Document:

exv10w6

 

Exhibit 10.6

OPTION AGREEMENT

     This Option Agreement (“Option Agreement”) is made as of the 1st day of December,
2006 (the “Effective Date”), by and between ReGen Biologics, Inc., a Delaware corporation
(hereinafter referred to as the “Company”), and the undersigned investor (together with its
successors and permitted assigns, the “Holder”).

RECITALS

     WHEREAS, in order to induce the Holder to enter into that certain Subscription Agreement
between the Company and the Holder dated as of December 1, 2006 (the “Subscription Agreement”), the
parties have entered into this Option Agreement granting to the Holder an option to purchase,
pursuant to the terms and conditions set forth herein, the Option Shares (as hereinafter defined);

     NOW, THEREFORE, BE IT RESOLVED, in consideration of the mutual covenants expressed herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties agree as follows:

AGREEMENT

	 	1.	 	GRANT AND VESTING OF OPTION.

	 	(a)	 	Grant. Subject to the terms hereof, the Company hereby
grants to the Holder the option (the “Option”) to purchase from the Company
such number of shares (the “Option Shares”) of the Company’s common stock,
$0.01 par value (the “Common Stock”) equal to the number of shares purchased by
the Holder pursuant to the Subscription Agreement.
	 
	 	(b)	 	Vesting. The Holder may exercise this Option upon, and
not later than fifteen (15) calendar days following, the Company’s public
announcement of receipt of Food and Drug Administration clearance of the
Company’s collagen scaffold device as a class II device (the last date of such
15-day period, the “Expiration Date”). In no event shall this Option be
exercised later than the Termination Date provided for below.
	 
	 	(c)	 	Exercise Price. The “Exercise Price” shall be $0.37
per Option Share.
	 
	 	(d)	 	Term. The Option shall terminate upon the earlier of
(i) the Expiration Date, (ii) December 31, 2007 (the “Termination Date”) and
(iii) partial exercise as provided by Section 2 below.

	 	2.	 	EXERCISE OF OPTION. In order to exercise the Option, the Holder must
present at the Company’s princial executive offices the following:

 

 

	 	(a)	 	the original Option Agreement together with a fully executed
Option Exercise Form in the form attached hereto and made a part hereof as
Exhibit A, including the representation to the Company that all of the
representations and warranties made by the Holder in Section 6(b) of this
Option Agreement are true and correct on the date of exercise; and
	 
	 	(b)	 	a certified or bank cashier’s check payable to the Company or a
wire transfer of immediately available funds in the amount of the product of
the Option Shares to be exercised and the Exercise Price (such amount, the
“Exercise Amount”).

The Company shall promptly thereafter deliver, or cause to be delivered, to the
Holder certificates for the number of Option Shares being purchased. If the Holder
elects to exercise the Option for less than all of the Options Shares subject
hereto, the option to purchase the remainder of the Option Shares shall immediately
terminate.

	 	3.	 	TRANSFER. This Option may not be transferred or assigned in any
manner, without the consent of the Company in its sole and absolute discretion.
	 
	 	4.	 	RIGHTS AND OBLIGATIONS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights as a stockholder in the Company, either at law or in
equity; provided, however, in the event that any certificate representing Option Shares
is issued to the Holder upon exercise of some or all of the Option, the Holder shall,
for all purposes, be deemed to have become the holder of record of such Option Shares
on the date on which full payment of the Exercise Amount was made, irrespective of the
date of delivery of the certificate representing such Option Shares. The rights of the
Holder are limited to those expressed herein.
	 
	 	5.	 	REGISTRATION RIGHTS. The Holder shall have the following registration
rights with respect to the Option Shares:

	 	(a)	 	Required Registration. The Company agrees to register
the resale of the Option Shares by filing a Registration Statement on Form S-1
or on any other form for which the Company then qualifies and is available (the
“Registration Statement”) with the SEC within the earlier of (i) thirty (30)
calendar days after the filing of the Company’s Form 10-K for the prior fiscal
year or (ii) ninety (90) calendar days after the Expiration Date, or
registering such Option Shares on any Registration Statement filed by the
Company. The Company shall subsequently use commercially reasonable efforts to
cause the SEC to declare the Registration Statement effective as soon as
possible. The Company shall thereafter maintain the effectiveness of the
Registration Statement until the earlier of (a) the date on which all the
Option Shares have been sold pursuant to the Registration Statement or Rule 144
promulgated under the Securities Act (“Rule 144”), (b) such time as the Company
reasonably determines, based on an opinion of counsel, that all of the holders
of options granted contemporaneously

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	 	 	 	with the Option will be eligible to sell under Rule 144 all of the option shares then owned by such holders within the volume limitations imposed by
paragraph (e) of Rule 144 in the three (3) month period immediately
following the termination of the effectiveness of the Registration
Statement, and (c) the first anniversary of the date the Registration
Statement was declared effective by the SEC. The Registration Statement
filed pursuant to this Section 5(a) may include other securities of the
Company that are held by individuals, partnerships, corporations, business
trusts, joint stock companies, estates, trusts, unincorporated associations,
joint ventures or other entities who, by virtue of agreements with the
Company, are entitled to similar registration rights.

	 	(b)	 	Registration Procedures.

	 	i.	 	In case of the Registration Statement effected
by the Company subject to this Section 5, the Company shall keep the
Holder advised in writing as to the initiation of such registration,
and as to the completion thereof. In addition, subject to Section 5(a)
above, the Company shall, to the extent applicable to the Registration
Statement:

	 	a)	 	prepare and file with the SEC
such amendments and supplements to the Registration Statement as
may be necessary to keep such registration continuously
effective and free from any material misstatement or omission
necessary to make the statements therein, in light of the
circumstances, not misleading, and comply with provisions of the
Securities Act with respect to the disposition of all securities
covered thereby during the period referred to in Section 5(a);
	 
	 	b)	 	update, correct, amend and
supplement the Registration Statement as necessary;
	 
	 	c)	 	notify the Holder promptly when
the Registration Statement is declared effective by the SEC, and
furnish such number of prospectuses, including preliminary
prospectuses, and other documents incident thereto as Holder may
reasonably request from time to time;
	 
	 	d)	 	use its commercially reasonable
efforts to register or qualify such Option Shares under such
other securities or blue sky laws of such jurisdictions of the
United States where an exemption is not available and as Holder
may reasonably request to enable it to consummate the
disposition in such jurisdiction of the Option Shares (provided
that the Company will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise
be required to qualify but for this
provision, or (B) consent to general service of process in
any such jurisdiction, or (C) subject itself to taxation in
any jurisdiction where it is not already subject to
taxation);

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	 	e)	 	notify Holder at any time when a
prospectus relating to the Option Shares is required to be
delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in the
Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements
therein not misleading and, subject to Section 5(a), the Company
will prepare a supplement or amendment to such prospectus, so
that, as thereafter delivered to purchasers of such shares, such
prospectus will not contain any untrue statements of a material
fact or omit to state any fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
	 
	 	f)	 	cause all such Option Shares to
be listed on each securities exchange on which similar
securities issued by the Company are then listed and obtain all
necessary approvals for trading thereon;
	 
	 	g)	 	provide a transfer agent and
registrar for all such Option Shares not later than the
effective date of the Registration Statement;
	 
	 	h)	 	upon the sale of any Option
Shares pursuant to the Registration Statement, direct the
transfer agent to remove all restrictive legends from all
certificates or other instruments evidencing the Option Shares;
	 
	 	i)	 	With a view to making available
to the Holder the benefits of certain rules and regulations of
the SEC that at any time permit the sale of the Option Shares to
the public without registration, so long as any Option Shares
are outstanding, the Company shall use its commercially
reasonable efforts for a period of two years following the
Effective Date:

	 	(1)	 	to make and keep
public information available, as those terms are
understood and defined in Rule 144(c) under the
Securities Act;
	 
	 	(2)	 	to file with the
SEC in a timely manner all reports and other documents
required of the Company under the Exchange Act; and
	 
	 	(3)	 	to furnish to the
Holder upon any reasonable request a written statement
by the Company as to its compliance with the public
information
requirements of Rule 144(c) under the Securities Act;
and

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	 	j)	 	To advise the Holder promptly
after it has received notice or obtained knowledge of the
existence of any stop order by the SEC delaying or suspending
the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose, and to
make every commercially reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time.

	 	ii.	 	Notwithstanding anything stated or implied to
the contrary in Section 5(b)(i) above, the Company shall not be
required to consent to any underwritten offering of the Option Shares
or to any specific underwriter participating in any underwritten public
offering of the Option Shares.
	 
	 	iii.	 	Each Holder agrees that upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5(b)(i)(e), and subject to Section 5(d), such
Holder will forthwith discontinue such Holder’s disposition of Option
Shares pursuant to the registration statement relating to such Option
Shares until such Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(b)(i)(e) and, if so
directed by the Company, will deliver to the Company at the Company’s
expense all copies, other than permanent file copies, then in such
Holder’s possession, of the prospectus relating to such Option Shares
current at the time of receipt of such notice.
	 
	 	iv.	 	Except as required by law, all expenses
incurred by the Company in complying with this Section 5, including but
not limited to, all registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel and accountants
for the Company, blue sky fees and expenses (including fees and
disbursements of counsel related to all blue sky matters) incurred in
connection with any registration, qualification or compliance pursuant
to this Section 5 shall be borne by the Company. All underwriting
discounts and selling commissions applicable to a sale incurred in
connection with any registration of Option Shares and the legal fees
and other expenses of a Holder shall be borne by such Holder.

	 	(c)	 	Further Information. If Option Shares owned by a
Holder are included in any registration, such Holder shall furnish the Company
such information regarding itself as the Company may reasonably request and as
shall be required in connection with any registration (or amendment or
supplement thereto), referred to in this Agreement, and Holder shall indemnify
the Company with respect thereto in accordance with Section 9 hereof. The

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	 	 	 	Holder hereby represents and warrants to the Company that it has accurately
and completely provided the requested information and answered the questions
numbered (a) through (d) on the signature pages of the Subscription
Agreement, and the Holder agrees and acknowledges that the Company may rely
on such information as being true and correct for purposes of preparing and
filing the Registration Statement at the time of filing thereof and at the
time it is declared effective, unless the Holder has notified the Company in
writing to the contrary prior to such time.

	 	(d)	 	Right of Suspension.

	 	i.	 	Notwithstanding any other provision of this
Agreement or any related agreement to the contrary, the Company shall
have the right, at any time, to suspend the effectiveness of the
Registration Statement and offers and sales of the Option Shares
pursuant thereto whenever, in the good faith judgment of the Company,
(i) continuing such effectiveness or permitting such offers and sales
could reasonably be expected to have an adverse effect upon the
Company’s ability to raise additional funds pursuant to one or more
private placements of shares of the Company or any debt securities of
the Company, a proposed sale of all or substantially all of the assets
of the Company or a merger, acquisition, reorganization,
recapitalization or similar current transaction materially affecting
the capital, structure, or equity ownership of the Company, (ii) the
Registration Statement must be suspended in order to register
additional shares of Common Stock, (iii) there exists a material
development or a potential material development with respect to or
involving the Company that the Company would be obligated to disclose
in the prospectus used in connection with the Registration Statement,
which disclosure, in the good faith judgment of the Company, after
considering the advice of counsel, would be premature or otherwise
inadvisable at such time, or (iv) the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated
therein by reference contains 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, in light of the
circumstances, not misleading, including without limitation that period
annually during which any Registration Statement would require
suspension pending the Issuer’s new fiscal year financial statements (a
“Suspension Event”). In the event that the Company shall determine to
so suspend the effectiveness of the Registration Statement and offers
and sales of the Option Shares pursuant thereto, the Company shall, in
addition to performing those acts required to be performed under the
Securities Act and/or the Exchange Act or deemed advisable by the
Company, deliver to each Holder written notice thereof, signed by the
Chief Financial Officer or Chief Executive

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	 	 	 	Officer of the Company. Upon receipt of such notice, the Holders
shall discontinue disposition of the Option Shares pursuant to the
Registration Statement and prospectus until such Holders (x) are
advised in writing by the Company that the use of the Registration
Statement and prospectus (and offers and sales thereunder) may be
resumed, (y) have received copies of a supplemental or amended
prospectus, if applicable, and (z) have received copies of any
additional or supplemental filings which are incorporated or deemed
to be incorporated by reference into such prospectus. The Company
will exercise commercially reasonable efforts to ensure that the use
of the Registration Statement and prospectus may be resumed as
quickly as practicable.
	 	ii.	 	The Company’s right to suspend the
effectiveness of the Registration Statement and the offers and sales of
the Option Shares pursuant thereto, as described above in this Section
5(d), shall be for a period of time (the “Suspension Period”) beginning
on the date of the occurrence of the Suspension Event and expiring on
the earlier to occur of (i) the date on which the Suspension Event
ceases, or (ii) ninety (90) days after the occurrence of the Suspension
Event; provided, however, that there shall not be more than two
Suspension Periods in any 12- month period. Notwithstanding the
foregoing, the Company shall be able to suspend the effectiveness of
the Registration Statement and offers and sales of the Option Shares
for any time period as may reasonably be required in order to update
the Registration Statement to replace financial information which is no
longer current, as required by applicable securities law.
	 
	 	iii.	 	In addition, in connection with any
underwritten public offering of securities of the Company, if requested
by the Company or its managing underwriter, each Holder will enter into
a lock-up agreement pursuant to which such Holder will not, during the
seven (7) days prior to, and for a period no longer than one hundred
eighty (180) days following, the date of the prospectus (or if the
offering is pursuant to a shelf registration statement, the date of the
pricing prospectus supplement) relating to the offering, offer, sell or
otherwise dispose of any securities of the Company without the prior
consent of the Company and the managing underwriter, provided that the
executive officers and directors of the Company enter into lockup
agreements for a period at least as long and on the same terms.

	 	6.	 	COVENANTS.

	 	(a)	 	The Company covenants and agrees that all Option Shares
delivered upon exercise (in accordance with the terms and conditions set forth
herein) of the Option will, upon delivery, be duly and validly authorized and
issued,
fully paid and non-assessable, and free from all liens and charges with
respect to the purchase thereof.

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	 	(b)	 	The Company covenants and agrees that this Option Agreement has
been duly and validly authorized, executed and delivered. In addition, the
Company agrees at all times to reserve and keep available an authorized number
of shares of its Common Stock sufficient to permit the exercise in full of the
Option.

	 	7.	 	REPRESENTATIONS AND WARRANTIES.

	 	(a)	 	The Option Shares will not be registered under the Securities
Act of 1933, as amended, or the rules and regulations promulgated thereunder
(such Act and rules and regulations being hereinafter referred to as the “Act”)
or any state securities laws. The Holder agrees that the sale or any other
disposition of the Option Shares will be made in compliance with Federal and
applicable state securities laws.
	 
	 	(b)	 	The Holder hereby represents and warrants to the Company as
follows:

	 	i.	 	it is an “accredited investor” within the
meaning of Rule 501 under the Act;
	 
	 	ii.	 	it is sophisticated and experienced in matters
of equity investing in general and in financial and business matters
related to the business of the Company in particular, capable of
evaluating the merits and risks of an investment in the Option and the
Option Shares;
	 
	 	iii.	 	it is acquiring the Option and will acquire the
Option Shares for investment for its own account and not with a view to
any distribution thereof in violation of Federal or applicable state
securities laws;
	 
	 	iv.	 	this Option Agreement and the transactions
hereby have been duly approved by all requisite action of the Holder,
and the Holder has full power and authority to enter into and perform
its obligations under this Option Agreement, and to otherwise carry-out
the transactions contemplated by this Option Agreement, without the
consent or approval of, notice to or registration with any person,
association, entity or governmental authority;
	 
	 	v.	 	this Option Agreement is a legal, valid and
binding obligation of the Holder enforceable in accordance with its
terms; and
	 
	 	vi.	 	the execution, delivery, performance and
consummation of this Option Agreement and the transactions provided for
herein do not
and will not violate: (a) any contract, agreement or other commitment
to which the Holder is a party, or by which the Holder is bound; or
(b) any order, writ, injunction, decree, statute, ordinance, rule or
regulation applicable to the Holder.

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	 	8.	 	FRACTIONAL SHARES. The Company shall not be required to issue any
fraction of a share of Common Stock upon the exercise of the Option. If any fractional
interest in a share of Common Stock shall be deliverable upon the exercise of the
Option (in whole or in part), the Company shall make an adjustment therefor in cash
equal to such fraction multiplied by the closing price of the Common Stock on the
business day directly preceding the day of exercise. If there is no closing price,
then the fraction shall be multiplied by the fair market of a share of Common Stock as
determined by the Board of Directors of the Company.
	 
	 	9.	 	INDEMNIFICATION.

	 	(a)	 	Indemnification by the Company. The Company will
indemnify and hold harmless each Holder of Option Shares which are included in
a registration statement pursuant to the provisions of Section 5 hereof and any
underwriter (as defined in the Securities Act) for such Holder, and any person
who controls such Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act or such underwriter within the
meaning of the Securities Act, and any officer, director, investment adviser,
employee, agent, partner, member or affiliate of such Holder (each, a “Holder
Indemnified Party”), from and against, and will reimburse each such Holder
Indemnified Party with respect to, any and all claims, actions, demands,
losses, damages, liabilities, costs and reasonably incurred expenses to which
such Holder or any such Holder Indemnified Party may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or reasonably incurred expenses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any materially inaccurate representation or breach of any material
warranty, agreement or covenant of the Company contained herein;
provided, however, that the Company will not be liable in any such case
to the extent that any such claim, action, demand, loss, damage, liability,
cost or expense is caused by an untrue statement or alleged untrue statement or
omission or alleged omission (1) made in conformity with information furnished
by such Holder in writing specifically for use in the preparation thereof, or
(2) which was cured in an amendment or supplement to the prospectus (or any
amendment or
supplement thereto) delivered to the Holder on a timely basis to permit
proper delivery thereof prior to the date on which any Option Shares were
transferred or sold.

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	 	(b)	 	Indemnification by the Holder. Each Holder of Option
Shares which are included in a registration statement pursuant to the
provisions of Section 5 hereof will indemnify and hold harmless the Company,
and any Person who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and any officer,
director, employee, agent, partner, member or affiliate of the Company (each,
an “Company Indemnified Party”) from and against, and will reimburse the
Company Indemnified Parties with respect to, any and all losses, damages,
liabilities, costs or reasonably incurred expenses to which such Company
Indemnified Parties may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or reasonably incurred
expenses are caused by any untrue or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or are caused by the omission or the
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, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was so made solely in reliance upon and in conformity with
written information furnished by such Holder specifically for use in the
preparation thereof; provided, however, that the liability of any
Holder pursuant to this Section 9(b) shall be limited to an amount not to
exceed the net proceeds received by such Holder from the sale of Option Shares
pursuant to the registration statement which gives rise to such obligation to
indemnify.
	 
	 	(c)	 	Procedures. Promptly after receipt by a party
indemnified pursuant to the provisions of Section 9(a)or Section 9(b) of notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of Section 9(a)
or Section 9(b), notify the indemnifying party of the commencement thereof; but
the omission to so notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9 and shall not relieve the indemnifying party from liability under
this Section 9, except to the extent that such indemnifying party is materially
prejudiced by such omission. In case such action is brought against any
indemnified party and such indemnified party notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably

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	 	 	 	satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of Section 9(a) or Section 9(b)
for any legal or other expense subsequently incurred by such indemnified
party in connection with the defense thereof. No indemnifying party shall
be liable to an indemnified party for any settlement of any action or claim
without the consent of the indemnifying party. No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.

	 	10.	 	SURVIVAL. The obligations of the Holder as set forth in Section 4
hereof shall survive the exercise of the Option in full and the termination of this
Option Agreement.
	 
	 	11.	 	NOTICES. Any notice required or permitted to be given hereunder shall
be in writing, and shall be either (i) personally delivered, (ii) sent by U.S.
certified or registered mail, return receipt requested, postage prepaid, or (iii) sent
by Federal Express or other reputable common carrier guaranteeing next business day
delivery, to the respective addresses of the parties set forth below, or to such other
place as any party hereto may by notice given as provided herein designate for receipt
of notices hereunder. Any such notice shall be deemed given and effective upon receipt
or refusal of receipt thereof by the primary party to whom it is to be sent.
	 
	 	 	 	To the Holder, at the address provided in the Subscription Agreement.

	 	 	 
	To the Company:

	 	ReGen Biologics, Inc.
	 

	 	509 Commerce Street
	 

	 	Franklin Lakes, NJ 07417
	 

	 	Attention: Brion D. Umidi
	 

	 	Telecopy: 201.651.5141

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	with a copy to:

	 	 
	 

	 	Pillsbury Winthrop Shaw Pittman LLP
	 

	 	1650 Tysons Boulevard
	 

	 	McLean, VA 22102
	 

	 	Attention: David C. Main, Esq.
	 

	 	Telecopy: 703.770.7901

	 	12.	 	GOVERNING LAW. This Option Agreement shall be governed by the laws of
the State of New York without reference to its principles of conflicts of laws.
	 
	 	13.	 	LITIGATION. It is the intent of the parties upon execution hereof that
this Option Agreement be deemed to have been prepared by all of the parties to the end
that no party shall be entitled to the benefit of any favorable interpretation or
construction of any term or provision hereof under any rule or law.
	 
	 	14.	 	ENTIRE AGREEMENT. This Option Agreement, together with the
Subscription Agreement, contains the entire understanding between the parties
concerning the subject matter of this Option Agreement. There are no representations,
agreements, arrangements or undertakings, oral or written, between the parties relating
to the subject matter of this Option Agreement which are not fully expressed herein or
in the Subscription Agreement, and all prior agreements, to the extent they pertain to
the subject matter herein, are canceled and of no further force or effect. This Option
Agreement may not be amended or modified except in a writing signed by the parties
hereto.
	 
	 	15.	 	BINDING EFFECT. This Option Agreement shall be binding upon and inure
to the benefit of the Company and the Holder. Nothing in this Option Agreement is
intended or shall be construed to confer upon any other person any right, remedy or
claim, in equity or at law, or to impose upon any other person any duty, liability or
obligation.

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     IN WITNESS WHEREOF, the parties have caused this Option Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	ReGen Biologics, Inc.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NAME OF HOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	SIGNATURE:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

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EXHIBIT A

OPTION EXERCISE FORM

                    , 200_

ReGen Biologics, Inc.

509 Commerce Street

Franklin Lakes, NJ 07417

Attention: Brion D. Umidi

Telecopy: 201.651.5141

          The undersigned hereby irrevocably elects to exercise its rights under the Option Agreement
dated December 1, 2006 made by and between ReGen Biologics, Inc. and the undersigned, by purchasing
the number of Option Shares listed below and hereby makes payment of the Exercise Amount listed
below.

Number of Option Shares Purchased                                               

Exercise Price Per Share: $                                        

Exercise Amount:            $                                        

     The undersigned hereby represents and warrants to the Company that all of the representations
and warranties made by the Holder in Section 6(b) of the Option Agreement are true and correct as
of the date set forth above.

     Please register and deliver the Option Shares in the name and to the address set forth below.

	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	(Please typewrite or print in block letters)	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NAME OF HOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	SIGNATURE OF HOLDER:	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	Name:	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	Title:exv10w9

 

Exhibit 10.9

Description of the Elective Deferred Compensation Plan II

In response to passage of The American Jobs Creation Act of 2004 (the “Act”), the Board of
Directors of Fannie Mae has taken steps to ensure that the company’s deferred compensation plans,
programs, and arrangements comply with new requirements under the Internal Revenue Code of 1986.
Specifically, the Act added a new section to the Internal Revenue Code, Section 409A, which imposes
new requirements on deferred compensation arrangements. Accordingly, on November 16, 2004, Fannie
Mae’s Board of Directors authorized and directed the creation of a new elective deferred
compensation plan to comply with Section 409A. We refer to the new plan as the “Elective Deferred
Compensation Plan II.”

Apart from changes required by Section 409A, the terms of the Elective Deferred Compensation Plan
II are modeled on our existing elective deferred compensation plan, which we refer to as the
Elective Deferred Compensation Plan I, a copy of which is incorporated by reference as an exhibit
to our Form 8-K filed on November 22, 2004. The Elective Deferred Compensation Plan II applies to
compensation that is earned after December 31, 2004.

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