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any Violation. The Company will reimburse each
Holder Indemnitee for any legal or other expenses reasonably incurred by
such Holder Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action. The indemnity agreement
contained in this Section 2.8(a) shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable to
any Holder Indemnitee in any such case for any such loss, claim, damage,
liability or action (i) to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by or on behalf of such Holder Indemnitee; or supplied by
another Holder or (ii) in the case of a sale directly by a Holder of
Registrable Securities (including a sale of such Registrable Securities
through any underwriter retained by such Holder engaging in a
distribution solely on behalf of such Holder), such untrue statement or
alleged untrue statement or omission or alleged omission was contained in
a preliminary prospectus and corrected in a final or amended prospectus
which was timely delivered to such Holder, and such Holder failed to
deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the Registrable Securities to the Person
asserting any such loss, claim, damage or liability in any case in which
such delivery is required by the 1933 Act.

		
	 	     (b) Each Holder that includes any Registrable Securities in any
registration statement (i) will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the
registration statement, each Person, if any, who controls or is
controlled by the Company within the meaning of the 1933 Act or the 1934
Act, each agent and any underwriter for the Company, and any other Holder
or other stockholder selling securities in such registration statement or
any of its directors, officers, partners, agents or employees or any
Person who controls such Holder or such other stockholder or such
underwriter within the meaning of the 1933 Act or the 1934 Act
(collectively, the “Company Indemnitees”), against any losses, claims,
damages or liabilities (joint or several) to which any Company Indemnitee
may become subject under the 1933 Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by or on behalf of such Holder expressly for use in connection
with such registration and (ii) will reimburse any legal or other
expenses reasonably incurred by any Company Indemnitee in

13

 

		
	 	connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the
liability of any Holder hereunder shall be limited to the amount of
net proceeds (after deduction of all underwriters’ discounts and
commissions paid by such Holder in connection with the registration in
question) received by such Holder in the offering giving rise to the
Violation, less the aggregate purchase price of the Holder’s Registrable
Securities; and provided, further, that the indemnity agreement contained
in this Section 2.8(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is
effected without the consent of such Holder (which consent shall not be
unreasonably withheld) nor, in the case of a sale directly by the Company
of its securities (including a sale of such securities through any
underwriter retained by the Company to engage in a distribution solely on
behalf of the Company), shall such Holder be liable to the Company in any
case in which such untrue statement or alleged untrue statement or
omission or alleged omission was contained in a preliminary prospectus
and corrected in a final or amended prospectus, and the Company failed to
deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the securities to the Person asserting any
such loss, claim, damage or liability in any case in which such delivery
is required by the 1933 Act.

		
	 	     (c) Promptly after receipt by any Company Indemnitee or Holder
Indemnitee (collectively, the “Indemnitees”) under this Section 2.8 of
notice of the commencement of any action (including any governmental
action), such Indemnitee will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.8, deliver to
the indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume and control the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that such Indemnitee (together with all other Indemnitees which
may be represented without conflict by one counsel) shall have the right
to retain its own counsel, with the reasonable fees and expenses to be
paid by the indemnifying party, if representation of such Indemnitee by
the counsel retained by the indemnifying party would be inappropriate due
to actual or potential differing interests, as reasonably determined by
either party, between such Indemnitee and any other party represented by
such counsel in such proceeding. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of
any such action, shall relieve such indemnifying party of any liability
to the Indemnitee under this Section 2.8, but only to the extent that the
failure to notify the indemnifying party is prejudicial to the
indemnifying party’s ability to defend such action, but the omission so
to deliver written notice to the indemnifying party will not relieve it
of any liability that it may have to such Indemnitee otherwise than under
this Section 2.8.

		
	 	     (d) The obligations of the Company and the Holders under this
Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement whether under this Section 2 or
otherwise.

14

 

		
	 	     (e) If the indemnification provided for in this Section 2.8 is held
by a court of competent jurisdiction to be unavailable to a party that
would have been an Indemnitee
under this Section 2.8 in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
herein, then each party that would have been an indemnifying party
hereunder shall, in lieu of indemnifying such Indemnitee, contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of such indemnifying party, on the one hand, and such
Indemnitee, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof). The relative fault of
the indemnifying party and the Indemnitee shall be determined by
reference to, among other things, whether the Violation relates to
information supplied by such indemnifying party or such Indemnitee and
the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The parties agree that
it would not be just and equitable if contribution pursuant to this
Section 2.8(e) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the preceding sentence. The amount paid or
payable by a contributing party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 2.8(e) shall include any legal or other
expenses reasonably incurred by such Indemnitee in connection with
investigating or defending any such action or claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The liability of any Holder
of Registrable Securities in respect of any contribution obligation of
such Holder (after deduction of all underwriters’ discounts and
commissions paid by such Holder in connection with the registration in
question) arising under this Section 2.8(e) shall not in any event exceed
an amount equal to the net proceeds to such Holder from the disposition
of the Registrable Securities disposed of by such Holder pursuant to such
registration, less the aggregate purchase price of the Holder’s
Registrable Securities. Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with an underwritten
public offering are in conflict with the foregoing provisions, the
provisions of the underwriting agreement will control with respect to the
rights and obligations of each of the parties to the underwriting
agreement.

     2.9. Reports Under Securities Exchange Act of 1934.

		
	 	     (a) With a view to making available to the Holders the benefits of
Rule 144 promulgated under the 1933 Act (“Rule 144”) and any other rule
or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company
agrees to:

		
	 	     (i) use commercially reasonable efforts to make and keep
public information available, as those terms are understood and
defined in Rule 144, at

15

 

		
	 	all times so long as the Company remains
subject to the periodic reporting requirements under Section 13 or
15(d) of the 1934 Act; and

		
	 	     (ii) use commercially reasonable efforts to file with the SEC
in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act.

     2.10. Lock-up Agreements. If requested by the Company and the managing
underwriter, the Holders agree to enter into lock-up agreements pursuant to
which they will not, during the seven (7) days prior to, and for a period of no
longer than one hundred eighty days (180) following, the effective date of a
registration statement for the Company’s public offering of the Company’s
securities for the Company’s account, offer, sell or otherwise dispose of any
securities of the Company (except Registrable Securities sold pursuant to such
registration statement) without the prior consent of the Company and the
underwriter, provided that the executive officers and directors of the Company
enter such lock-up agreements for the same period and on the same terms. In
addition, each Holder agrees to execute an agreement, in the managing
underwriter’s standard form, reflecting the foregoing at the time of the
underwritten offering. The provisions of this Section 2.10 shall be binding
upon any transferee or assignee of any Registrable Securities, whether or not
such persons are entitled to registration rights pursuant to Section 2.11. The
obligation of the Holders under this Section 2.10 shall terminate on the
Expiration Date.

     2.11. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned
by any Holder without limitation to an affiliate (as such term is defined in
the 1934 Act); provided, that such affiliate is not an operating company that
is a direct competitor of the Company. In addition, the rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a third party transferee who acquires such Registrable
Securities, and by such transferee to a subsequent permitted transferee;
provided, that with respect to any such transfer, either the transferor is a
Significant Stockholder immediately prior to and subsequent to such transfer
and the transferee would hold at least five percent (5%) of the Company’s
outstanding Common Stock immediately after such transfer (on an as converted
basis), or, in the event the transferor is not a Significant Stockholder, such
transferor transfers in a single transaction to one party no less than all of
the shares subject to such rights held by the transferor; provided, however,
that such transfer does not constitute a distribution within the meaning of the
1933 Act and is otherwise effected in accordance with all applicable securities
laws. Any transferee to which rights under this Agreement are transferred,
including an affiliate of a Holder, shall: (i) as a condition to such
transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations imposed upon Holders under this Agreement
to the same extent as if such transferee were a Holder under this Agreement;
and (ii) be deemed to be a Holder hereunder. For purposes of this Section
2.11, Significant Stockholder shall mean any stockholder of the Company holding
at least ten percent (10%) of the Company’s outstanding capital stock (on an
as-converted basis) as of the date the Company is notified of any proposed
transfer of securities by such stockholder.

16

 

     2.13. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as a
result of any controversy that might arise with respect to the interpretation
or implementation of this Section 2.

     3.     Termination. The right of any Holder to request registration or
inclusion in any registration pursuant to this Agreement shall terminate on the
Expiration Date.

     4.     Specific Performance. The parties recognize that their respective
rights under this Agreement are unique, and, accordingly, each party shall, in
addition to such other remedies as may be available to it at law or in equity,
have the right to enforce its rights hereunder by actions for injunctive relief
and specific performance to the extent permitted by law. This Agreement is not
intended to limit or abridge any rights of either party which may exist apart
from this Agreement.

     5.     Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing and delivered in Person,
transmitted by facsimile transmission (fax) or sent by registered or certified
mail (return receipt requested) or recognized overnight delivery service,
postage pre-paid, addressed (a) if to a Holder to such address as such holder
shall have furnished the Company in writing, or, until any such Holder so
furnishes an address to the Company, then to and at the address of the last
Holder of such securities who has so furnished an address to the Company or (b)
if to the Company, to 1290 Bay Dale Drive, PMB 351, Arnold, Maryland 21012, to
the attention of the Corporate Secretary, or to such other address has such
party may notify to the other parties in writing. A notice or communication
will be effective (i) if delivered in Person or by overnight courier, on the
business day it is delivered, (ii) if transmitted by telecopier, on the
business day of actual confirmed receipt by the addressee thereof, and (iii) if
sent by registered or certified mail, three (3) business days after dispatch.

     6.     Binding Effect; Assignment. This Agreement shall be binding upon, and
inure to the benefit of, the parties and their respective personal
representatives, successors and permitted assigns; provided, however, that the
Company shall not have the right to assign its rights and obligations
hereunder, or any interest herein, without the prior written consent of the
holders of a majority of the Registrable Securities then outstanding.

     7.     Course of Dealing; Amendments, Waivers and Consents. No course of
dealing between the parties shall operate as a waiver of any party’s rights
under this Agreement. Each party acknowledges that if any party, without being
required to do so by this Agreement, gives any notice or information to, or
obtains any consent from, the other party, such party shall not by implication
have amended, waived or modified any provision of this Agreement, or created
any duty to give any such notice or information or to obtain any such consent
on any future occasion. No delay or omission on the part of any party in
exercising any right under this Agreement shall operate as a waiver of such
right or any other right hereunder or thereunder. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion. No amendment, waiver or consent with respect to this
Agreement shall be binding

17

 

unless it is in writing and signed by each of the Company and the holders of a
majority of the Registrable Securities then outstanding.

     8.     Additional Investors. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Series C
Preferred pursuant to the Series C Purchase Agreement, any purchaser of such
shares of Series C Preferred may become a party to this Agreement by executing
and delivering an additional counterpart signature page to this Agreement
(without the necessity of an amendment hereto) and shall be deemed a Holder
hereunder.

     9.     Miscellaneous. If any provision of this Agreement shall be found by
any court of competent jurisdiction to be invalid or unenforceable, the parties
hereby waive such provision to the extent that it is found to be invalid or
unenforceable. Such provision shall, to the maximum extent allowable by law,
be modified by such court so that it becomes enforceable, and, as modified,
shall be enforced as any other provision hereof, all the other provisions
hereof continuing in full force and effect. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation hereof. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior understandings and agreements, whether written or
oral, with respect to such subject matter. This Agreement supersedes the Prior
Rights Agreement and, as of the date hereof the Prior Rights Agreement shall no
longer have any force or effect. This Agreement may be executed in
counterparts, which together shall constitute one and the same instrument.
This Agreement shall be governed by and construed in accordance with the laws
(other than the conflict of laws rules) of the State of Delaware.

[Signature pages follow]

18

 

SIGNATURE PAGE FOR REGEN BIOLOGICS

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Registration Rights Agreement to be duly executed by their respective
authorized persons as of the date first indicated above.

	 	 	 
	 	 	
REGEN BIOLOGICS
	 	 	 
	 	 	
By:
	 	 	

      Name:
	 	 	
      Title:
	 	 	 
	 	 	
STOCKHOLDER:
	 	 	 
	 	 	
If Individual:
	 	 	 
	 	 	
Print Name:
	 	 	

	 	 	 
	 	 	
Signature:
	 	 	

	 	 	 
	 	 	
If Corporation, Partnership, Limited Liability
	 	 	
Company or Other Entity:
	 	 	 
	 	 	
Print Name of Entity:
	 	 	

	 	 	 
	 	 	
Signature: By:
	 	 	

19exv10w2

 

Exhibit 10.2

REGEN BIOLOGICS, INC.

SERIES C CONVERTIBLE PREFERRED STOCK

PURCHASE AGREEMENT

Dated as of September 23, 2003

 

 

REGEN BIOLOGICS, INC.

SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

     This Agreement, dated as of September 23, 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 17,900,000 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 1,600,000 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.

2

 

               (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. 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 outstanding options and warrants to purchase 12,791,540 and

3

 

5,473,554 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 Subsidiary of
any nature whatsoever (contingent or otherwise), (c) any asset or property of
the

4

 

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.

5

 

          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 business as proposed, would violate any of the patents,
trademarks, service marks, trade names,

6

 

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 or personal, owned by any other party; (h)
lease or agreement under which the Company or any

7

 

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 this Agreement.

          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 the
Company’s or any of its Subsidiaries knowledge, none of the federal or state
income tax

8

 

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

9

 

(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.

10

 

          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.

          5.5    Opinion of Counsel. Purchasers shall have received from Shaw Pittman,
LLP, special counsel to the Company, an opinion dated as of the Closing, in a
form set forth as Exhibit E.

          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

12

 

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.

               (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

13

 

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 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.

14

 

          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]

16

 

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

	 	 	 	 	 
	 	 	REGEN BIOLOGICS, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	Gerald E. Bisbee, Jr., Ph.D.
	 	 	
Title:
	 	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:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00056-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00056-of-00352.parquet"}]]