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EXHIBIT 10.10
EXECUTION COPY
MEMBERS' AGREEMENT dated as
of June 30, 1999, among DONJOY, L.L.C., a
Delaware limited liability company (the
"Company"), and the Members that are parties
hereto.
WHEREAS, each Member deems it to be in the best interest of the
Company and the Members that provision be made for the continuity and stability
of the business and policies of the Company, and, to that end, the Company and
the Members hereby set forth herein their agreement with respect to the Member
Units owned by them.
NOW, THEREFORE, in consideration of the premises and of the mutual
consents and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following
respective meanings:
"AFFILIATE" shall mean with respect to any Person, any other
Person, directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with such Person. The term "control" means
and includes the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"BOARD" shall mean the Board of Managers of the Company.
"CHASE" shall mean Chase DJ Partners, LLC.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"COMMON UNIT" shall mean one Common Unit as defined in the
Operating Agreement.
"FAIR VALUE PER UNIT" shall mean, as of any date of determination,
the fair value of each Unit (or, with respect to a warrant or option, the fair
value of each Unit obtainable upon exercise thereof net of the exercise price),
determined as follows: At any time that the Fair Value Per Unit shall be
required to be determined hereunder, the Board shall make a good faith
determination (the "Board's Determination") of the fair value of each Unit
within 30 days of the delivery by the Company of a Repurchase Notice (without
taking into account that the Units may be "restricted securities" but with a
reasonable discount (not to exceed 20%) for the minority position represented by
the Units and shall provide to the Member with respect to whose Unit such
determination is being made a written notice thereof which notice shall set
forth supporting data in respect of such calculation (the "Determination
Notice"). The Member shall have 10 days following receipt of the Determination
Notice within which to deliver to the Company a written notice (the "Objection
Notice") of an objection, if any, to the Board's Determination, which Objection
Notice shall set forth the Member's good faith determination (the "Member's
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Determination") of the fair value of each Unit. The failure by the Member to
deliver the Objection Notice within such 10-day period shall constitute the
Member's acceptance of the Board's Determination as conclusive. In the event of
the timely delivery of an Objection Notice, the Company and the Member shall
attempt in good faith to arrive at an agreement with respect to the Fair Value
Per Unit, which agreement shall be set forth in writing within 15 days following
delivery of the Objection Notice. If the Company and the Member are unable to
reach an agreement within such 15-day period, the matter shall be promptly
referred for determination to a regionally or nationally recognized investment
banking or valuation firm (the "Valuer") reasonably acceptable to the Company
and the Member. The Company and the Member will cooperate with each other in
good faith to select such Valuer. The Valuer may select the Board's
Determination or the Member's Determination as the Fair Value Per Unit or may
select any other number or value (determined without taking into account that
the Units may be "restricted securities" but with a reasonable discount, not to
exceed 20% for the minority position represented by the Units). The Valuer's
selection will be furnished to the Company and the Member in writing and
conclusive and binding upon the Company and the Member. The fees and expenses of
the Valuer shall be borne equally by the Company and the Member with respect to
whose Units such determination relates; provided, however, that if the Fair
Value Per Unit, as determined by the Valuer, shall be more than 15% greater than
the Board's Determination of such Fair Value Per Unit, then such fees and
expenses of the Valuer shall be borne entirely by the Company.
"GROUP" shall mean:
(a) in the case of any Member who is an individual, (i) such
Member, (ii) the siblings, spouse, lineal descendants, adopted children, parents
and grandparents of such Member, (iii) any trust for the benefit of any of the
foregoing and (iv) any entity whose ownership and management is controlled by
such Member;
(b) in the case of any Member which is a partnership, (i) such
partnership and any of its limited or general partners, (ii) any corporation or
other business organization to which such partnership shall sell all or
substantially all of its assets or with which it shall be merged and (iii) any
Affiliate of such partnership;
(c) in the case of any Member which is a corporation, (i) such
corporation and (ii) any controlling stockholder of such corporation; and
(d) in the case of any Member which is a limited liability
company, (i) such limited liability company and any of its members, (ii) any
corporation or other business organization to which such limited liability
company shall sell all or substantially all of its assets or with which it shall
be merged and (iii) any Affiliate of such limited liability company.
"MAJORITY IN INTEREST OF NON-CHASE MEMBERS" shall mean, at any
point in time, Non-Chase Members owning, in the aggregate, more than 50% of the
Member Units owned by all Non-Chase Members at such time.
"MANAGEMENT MEMBERS" shall mean the Persons listed under the
caption "Management Members" on Annex I attached hereto and any successor to, or
assignee or transferee of, any such Management Member who shall agree in writing
to be treated as a Management Member and to be bound by the terms and to comply
with the provisions of this
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Agreement, including any member of the Group of such Management Members who
shall agree in writing to be treated as a Management Members and to be bound by
the terms of and to comply with the provisions of this Agreement.
"MEMBER UNITS" means any Units held, from time to time, by any
Member and any Units issued upon exercise of options or warrants for Units.
"MEMBERS" shall mean Chase, the Management Members and the
Non-Chase Members.
"NON-CHASE MEMBERS" shall mean all Members listed on Annex I
hereto (as amended from time to time) as Non-Chase Members.
"OPERATING AGREEMENT" means the Amended and Restated Operating
Agreement of the Company, dated the date hereof, as amended from time to time.
"OTHER UNITS" shall mean at any time those Units that do not
constitute Primary Units or Registrable Units.
"PAID PREFERRED UNITS" shall have the meaning ascribed to such
term in the Operating Agreement.
"PERSON" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"PRIMARY UNITS" shall mean at any time the authorized but unissued
Units.
"PREFERRED UNIT" shall mean one Preferred Unit as defined in the
Operating Agreement.
"PROPORTIONATE PERCENTAGE" shall mean (1) for the purposes of
Section 2, the pro rata percentage of the number of Member Units to which a
Section 2 Offer relates that each Non-Chase Member shall be entitled to Transfer
to the Section 2 Offeror, which pro rata percentage, as to each Non-Chase
Member, shall be the percentage figure which expresses the ratio between the
number of Member Units owned by such Non-Chase Member (assuming the conversion
of all convertible securities and the exercise of all exercisable securities to
the extent then convertible or exercisable) and the aggregate number of Units
then outstanding and held by all Members (assuming the conversion of all
convertible securities and the exercise of all exercisable securities to the
extent then convertible or exercisable) and (2) for the purposes of Section 5,
the percentage figure which expresses the ratio between the number of Member
Units owned by the Member exercising its rights under Section 5 (assuming the
conversion of all convertible securities and the exercise of all exercisable
securities to the extent then convertible or exercisable) and the aggregate
number of Units then outstanding and held by all Members (assuming the
conversion of all convertible securities and the exercise of all exercisable
securities to the extent then convertible or exercisable).
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"PUBLIC OFFERING" shall mean an offering of equity securities of
the Company or any Subsidiary (or any successor-in-interest of the foregoing)
which is made pursuant to an effective registration statement under the
Securities Act.
"QUALIFIED PUBLIC OFFERING" shall mean a Public Offering which
results in at least $20,000,000 of net proceeds (after the effect of
underwriting discounts and commissions) to the Company (or in the case of a
Qualified Public Offering of a Subsidiary, to such Subsidiary).
"REGISTRABLE UNITS" shall mean the Units held by the Members that
constitute Restricted Units.
"RELATIVELY EQUIVALENT TERMS", as of any date of determination,
with respect to any Common Unit proposed to be sold, the Relatively Equivalent
Terms for a Preferred Unit shall be the amount proposed to be paid for such
Common Unit plus an amount, if any, equal to the Preferred Liquidation
Preference (as such term is defined in the Operating Agreement) of such
Preferred Unit.
"RESTRICTED UNITS" shall mean all Units and any other securities
which by their terms are exercisable or exchangeable for or convertible into
Units and any securities received in respect thereof, which are held by a Member
and which have not theretofore been sold to the public pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
promulgated under the Securities Act or any successor rule thereto or any
complementary rule thereto (such as Rule 144A).
"SALE OF THE COMPANY" shall mean a sale of the Company (or any
Subsidiary) or substantially all of its (or their) assets, whether by way of
merger, consolidation, sale of Units or assets, or otherwise.
"SECURITIES ACT" shall mean the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SUBSIDIARY" means any Person of which the securities or other
ownership interests having at least 50% of the ordinary voting power in electing
the board of directors (or other governing body), at the time as of which any
determination is being made, are owned by the Company either directly or through
one or more of its Subsidiaries.
"TERMINATION OF EMPLOYMENT" shall mean, as to any Management
Member, the termination of the employment by the Company or any of its
Subsidiaries of such Management Member for any reason whatsoever including, but
not limited to, termination by resignation, discharge (with or without cause),
retirement, disability or non-renewal of an employment agreement.
"TERMINATION DATE" shall mean, as to such Management Member, the
effective date of the Termination of Employment of such Management Member.
"TERMINATION FOR CAUSE" shall have the meaning, in the case of any
Management Member, set forth in the employment agreement, if any, of such
Management
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Member, or in the absence of such an employment agreement, shall mean a
Termination of Employment for Cause (as defined herein).
"TERMINATION OF EMPLOYMENT FOR CAUSE" shall mean the Management
Member's (A) failure to perform such duties as are reasonably requested by the
Board as documented in writing to the Management Member, (B) willful disregard
of his duties or failure to act, where such action would be in the ordinary
course of the Management Member's duties, (C) failure to observe all material
Company policies and material policies of all Affiliates of the Company
generally applicable to executives of the Company and/or its Affiliates, (D)
gross negligence or willful misconduct in the performance of his duties, (E)
commission of an act constituting a felony or involving fraud, theft or
dishonesty which is not a felony and which materially adversely affects the
Company and/or its Affiliates or could reasonably be expected to materially
adversely affect the Company or its Affiliates, as applicable, (F) repeated
failure to be reasonably available to perform his duties, which, if curable,
shall not have been cured within 10 business days of written notice thereof from
the Company or its Affiliates, as applicable, (G) repeated failure to follow the
lawful directions of the Board, which, if curable, shall not have been cured
within 10 business days of written notice thereof from the Company or its
Affiliates, as applicable, (H) material breach of any agreement with the Company
or its Affiliates (including the non-compete provisions thereof) which, if
curable, shall not have been cured within 10 business days of written notice
thereof from the Company or its Affiliates, as applicable, (I) resignation or
(J) alcohol or other substance abuse.
"TRANSFER" shall mean, as to any Member Units, to sell, or in any
other way transfer, assign, pledge, distribute, encumber or otherwise dispose of
(including, without limitation, the foreclosure or other acquisition by any
lender with respect to any Member Units pledged to such lender by a Member),
such Member Units, either voluntarily or involuntarily and with or without
consideration.
"UNDERWRITERS' MAXIMUM NUMBER" means, for any registration of
Units under the Securities Act which is an underwritten offering of Units
pursuant to an effective registration statement, that number of Units to which
such registration should, in the opinion of the managing underwriters of such
registration in the light of marketing and other relevant factors (including
pricing), be limited.
"UNITS" has the meaning set forth in the Operating Agreement and
shall also include any equity security of the Company or any successor thereto,
issued in respect of or in exchange for Units, whether by way of dividend or
other distribution, split, recapitalization, merger, rollup transaction,
consolidation or reorganization.
SECTION 2. RIGHT OF CO-SALE.
(a) In the event that, prior to a Qualified Public Offering, Chase
(hereinafter, the "Section 2 Offeree") receives a bona fide offer (the "Section
2 Offer") from a third party which is not an Affiliate of Chase (the "Section 2
Offeror") to purchase Common Units from the Section 2 Offeree, for a specified
price payable in cash or otherwise and on specified terms and conditions that
the Section 2 Offeree intends to accept, the Section 2 Offeree shall promptly
forward a notice (the "Section 2 Notice") complying with Section 2(b) to the
Company and each Non-Chase Member. The Section 2 Offeree shall not Transfer any
Common Units to the Section 2
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Offeror prior to the expiration of the 15-day period referred to below and
unless the terms of the Section 2 Offer are extended to the Non-Chase Members
with respect to their Proportionate Percentages of the aggregate number of Units
to which the Section 2 Offer relates, whereupon each Non-Chase Member shall be
entitled to Transfer to the Section 2 Offeror pursuant to the Section 2 Offer
such Non-Chase Member's Proportionate Percentage of the aggregate number of
Units to which the Section 2 Offer relates. Each Non-Chase Member shall have a
period of 15 days after receipt of the Section 2 Notice to deliver a written
notice (the "Section 2 Acceptance") to the Section 2 Offeree evidencing such
Non-Chase Member's acceptance of the Section 2 Offer and setting forth the
number and type (e.g., Preferred Unit, Paid Preferred Unit or Common Unit) of
Member Units such Non-Chase Member desires to include. If an Acceptance Notice
is not received from a Non-Chase Member within such 15 day period, then such
Non-Chase Member shall be deemed to have declined such Section 2 Offer.
(b) The Section 2 Notice shall set forth (i) the number of Common
Units to which the Section 2 Offer relates and the name of the Section 2
Offeree, (ii) the name and address of the Section 2 Offeror, (iii) the proposed
amount and type of consideration (including, if the consideration consists in
whole or in part of non-cash consideration, such information available to the
Section 2 Offeree as may be reasonably necessary for the Non-Chase Members to
properly analyze the economic value and investment risk of such non-cash
consideration) and the terms and conditions of payment offered by the Section 2
Offeror and (iv) that the Section 2 Offeror has been informed of the co-sale
rights provided for in this Section 2 and has agreed to purchase Member Units in
accordance with the terms of this Section 2 (which agreement may contain the
Section 2 Offeror's obligation to purchase all of the Common Units subject to
the Section 2 Offer from the Section 2 Offeree so long as such Section 2 Offeree
agrees to purchase simultaneously with such sale from any Non-Chase Member
delivering a Section 2 Acceptance the Member Units subject to such Section 2
Acceptance).
(c) Any Member Units included in any Section 2 Acceptance that are
Common Units shall be transferred upon the terms and conditions set forth in the
Section 2 Notice. Any Member Units included in any Section 2 Acceptance that are
Preferred Units shall be transferred upon the same conditions and upon
Relatively Equivalent Terms as those set forth in the Section 2 Notice. If none
of the Non-Chase Members gives the Section 2 Offeree a timely Section 2
Acceptance with respect to the Transfer proposed in the Section 2 Notice, the
Section 2 Offeree may Transfer the Common Units specified in the Section 2
Notice for a period of 90 days after expiration of the time period during which
the Non-Chase Members may exercise their rights under this Section 2, on the
terms and conditions set forth in the Section 2 Notice. If one or more Non-Chase
Members give the Section 2 Offeree a timely Section 2 Acceptance, then the
Section 2 Offeree shall use all reasonable efforts to cause the prospective
transferees to agree to acquire all of the Member Units that are identified in
the Section 2 Acceptances that have been timely given to the Section 2 Offeree,
upon the same purchase price and other terms and conditions (or, if applicable,
upon the same conditions and upon Relatively Equivalent Terms) as set forth in
the Section 2 Notice.
(d) If the prospective transferees specified in the Section 2
Notice are unwilling or unable to acquire all of the Member Units that are
identified in the Section 2 Acceptances that have been timely given, the Section
2 Offeree may then elect either to (A) cancel the proposed Transfer or (B)
allocate to itself and to each Non-Chase Member which or who has given a timely
Section 2 Acceptance such Member's Proportionate Percentage of the aggregate
number
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of Member Units that the prospective transferees are willing to purchase
taking into account the types of Member Units held by each Member.
(e) Notwithstanding the provisions of this Section 2, during the
term of this Agreement Chase may Transfer up to an aggregate of 20% of the total
number of Common Units owned by Chase on the date hereof appropriately adjusted
for any Unit split or dividend or other recapitalization without complying with
the provisions of this Section 2.
(f) Sales under this Section 2 shall be subject to any applicable
transfer restrictions under the Operating Agreement.
SECTION 3. REQUIRED SALE; ROLLUP.
(a) In the event that, prior to a Qualified Public Offering, Chase
approves a Sale of the Company to a Person which is not an Affiliate of Chase
(an "Approved Sale"), all Non-Chase Members and Management Members shall consent
to and raise no objections against the Approved Sale, and if the Approved Sale
is structured as (i) a merger or consolidation of the Company, or a sale of all
or substantially all of the Company's assets, each Non-Chase Member and
Management Member shall, and hereby agree to, waive any dissenters rights,
appraisal rights or similar rights in connection with such merger, consolidation
or asset sale, or (ii) a sale of Units, the Non-Chase Members and Management
Members shall, and hereby agree to, agree to sell their Member Units on the
terms and conditions approved by Chase and in each such instance shall, and
hereby agree to, waive any claims any Non-Chase Member or Management Member may
have against the Board in connection with the Approved Sale. The Non-Chase
Members and Management Members shall take all necessary and desirable actions
approved by Chase, in connection with the consummation of the Approved Sale,
including the execution of such agreements and such instruments and other
actions reasonably necessary to (1) provide the representations, warranties,
indemnities, covenants, conditions, escrow agreements and other provisions and
agreements relating to such Approved Sale and (2) effectuate the allocation and
distribution of the aggregate consideration upon the Approved Sale as set forth
below.
(b) The obligations of the Non-Chase Members pursuant to this
Section 3 are subject to the satisfaction of the following conditions:
(i) subject to Section 3(b)(iii), upon the consummation of
the Approved Sale (or as promptly thereafter as practical in the case of
certain options to purchase Units pursuant to outstanding Tier II IRR
Vesting Option Agreements and Tier III IRR Vesting Option Agreements, in
each case between the Company and the optionees named therein), all of
the Members shall receive the same proportion of the aggregate
consideration from such Approved Sale that such holder would have
received if such aggregate consideration had been distributed by the
Company in complete liquidation pursuant to the rights and preferences
set forth in the Operating Agreement as in effect immediately prior to
such Approved Sale (giving effect to applicable orders of priority and
the exercise price of all warrants and options);
(ii) if any Members are given an option as to the form and
amount of consideration to be received, all Members will be given the
same option; provided, however, that holders of the Preferred Units
(other than Paid Preferred Units) shall not be
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required to accept any consideration that does not consist solely of cash
or marketable securities;
(iii) all holders of then-currently exercisable Unit
equivalents (including, without limitation, options and warrants
exercisable for Units) will be given an opportunity to either (A)
exercise such rights prior to the consummation of the Approved Sale (but
only to the extent such Unit equivalents are then vested or will become
vested as a result of the Approved Sale) and participate in such sale as
Members or (B) upon the consummation of the Approved Sale, receive in
exchange for such Unit equivalents (to the extent such Unit equivalents
are then vested) consideration equal to the amount determined by
multiplying (x) the same amount of consideration per Unit (of the same
class as that for which the Unit equivalent is exercisable) received by
the holders of such class of Unit in connection with the Approved Sale
less the exercise price per Unit equivalent by (y) the number of Unit
equivalents (but only to the extent such Unit equivalents are then
vested);
(iv) no Member shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Approved Sale and no Member
shall be obligated to pay more than his pro rata share (based upon the
number of Units held by each such Member) of reasonable expenses incurred
in connection with a consummated Approved Sale to the extent such costs
are incurred for the benefit of all Members and are not otherwise paid by
the Company or the acquiring party (costs incurred by or on behalf of a
Member for its or his sole benefit will not be considered costs of the
transaction hereunder), provided that a Member's liability for such
expenses shall be capped at the total purchase price received by such
Member for his Member Units (including the exercise price thereof, in the
case of options and warrants); provided that in calculating total
purchase price under this Section 3(b)(iv) the amount of any Preferred
Liquidation Preference (as defined in the Operating Agreement) for such
Member's Preferred Units shall be deducted from the total purchase price
received by such Member (but such deduction shall not cause such total
purchase price to be less than $0);
(v) in the event that the Members are required to provide
any representations or indemnities in connection with the Approved Sale
(other than representations and indemnities, on a several basis,
concerning each Member's valid ownership of his Member Units, free of all
liens and encumbrances (other than those arising under applicable
securities laws), and each Member's authority, power, and right to enter
into and consummate such purchase or merger agreement without violating
any other agreement and without needing any third party consent), then
each Member shall not be liable for more than his pro rata share (based
upon the amount of consideration received) of any liability for
misrepresentation or indemnity and such liability shall not exceed the
total purchase price received by such Member for his Member Units
(including the exercise price thereof, in the case of options and
warrants); provided that in calculating total purchase price under this
Section 3(b)(v) the amount of any Preferred Liquidation Preference (as
defined in the Operating Agreement) for such Member's Preferred Units
shall be deducted from the total purchase price received by such Member
(but such deduction shall not cause such total purchase price to be less
than $0); and
(vi) prior notice of an Approved Sale shall be provided to
the Members.
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(c) In the event that the Board shall determine that (i) it shall
facilitate a public offering of securities of the Company, (ii) it shall
facilitate compliance with this Agreement, or (iii) it is desirable or helpful
for the business of the Company, or in the best interests of the Company, for
the business of the Company to be conducted in a corporate rather than in a
limited liability company form, the Board shall have the power, without any vote
or consent of the holders of Units, to incorporate the Company or take such
other action as it may deem advisable in light of such changed conditions,
including, without limitation, (A) dissolving the Company, creating one or more
Subsidiaries of the newly formed corporation and transferring to such
Subsidiaries any or all of the assets of the Company or (B) causing the Members
to exchange their Units for shares of the newly formed corporation (which the
Company shall endeavor to effect in a manner that will not cause a taxable event
to the Members). In connection with any such incorporation of the Company, the
Members shall receive, in exchange for their respective Units, shares of capital
stock of such corporation or its subsidiaries having the same relative economic
interest and other rights and obligations in such corporation or its
subsidiaries as is set forth in this Agreement and the Operating Agreement,
subject to any modifications (as determined by the Board in its sole discretion)
required solely as a result of the conversion to corporation form. At the time
of such conversion, the Members shall, and hereby agree to, enter into a
shareholders agreement providing for (i) the restrictions on transfer set forth
in this Agreement; provided that such restrictions shall not apply to sales in
broadly disseminated public offerings or sales in accordance with Rule 144 under
the Securities Act and (ii) an agreement to vote all shares of capital stock
held by them to elect to the Board of Directors of the new corporation in
accordance with Section 8. Prior to taking any action to incorporate the
Company, the Board shall approve the proposed forms of a certificate of
incorporation, by-laws, stockholders' agreement and any other governing
documents proposed to be established for such corporation and its Subsidiaries,
if any.
SECTION 4. REPURCHASE OF UNITS.
(a) In the event of a Termination of Employment of any Management
Member (a "Terminated Member"), the Company or its designee shall have the right
(but not the obligation) to repurchase from such Management Member (and each
member of the Group of such Management Member) all or any part of any Units
owned by such Management Member and member of such Group, including warrants and
options not then expired.
(b) The repurchase right of the Company or its designee under this
Section 4 may be exercised by written notice on one occasion (a "Repurchase
Notice"), specifying the number of Units to be repurchased, and given to the
Terminated Member within 90 days of the Termination Date (or, if the Company
shall not have assigned its rights under this Section 4 and shall be legally
prevented (whether by contract or statutorily) from making such repurchase
during the foregoing 90-day period, then such Repurchase Notice may be delivered
by the Company within 45 days after the date on which it shall be legally
permitted to make such repurchase), but in no event shall the Company be
permitted to make such election after the second anniversary of the Termination
Date. Upon the delivery of a Repurchase Notice to the Terminated Member, the
Terminated Member and each member of such Terminated Member's Group shall be
obligated to sell or cause to be sold to the Company or its designee the Units
specified in such Repurchase Notice.
(c) The price per Unit to be paid under this Section 4 and the
form of payment therefor shall be determined as follows:
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(i) in the case of a repurchase of Units following a
Termination for Cause, the repurchase price to be paid for such Units or
warrants or options to acquire Units shall be the cost paid for such
Units, and such repurchase consideration shall be payable in cash; and
(ii) in the case of any other repurchase of Units or
warrants or options to acquire Units, such repurchase price shall be the
Fair Value Per Unit (net of any exercise price, in the case of options
and warrants) as of the Termination Date (or in the event that the
Company shall elect to repurchase any Units on or after the first
anniversary of the Termination Date because it shall have been legally
prevented (whether by contract or statutorily) from making such
repurchase at an earlier date, then the determination of Fair Value Per
Unit shall be made as of such date on which the Company makes its
repurchase election under this Section 4, which purchase price shall be
paid in cash or, at the election of the Company, 50% in cash and 50% in
the form of a subordinated promissory note that (1) matures ratably on a
quarterly basis over a three-year period, (2) is subordinated in right of
payment and exercise of remedies to all other funded indebtedness of the
Company and (3) bears interest at the rate of 10% per annum.
(iii) Repurchases of Units under the terms of this Section 4
shall be made at the offices of the Company or its designee on a mutually
satisfactory business day within 30 days after the final determination of
the repurchase price as described above. Delivery of certificates or
other instruments evidencing such Units duly endorsed for transfer and
free and clear of all liens, claims and other encumbrances shall be made
on such date against payment of the purchase price therefor.
SECTION 5. PREEMPTIVE RIGHT TO PURCHASE EQUITY SECURITIES; PURCHASE
PRICE.
(a) Prior to issuing to Chase any Units or any options or
convertible securities exercisable for or convertible into Units of the Company
(collectively, "Equity Securities"), the Company will first give to the
Non-Chase Members the right to purchase, on the same terms, conditions and
timing as Chase, their Proportionate Percentage of the securities proposed to be
sold by the Company. Any such right to purchase shall be exercisable for a
period of 10 days after the Non-Chase Members receive written notice of a
proposed issuance of Equity Securities. The obligations of the Company under
this Section 5 shall terminate upon the consummation of a Qualified Public
Offering.
(b) The price per Equity Security to be paid by Chase for any
Equity Security issued to Chase by the Company shall be the fair value of such
Equity Security as of the date of such issuance as determined in good faith by
the Board.
SECTION 6. RIGHT OF FIRST REFUSAL.
A Non-Chase Member or Management Member shall not Transfer any
Common Units other than in accordance with Section 2, 3 or 4 of this Agreement,
except in accordance with the applicable procedures in this Section 6 and
Article VII of the Operating Agreement and any other applicable provisions
thereof.
(a) In the event a Non-Chase Member or Management Member receives
an offer from a third Person to acquire any Common Units held by such Non-Chase
Member or
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Management Member and such Member intends to accept such offer and effect such
proposed Transfer to such third Person (and obtain any prior written consent
which may be required pursuant to Section 7 hereof in order to effect such
proposed Transfer), the Non-Chase Member or Management Member shall first
deliver to the Company and Chase a written notice (the "Section 6 Offer
Notice"), which shall be irrevocable for a period of 30 days after delivery
thereof, offering (the "Section 6 Offer") all of the Common Units proposed to be
Transferred by the Non-Chase Member or Management Member at the same purchase
price and on the same terms specified in such offer from the third Person (such
Section 6 Offer Notice shall include the foregoing information and all other
relevant terms of the proposed Transfer). The Company shall have the right and
option, for a period of 15 days after receipt of a Section 6 Offer Notice to
purchase all or any portion of the Units so offered, and if the Company declines
to accept any or all of such Common Units, Chase shall have the right and
option, for a period of 15 days, to accept all or any remaining portion of the
Common Units so offered at the purchase price and on the terms stated in the
Section 6 Offer Notice. Such acceptance shall be made by delivering a written
notice to the Company and all Members within said 15 or 30 day period (as
applicable).
(b) A notice of acceptance delivered by the Company or Chase
pursuant to Section 6 shall be a binding commitment to purchase the Common Units
referred to therein.
(c) Transfers of Common Units under the terms of Section 6 shall
be made at the offices of the Company on a mutually satisfactory business day
within 30 days after the expiration of the last applicable period described in
Section 6. Delivery of certificates or other instruments evidencing such Common
Units duly endorsed for Transfer shall be made on such date against payment of
the purchase price therefor.
(d) If effective acceptance shall not be received pursuant to
Section 6 with respect to all Common Units offered for sale pursuant to the
Section 6 Offer Notice, then the Non-Chase Members or Management Members may
Transfer all or any part of the Common Units so offered and not so accepted at a
price not less than the price, and on terms not more favorable to the purchaser
thereof than upon the terms, stated in the Section 6 Offer Notice at any time
within 30 days after the expiration of the offers required by Section 6. In the
event that the Common Units are not Transferred by the Non-Chase Members or
Management Members during such 30-day period, the right of the Non-Chase Members
or Management Members to Transfer such Common Units shall expire and the
obligations of this Section 6 shall be reinstated.
(e) Anything contained herein to the contrary notwithstanding, any
purchaser of Common Units pursuant to Section 6 who is not a Member shall, as a
condition to the effectiveness of such purchase, agree to become a party to, and
be bound by and obligated to comply with the terms and provisions of, this
Agreement. Such purchaser shall also agree, if requested by the Company, to be a
party to a confidentiality agreement which is reasonable and customary for an
investment of the type being made by such purchaser in the Company.
(f) The obligations of the Non-Chase Members or Management Members
under this Section 6 shall terminate upon the consummation of a Qualified Public
Offering.
SECTION 7. TRANSFER RESTRICTIONS.
All provisions with respect to transferability of the Units
are set forth in the Operating Agreement.
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SECTION 8. VOTING; BOARD OF MANAGERS.
(a) Any time at which holders of Units shall have the right to, or
shall, vote for managers of the Company, then, and in each event, the Members
shall vote all Units owned by them for the election of a Board consisting of
nine (9) managers (subject, however, to Section 3.4(c) of the Operating
Agreement), as designated from time to time in the following manner:
(i) one Management Member nominated by the Management
Members holding greater than 50% of all Member Units then held by all
Management Members shall be elected to the Board; provided that (i)
Leslie H. Cross shall be appointed to the Board as the initial nominee of
the Management Members, and (ii) such nominee Management Member shall be
a member of the Board for only so long as he is both an employee and a
holder of Member Units;
(ii) six individuals nominated by Chase shall be elected to
the Board (the "Chase Nominees"); such Chase Nominees shall initially be
Charles T. Orsatti, Mitchell J. Blutt, M.D., Shahan D. Soghikian, Jonas
L. Steinman, Damion E. Wicker, M.D., and John J. Daileader; and
(iii) two individuals with industry expertise shall be
nominated by agreement among the other members of the Board and shall be
elected to the Board.
(b) While any Preferred Unit has Unreturned Original Cost and
during the continuance of an Event of Non-Compliance, the holders of Preferred
Units (other than Paid Preferred Units), shall have the right to appoint two (2)
additional managers to the Board in accordance with the provisions of the Bylaws
of the Company. All terms used in this Section 8(b) not otherwise defined herein
shall have the meanings ascribed to them in the Operating Agreement.
(c) Voting of the Board shall be conducted in accordance with the
Bylaws of the Company, including, without limitation, the super-voting rights
granted to one of the Chase Nominees in Section 2.12 of the Bylaws of the
Company, which super-voting right allows such Chase Nominee to cast six votes on
each matter on which the managers are entitled to vote; such super-voting
manager shall initially be Charles T. Orsatti.
(d) The voting rights of this Section 8 shall not supersede, and
shall be subject to, the restrictions and other limitations of First Union
Investors, Inc.'s (including the successors and assigns of its Units) voting
rights as set forth in Section 5.3 and 5.4 of the Operating Agreement.
SECTION 9. DEMAND REGISTRATION.
(a) Request for Demand Registration.
(i) Subject to the limitations contained in the following
paragraphs of this Section 9, Chase may, at any time and from time to
time, give to the Company, pursuant to this subparagraph (i), a written
request for the registration by the Company under the Securities Act of
all or any part of the Registrable Units owned by it (such registration
being herein called a "Demand Registration"). Within ten (10) days after
the receipt by
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the Company of any such written request, the Company will give written
notice of such registration request to all holders of Registrable Units.
(ii) Subject to the limitations contained in the following
paragraphs of this Section 9, after the receipt of such written request
for a Demand Registration, (A) the Company will be required to include in
such Demand Registration all Registrable Units with respect to which the
Company shall receive from holders of Registrable Units, within thirty
(30) days after the date on which the Company shall have given to all
holders a written notice of registration request pursuant to Section
9(a)(i) hereof, the written requests of such holders for inclusion in
such Demand Registration, and (B) the Company will use its best efforts
in good faith to effect promptly the registration of all such Registrable
Units. All written requests made by Holders of Registrable Units pursuant
to this subparagraph (ii) will specify the number of Registrable Units to
be registered and will specify the intended method of disposition
thereof.
(b) Limitations on Demand Registration.
(i) Chase will not be entitled to require the Company to
effect more than three (3) Demand Registrations on Form S-1 (or other
comparable form adopted by the Commission). Chase will not be entitled to
require the Company to effect (A) any Demand Registration on Form S-1 (or
other comparable form adopted by the Commission) unless Form S-3 (or any
comparable form adopted by the Commission) is not available for such
Demand Registration, or (B) any Demand Registration if the aggregate
number of Registrable Units requested to be registered pursuant to such
Demand Registration is less than five percent (5%) of the number of Units
then outstanding (on a fully-diluted basis).
(ii) Any registration initiated by Chase pursuant to
Section 9(a) hereof shall not count as a Demand Registration for purposes
of Section 9(b)(i) hereof (A) unless and until such registration shall
have become effective and all of such Units requested by Chase or all of
such lesser number of Units as consented to by Chase to be included in
such registration shall have been actually sold.
(c) Priority on Demand Registration. If the managing underwriters
in any underwritten offering pursuant to a Demand Registration shall give
written advice to the Company and Chase of an Underwriters' Maximum Number,
then: (i) the Company will be obligated and required to include in such
registration that number of such Registrable Units requested by Chase to be
included in such registration which does not exceed the Underwriters' Maximum
Number; (ii) if the Underwriters' Maximum Number exceeds the number of
Registrable Units requested by Chase to be included in such registration, then
the Company will be obligated and required to include in such registration that
number of other holders' Registrable Units requested by the holders thereof
pursuant to Section 9(a)(ii) to be included in such registration and which does
not exceed such excess and such Registrable Units shall be allocated pro rata
among the holders thereof on the basis of the number of Registrable Units
requested to be included therein by each such holder, and (iii) if the
Underwriters' Maximum Number exceeds the number of Registrable Units requested
by Chase and such other holders of Registrable Units to be included in such
registration, then the Company may include Primary Units and, if (or to the
extent that) it does not do so, the Company will be required to include in such
registration that number of Other Units requested by the holders thereof to be
included in such registration
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and which does not exceed such excess and such Other Units shall be allocated
pro rata among the holders thereof on the basis of the number of Other Units
requested to be included therein by each such holder. Neither the Company nor
any of its Members (other than Chase) shall be entitled to include any
securities in any underwritten Demand Registration unless the Company or such
Members (as the case may be) shall have agreed in writing to sell such
securities on the same terms and conditions as shall apply to the Registrable
Units held by Chase to be included in such Demand Registration.
(d) Selection of Underwriters. Chase shall determine whether or
not the offering pursuant to such Demand Registration shall be underwritten.
Chase shall select the investment banker(s) and managing underwriter(s) to
administer such offering in a Demand Registration; provided that the selected
underwriters must be reasonably acceptable to the Company.
SECTION 10. REGISTRATIONS ON FORM S-3.
(a) Subject to paragraph (c) below, at and after such time as the
Company shall have qualified for the use of Form S-3 promulgated under the
Securities Act or any successor form thereto, any holder or holders of Preferred
Units shall have the right to request in writing registration on Form S-3, or
such successor form, and to effect a registration under the Securities Act of
Registrable Units in accordance with this Section 10.
(b) If the Company shall be requested by such Members to effect a
registration under the Securities Act of Registrable Units in accordance with
this Section 10, then the Company shall promptly give written notice of such
proposed registration to all other holders of Registrable Units and shall offer
to include in such proposed registration any Registrable Units requested to be
included in such proposed registration by such other holders who respond in
writing to the Company's notice within 30 days after delivery of such notice
(which response shall specify the number of Registrable Units proposed to be
included in such registration). The Company shall promptly use its commercially
reasonable efforts to effect such registration on Form S-3 of the Registrable
Units which the Company has been so requested to register.
(c) The Company shall not be obligated to effect any registration
under the Securities Act requested by the Members under this Section 10 except
in accordance with the following provisions:
(i) the Company shall not be obligated to effect any such
registration initiated pursuant to Section 10(a) if (A) the Company shall
reasonably conclude that the anticipated gross offering price of all
Registrable Units to be included therein would be less than $500,000, (B)
such registration is requested within six (6) months after a registered
offering of the Company in which any of the holders of Preferred Units
were given the opportunity to participate or (C) the Company shall have
effected two or more Registration Statements on Form S-3 pursuant to this
Section 10 during the preceding 12-month period; and
(ii) the Company may delay the filing or effectiveness of
any Registration Statement pursuant to this Section for a period not to
exceed 90 days after the date of a request for registration if the
Company's Board has determined that such registration would have a
material adverse effect upon the Company or its then current business
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plans; provided, however, that the Company may cause such delay only once
during any 360-day period.
SECTION 11. PIGGYBACK REGISTRATION.
Other than with respect to a registration pursuant to Section 9
hereof, if the Company at any time proposes for any reason to register Primary
Units, Registrable Units or Other Units under the Securities Act (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms
thereto), it shall promptly give written notice to all holders of outstanding
Registrable Units of its intention so to register the Primary Units, Registrable
Units or Other Units and, upon the written request, given within 30 days after
delivery of any such notice by the Company, of the holders of Registrable Units
(other than the holders of Registrable Units to be included in such offering) to
include in such registration Registrable Units held by such holders (which
request shall specify the number of Registrable Units proposed to be included in
such registration), the Company shall use its best efforts to cause all such
Registrable Units to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that if the managing underwriter advises the Company that the
inclusion of all such Registrable Units or Other Units proposed to be included
in such registration would interfere with the successful marketing (including
pricing) of Primary Units or Registrable Units initially included such proposed
registration by the Company, then the number of Primary Units, Registrable Units
and Other Units proposed to be included in such registration shall be included
in the following order:
(A) first, the Primary Units;
(B) second, any Registrable Units requested to be included
in such proposed registration at the request of the holders under
Section 10 hereof;
(C) third, any other Registrable Units requested to be
included in such registration by the holders of such Registrable
Units, pro rata based upon the number of such Registrable Units
requested to be included therein by each such holder; and
(D) fourth, any Other Units requested to be included in
such registration by the holders of Other Units, pro rata based
upon the number of Other Units requested to be included therein by
each such holder.
SECTION 12. EXPENSES.
All expenses incurred by the Company in complying with Section 9,
10 or 11, including, without limitation, all registration and filing fees, fees
and expenses of complying with securities and blue sky laws, printing expenses,
fees and expenses of the Company's counsel and accountants and fees and expenses
of the one counsel to the Members, shall be paid by the Company; provided,
however, that all underwriting discounts and selling commissions applicable to
the Registrable Units or Other Units shall not be borne by the Company but shall
be borne by the holders of Registrable Units or Other Units sold by each of
them.
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SECTION 13. INDEMNIFICATION.
In connection with any registration of any Registrable Units under
the Securities Act pursuant to Section 9, 10 or 11, the Company shall indemnify
and hold harmless the holders of Registrable Units, each underwriter, broker or
any other person acting on behalf of the holders of Registrable Units and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such Registrable Units were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Units, 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, with respect to any prospectus, necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by the Company of the Securities Act or state securities or
blue sky laws applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or qualification
under such state securities or blue sky laws; and shall reimburse the holders of
Registrable Units, such underwriter, such broker or such other person acting on
behalf of the holders of Registrable Units and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in said registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Units in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by the holders of Registrable Units or underwriter specifically for use in the
preparation thereof.
In connection with any registration of Registrable Units under the
Securities Act pursuant to this Agreement, each holder of Registrable Units
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section 10) the Company, each
director (within the meaning of the Securities Act) of the Company, each officer
of the Company who shall sign such registration statement, each underwriter,
broker or other person acting on behalf of the holders of Registrable Units and
each person who controls any of the foregoing persons within the meaning of the
Securities Act with respect to any statement or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Units, if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or such underwriter through an
instrument duly executed by such holder of Registrable Units specifically for
use in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
pursuant to which such holder of Registrable Units shall sell Registrable Units;
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provided, however, that the maximum amount of liability in respect of such
indemnification shall be limited, in the case of each seller of Registrable
Units, to an amount equal to the net proceeds actually received by such seller
from the sale of Registrable Units effected pursuant to such registration.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 13, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are additional to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 12 the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that portion of the
fees and expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided in
this Section 13.
If the indemnification provided for in this Section 13 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
SECTION 14. UNDERWRITING AGREEMENT.
Notwithstanding the provisions of Sections 9, 10, 11, 12 and 13 to
the extent that the holders of Registrable Units shall enter into an
underwriting or similar agreement, which agreement contains provisions covering
one or more issues addressed in such Sections, the provisions contained in such
Sections addressing such issue or issues shall be of no force or effect with
respect to such registration.
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SECTION 15. INFORMATION BY HOLDER.
Each holder of Registrable Units proposing to sell the same
pursuant to a registration to which this Agreement relates shall furnish to the
Company such written information regarding itself and the distribution of
Registrable Units proposed by such holder, as the Company may reasonably request
in writing, and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 16. LEGEND ON UNIT CERTIFICATES.
Each certificate representing Units shall bear the following
legends:
"THE VOTING OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN
RESPECT OF MANAGERS AND TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
MEMBERS' AGREEMENT AND AN OPERATING AGREEMENT, EACH DATED AS OF
JUNE 30, 1999, AS AMENDED FROM TIME TO TIME, AMONG THE ISSUER OF
SUCH SECURITIES AND CERTAIN HOLDERS OF THE OUTSTANDING SECURITIES
OF SUCH ISSUER. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF SUCH ISSUER."
"THIS CERTIFICATE AND THE UNITS REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
COMPLIANCE THEREWITH."
SECTION 17. ADDITIONAL UNITS; ETC.
In the event additional Units are issued by the Company to a
Member at any time during the term of this Agreement, either directly or upon
the exercise or exchange of securities of the Company exercisable for or
exchangeable into Units, such additional Units shall, as a condition to such
issuance, become subject to the terms and provisions of this Agreement.
SECTION 18. EFFECTIVENESS.
The rights and obligations of each Member under this Agreement
shall terminate as to such Member upon the earlier to occur of (i) the Transfer
of all Member Units owned by such Member, (ii) a sale of all or substantially
all of the equity interests of the Company in a single transaction or (iii) the
consummation of an Approved Sale.
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SECTION 19. SEVERABILITY.
If any provision of this Agreement shall be determined to be
illegal and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms.
SECTION 20. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware (without regard to principles
of conflicts of laws).
SECTION 21. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the parties
and their respective successors and assigns, transferees, legal representatives
and heirs; provided, however, that the rights under this Agreement shall not be
assignable by any Member, (i) except in connection with a Transfer pursuant to
Section 2, 3 or 6, (ii) without the consent of Chase, or (iii) except for
transfers permitted by the Operating Agreement.
SECTION 22. NOTICES.
All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or by telecopy or sent by nationally-recognized
overnight courier or first class registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at the address set forth
below or at such other address as may hereafter be designated in writing by such
party to the other parties:
(a) if to the Company, to:
DonJoy, L.L.C.
2985 Scott Street
Vista, CA 92083
Telecopier: (760) 734-3536
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 24th Floor
New York, NY 10112
Attention: John J. Suydam, Esq.
Telecopier: (212) 728-5950;
(b) if to the Members, to their respective addresses set forth
on Annex I hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered and received (i) in the case of personal delivery or
delivery by telecopy, on the date of such delivery (assuming such date of
delivery is a business day), (ii) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (iii) in the case of mailing, on the third business day after the
posting thereof.
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SECTION 23. MODIFICATION.
Except as otherwise provided herein, neither this Agreement nor
any provisions hereof can be modified, changed, discharged or terminated except
by an instrument in writing signed by (i) the Company, (ii) Chase and (iii) a
Majority in Interest of Non-Chase Members; provided, however, that no
modification or amendment shall be effective to reduce the percentage of the
Member Units the consent of the holders of which is required under this Section
22 nor shall any modification or amendment discriminate against any Member
without the consent of such Member; provided further, that, any amendment or
modification that would adversely affect the rights of any Member hereunder, in
its capacity as a Member, without similarly affecting the rights hereunder of
all Members of the same class, shall not be effective as to such Member without
its prior written consent.
SECTION 24. HEADINGS.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
SECTION 25. ENTIRE AGREEMENT.
This Agreement and the other writings referred to herein or
therein contain the entire agreement among the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and understandings
with respect thereto. In case of any conflict among this Agreement or any such
writings, the terms of the Operating Agreement shall be dispositive.
SECTION 26. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first above written.
DONJOY, L.L.C.
By: /s/ Leslie H. Cross
-----------------------------
Name: Leslie H.Cross
Title: President and CEO
CHASE DJ PARTNERS, LLC
By: Fairfield Chase Medical Partners, LLC,
its Managing Member
By: /s/ Charles T. Orsatti
-----------------------------
Name: Charles T. Orsatti
Title:Managing Member
SMITH & NEPHEW DISPOSAL, INC.
By: /s/ Clifford K. Lomax
-----------------------------
Name: Clifford K. Lomax
Title:President
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc,
its General Partner
By: /s/ Damion Wicker
-----------------------------
Name: Damion Wicker
Title:General Partner
22
/s/ Leslie H. Cross
-----------------------------
Leslie H. Cross
/s/ Cyril Talbot III
-----------------------------
Cyril Talbot III
/s/ Michael R. McBrayer
-----------------------------
Michael R. McBrayer
[DonJoy, L.L.C. Members' Agreement]
23
FIRST UNION INVESTORS, INC.
By: /s/ Neal Morrison
-----------------------------
Name: Neal Morrison
Title: Sr. Vice President
[DonJoy, L.L.C. Members' Agreement]
24
ANNEX I
Chase
- -----
Chase DJ Partners, LLC
Non-Chase Members
- -----------------
Smith & Nephew, Inc.
CB Capital Investors, L.P. (as holder of Preferred Units)
First Union Investors, Inc. (as holder of Preferred Units)
Management Members
- ------------------
Leslie H. Cross
Cyril Talbot III
Michael R. McBrayer