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EXHIBIT 10.12
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT
dated as of June 30, 1999, among DJ ORTHOPEDICS, LLC, a
Delaware limited liability company (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I hereto
(the "Guarantors") and FIRST UNION NATIONAL BANK ("First
Union"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in
the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of June 30, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, DONJOY, L.L.C., a Delaware limited liability
company, the lenders from time to time party thereto (the "Lenders"), First
Union, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and Collateral Agent, and THE CHASE MANHATTAN BANK, as
Syndication Agent and as issuing bank (in such capacity, the "Issuing Bank"),
and (b) the Subsidiary Guarantee Agreement dated as of June 30, 1999 between
the Guarantors and the Collateral Agent (the "Subsidiary Guarantee Agreement").
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed such Loans and the other
Obligations (as defined in the Subsidiary Guarantee Agreement) of the Borrower
under the Credit Agreement pursuant to the Subsidiary Guarantee Agreement;
certain Guarantors have granted Liens on and security interests in certain of
their assets to secure such guarantees. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Borrower and the
Guarantors of an agreement in the form hereof.
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Accordingly, the Borrower, each Guarantor and the Collateral Agent agree
as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under the Subsidiary Guarantee Agreement, (i)
the Borrower shall indemnify such Guarantor for the full amount of such payment
and (ii) such Guarantor shall be subrogated to the rights of the Person to whom
such payment shall have been made to the extent of such payment and (b) in the
event any assets of any Guarantor shall be sold pursuant to any Security
Document to satisfy a claim of any Secured Party, the Borrower shall indemnify
such Guarantor in an amount equal to the greater of (i) the book value of the
assets so sold and (ii) the fair market value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing
Guarantor") agrees (subject to Section 3) that, in the event a payment shall be
made by any other Guarantor under the Subsidiary Guarantee Agreement or assets
of any other Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrower as provided
in Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor
in an amount equal to the amount of such payment or the greater of (i) the book
value of the assets so sold and (ii) the fair market value of such assets, as
the case may be, in each case multiplied by a fraction of which the numerator
shall be the net worth of the Contributing Guarantor on the date hereof and the
denominator shall be the aggregate net worth of all the Guarantors on the date
hereof (or, in the case of any Guarantor becoming a party hereto pursuant to
Section 12, the date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a Claiming
Guarantor pursuant to this Section 2 shall be subrogated to the rights of such
Claiming Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2
and all other rights of indemnity, contribution or subrogation under applicable
law or otherwise shall be fully subordinated to the indefeasible payment in
full in cash of the Obligations. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its
obligations hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. Termination. Subject to the provisions of the last sentence
of Section 8 of this Agreement, this Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the LC Exposure has not been
reduced to zero or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any
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Obligation is rescinded or must otherwise be restored by any Secured Party or
any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided
by law. None of the Collateral Agent or any of the Guarantors shall be deemed
to have waived any rights hereunder unless such waiver shall be in writing and
signed by such parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into among
the Borrower, the Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Subsidiary Guarantee Agreement and
addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all covenants, promises
and agreements by or on behalf of the parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
and assigns. Neither the Borrower nor any Guarantor may assign or transfer any
of its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the prior written consent of the Required
Lenders. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the Subsidiary Guarantee Agreement in accordance
with such Subsidiary Guarantee Agreement and the Credit Agreement, such
Guarantor will cease to have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or
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other instruments prepared or delivered in connection with this Agreement or
the other Loan Documents shall be considered to have been relied upon by the
Collateral Agent, the other Secured Parties and each Guarantor and shall
survive the making by the Lenders of the Loans and the issuance of the Letters
of Credit by the Issuing Bank, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loans or any other fee
or amount payable under the Credit Agreement or this Agreement or under any of
the other Loan Documents is outstanding and unpaid or the LC Exposure does not
equal zero and as long as the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement shall be
effective with respect to any Guarantor when a counterpart bearing the
signature of such Guarantor shall have been delivered to the Collateral Agent.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
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SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, the Borrower is required to cause each Subsidiary that was
not in existence or not such a Subsidiary on the date of the Credit Agreement
to enter into the Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon
becoming such a Subsidiary that is a Subsidiary Loan Party. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such a Subsidiary
of an instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor hereunder. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing
above.
DJ ORTHOPEDICS, LLC,
by /s/ Cyril Talbot III
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Title: V.P., CFO and Secretary
DJ ORTHOPEDICS CAPITAL
CORPORATION, as a Guarantor,
by /s/ Cyril Talbot III
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Title: V.P., CFO and Secretary
FIRST UNION NATIONAL BANK, as
Collateral Agent,
by /s/ J. Matt Maclver, Jr.
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Title: Vice President
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Schedule I to
the Indemnity, Subrogation and
Contribution Agreement
Subsidiary Guarantor Address
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DJ Orthopedics Capital Corporation 2985 Scott Street
Vista, California 92083
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Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of , to the
Indemnity, Subrogation and Contribution Agreement
dated as of June 30, 1999 (as the same may be
amended, supplemented or otherwise modified from
time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among DJ ORTHOPEDICS,
LLC, a Delaware limited liability company (the
"Borrower"), each Subsidiary of the Borrower listed
on Schedule I thereto (the "Guarantors"), and FIRST
UNION NATIONAL BANK ("First Union"), as collateral
agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement
referred to below).
A. Reference is made to (a) the Credit Agreement dated as of June 30,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, DONJOY, L.L.C., a Delaware limited
liability company, the lenders from time to time party thereto (the "Lenders"),
First Union, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and Collateral Agent, and THE CHASE MANHATTAN BANK, as
Syndication Agent and as issuing bank (in such capacity, the "Issuing Bank"),
and (b) the Subsidiary Guarantee Agreement dated as of June 30, 1999, among the
Guarantors and the Collateral Agent (the "Subsidiary Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary that was not in existence or not such
a Subsidiary on the date of the Credit Agreement is required to enter into the
Subsidiary Guarantee Agreement as a Guarantor upon becoming a Subsidiary that
is a Subsidiary Loan Party. Section 12 of the Indemnity, Subrogation and
Contribution Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Guarantor under the Indemnity, Subrogation and Contribution Agreement
in order to induce the Lenders to make additional Loans and the Issuing Bank to
issue
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additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation
and Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein and in the Indemnity, Subrogation and Contribution
Agreement shall not in any way be affected or impaired (it being understood
that the invalidity of a particular provision in a particular jurisdiction
shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
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SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it care of the Borrower.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
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IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
Name:
Title:
Address:
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FIRST UNION NATIONAL BANK, as
Collateral Agent,
by
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Name:
Title: